Lesaka Q1 FY2027 EBITDA Falls 17% Despite Net Revenue Growth

Lesaka Technologies (NASDAQ: LSAK) reported higher first-quarter fiscal 2027 net revenue but lower profitability as growth in its Consumer and Enterprise businesses was offset by a Merchant division reset and increased group costs. The South African fintech maintained fiscal-year guidance and expects Merchant earnings to recover sequentially from the quarter ended September 30, 2026.

Non-GAAP net revenue rose 8% year over year to R1.58 billion, at the bottom of the company’s Q1 guidance range of R1.58 billion to R1.66 billion. Group Adjusted EBITDA declined 17% to R220.1 million, within guidance of R200 million to R240 million, while the corresponding margin fell to 13.9% from 18.1%.

Adjusted earnings dropped 25% to R60.3 million, and adjusted earnings per share decreased 26% to R0.72, exceeding the company’s Q1 range of R0.40 to R0.60. On a US GAAP basis, the net loss attributable to Lesaka narrowed 17% to R68.0 million, or R0.81 per share, from a revised loss of R82.3 million, or R0.88 per share, a year earlier. The operating result moved to a R17.2 million loss from income of R2.4 million.

GAAP revenue declined 1% in Lesaka’s operational currency to R3.01 billion. In US dollars, reported revenue rose 8% to $184.6 million as the average exchange rate strengthened to R16.28 per dollar from R17.67. The company said currency fluctuations can significantly affect its dollar-reported results.

Consumer and Enterprise growth offsets Merchant weakness

Consumer remained the largest source of divisional growth. Net revenue increased 24% to R668.3 million, while Segment Adjusted EBITDA rose 38% to R206.1 million. Active consumers reached 2.1 million, compared with 1.9 million a year earlier, and monthly average revenue per consumer increased to R101.7 from R88.6. The share of active consumers holding at least two products rose to 51% from 47%.

Consumer lending originations climbed to R1.58 billion from R1.12 billion, while the outstanding portfolio increased to R1.14 billion from R820 million. Gross written insurance premiums grew 46% to R167 million, and the number of policies rose 36% to 799,000. The insurance collection ratio was 94%, compared with 97% a year earlier.

Enterprise net revenue advanced 19% to R262.6 million, and Segment Adjusted EBITDA increased 28% to R28.6 million. Total automated distribution platform and utilities payment volume rose 15% to R13.8 billion. Utilities transaction volume increased 10% to R537 million, with active meters rising to 380,000 from 358,000.

Merchant was the main drag on quarterly profitability. Segment net revenue fell 7% to R674.6 million, while Segment Adjusted EBITDA dropped 51% to R76.9 million. Management said the quarter included upfront reset costs and estimated Merchant’s run-rate Segment Adjusted EBITDA at about R120 million when exceptional items were excluded.

Community Merchant activity continued to expand, with active merchants up 2% to 109,100, acquiring payment volume up 24% to R4.5 billion and cash payment volume up 58% to R7.7 billion. Corporate active merchants declined 11% to 23,800, while Corporate cash volume fell 10% to R22.2 billion and acquiring volume was flat at R6.8 billion. Merchant lending originations increased 67% to R272 million, and the outstanding portfolio rose 29% to R483 million.

Management expects Q1 to be the low point for Merchant Segment Adjusted EBITDA in fiscal 2027. It forecasts more than R130 million for the division in Q2, representing roughly 70% sequential growth, with benefits from the cost-base reset expected from Q3.

Guidance maintained as Bank Zero closing remains pending

For fiscal 2027, Lesaka continues to expect net revenue of R7.0 billion to R7.7 billion, Group Adjusted EBITDA of R1.45 billion to R1.60 billion and adjusted EPS of R7.50 to R8.50. Q2 guidance calls for net revenue of R1.62 billion to R1.72 billion, Group Adjusted EBITDA of R280 million to R320 million and adjusted EPS of R1.00 to R1.40.

The full-year outlook includes the expected contribution from the pending Bank Zero acquisition and excludes unannounced acquisitions. The Competition Tribunal has approved the transaction, but final regulatory approvals remain outstanding. Lesaka expects completion by the beginning of Q3 FY27, lending-book transfers by Q4 and the sponsorship-bank transfer by Q1 FY28.

Cash generated from business operations before specified working-capital, funding, tax and interest items was R245 million. After working capital, loan-book funding, taxes and interest, net cash used in operating activities was R113 million. Net debt increased to R2.73 billion from R2.46 billion at the end of Q4, lifting net debt to 2.2 times last-12-month Group Adjusted EBITDA from 1.9 times, above the company’s 2.0-times target.

Lesaka also said investments in controls and cybersecurity are reflected in fiscal 2027 group costs. Group costs increased 44% to R91.4 million in Q1. The company identified pending Bank Zero approvals, currency movements and broader economic, competitive, governmental and technological factors among the uncertainties that could cause actual results to differ from its expectations.