Lesaka Earnings Double on Acquisitions

Lesaka Technologies (NASDAQ:LSAK) reported fourth-quarter 2025 results on June 3, 2025, posting net revenue of ZAR 5.3 billion (non-GAAP) for FY2025 and adjusted EBITDA (non-GAAP) of ZAR 922 million for FY2025, in line with guidance. Adjusted earnings per share surged year-over-year from ZAR 0.80 to ZAR 2.29, and management issued fiscal 2026 guidance of more than ZAR 4.60 per share. This analysis highlights Lesaka’s operational execution, accretive acquisitions, and transformative strategic initiatives impacting the long-term investment outlook.

Adjusted EPS doubles as Lesaka boosts profitability

For the full year, adjusted earnings reached ZAR 186 million, up substantially from ZAR 51 million a year earlier, driven by strong performance in the Consumer division and accretive contributions from the Adumo and Recharger acquisitions. The company’s leverage ratio (net debt/adjusted EBITDA) ended at 2.9x for the trailing 12 months, or 2.2x when annualizing Q4 results, edging closer to its medium-term target of sub-2x.

"Our adjusted earnings for the year of ZAR 186 million was up substantially from ZAR 51 million last year and resulted in adjusted earnings per share growing from ZAR 0.80 to ZAR 2.29. From a balance sheet perspective, in March 2025, we refinanced our existing debt facilities and expanded our banking relationships to include both RMB and Investec. Our gross debt increased as we raised debt to fund acquisitions in FY2025. And accordingly, our net debt to group adjusted EBITDA increased to 2.9x if we use 12-month trailing EBITDA. However, if we annualize Q4 adjusted EBITDA, this would be 2.2x, approaching our target of less than 2x leverage ratio."
-- Ali Zaynalabidin Mazanderani, Group CEO

This substantial earnings growth, with improving leverage aligned to acquisition integration, signals accelerating profit scalability and an improving risk profile supportive of long-term capital deployment.

Acquisitions transform Lesaka’s platform and scale

Lesaka completed three major acquisitions: Adumo for ZAR 1.7 billion, Recharger for ZAR 507 million, and announced the acquisition of Bank Zero for ZAR 1.1 billion, all while divesting its MobiKwik stake for ZAR 290 million. The Adumo acquisition alone expanded the merchant footprint to over 84,500 points of presence, broadened digital verticals, and introduced hospitality sector SaaS capability through GAAP.

"We acquired Adumo, South Africa's largest independent payments processor to significantly scale our merchant footprint and broaden our product offering. This transaction added more than 23,000 merchants to our base. It expanded our geographical presence and opened new verticals, most notably hospitality point-of-sale software through GAAP. GAAP is the leading provider of integrated point-of-sale software and hardware to the hospitality sector"
-- Steven Heilbron, CEO, Merchant Division

The integration of these acquisitions has transformed Lesaka’s addressable market, diversified revenue streams, and established a scalable base for accelerated cross-sell and organic growth across underserved merchant and consumer segments.

Consumer business drives revenue and share gains

The Consumer segment delivered 35% revenue and 83% EBITDA growth year-over-year (non-GAAP, ZAR), and permanent grant beneficiary market share rose to 13.6%, up from 9.1% over two years. Cross-sell initiatives resulted in 40% of customers holding a lending product and 34% having an insurance product, with the loan book up 82% year-over-year to ZAR 996 million and stable loan loss ratios around 6%.

"Since we repositioned our consumer business to focus on customer experience through investment in training, brand enhancement, distribution and IT platforms, we have increased our permanent grant beneficiaries by 23% year-on-year. And over a 2-year period, our market share has increased from 9.1% to 13.6%. This growth has primarily come at the expense of the Post Bank, which experienced a sub-decline in share following its various challenges."
-- Lincoln Mali, CEO, Consumer Division

The Consumer division’s scalable growth, stable credit performance, and expanding cross-sell penetration underpin revenue resilience and lay a durable foundation for ongoing share gains in underbanked markets.

Looking Ahead

Management reaffirmed FY 2026 net revenue, group adjusted EBITDA, and positive net income guidance, introducing explicit guidance of more than ZAR 4.60 adjusted earnings per share (over 100% YoY growth). Guidance explicitly excludes any Bank Zero impact until regulatory approval and transaction close. Management is targeting net debt to adjusted EBITDA below 2x, annual capital expenditure to remain below ZAR 400 million.

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This article was created using Large Language Models (LLMs) based on The Motley Fool's insights and investing approach. It has been reviewed by our AI quality control systems. Since LLMs cannot (currently) own stocks, it has no positions in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.