Good day, ladies and gentlemen, and welcome to the Net 1 Q2 2022 Earnings Call. All participants will be in listen-only mode. There will be an opportunity to ask questions later during the conference. [Operator Instructions] I would now like to hand the conference over to Dara Dierks. Please go ahead.

Thank you, Operator. Welcome to our second quarter 2022 earnings call. With me today are Chris Meyer, Group CEO; and Lincoln Mali; South African CEO; and Alex Smith, CFO. Our press release and supplementary investor presentation are available on our Investor Relations website at ir.net1.com. As a reminder during this call, we will be making forward-looking statements and I ask you to look at the cautionary language contained in our Form 10-Q regarding the risks and uncertainties associated with forward-looking statements. Also we will discuss our results in South African rand, which is non-GAAP. We analyze our results of operations in our press release in rand and to assist investors understanding of the underlying trends of our business. As you know the company’s results can be significantly affected by the currency fluctuations between the U.S. dollar and South African rand. Chris will start the call with an update on strategy, then Lincoln will provide an update on the turnaround of the South African operations. And finally, Alex will go through the results of the second quarter. Following that we’ll have a Q&A session. With that, I would like to turn the call over to Chris.

Thank you Dara, good morning, good afternoon and thank you to all for joining us for our second quarter earnings call today. On today’s call, I’d like to focus on four key pillars that are critical to the successful transformation of Net1 into becoming a leading South African full service FinTech platform. Delivery on each of these pillars will enable the management team to stay focused on repositioning the business for growth and capturing the long-term opportunity we see ahead. Firstly, I will provide an update on the transformation in our consumer financial services business, and discuss the early progress we have made towards our strategic imperative in returning the consumer financial service business to breakeven by June 2022, and then into profitability as soon as possible thereafter. Secondly, I’ll provide a high level update on the acquisition of Connect Group and recap on the opportunity, the merged entity will provide. And thirdly, I’d like to take you through the progress we are making in transforming our organization into a world-class platform. And lastly, I will highlight the important work we are doing in South Africa to strengthen our relationships with key stakeholders. So, I’m encouraged by the progress we are seeing in the turnaround of our consumer financial services business, which is manifesting in some of the key performance indicators we are measuring. Each of the three levers we focused on, which are growth in active accounts, increasing average revenue per customer, and cost optimization have all started to deliver benefits. Lincoln will give you more detail on the performance of each of these. But at a high level, I’d like to make a few points. Firstly, active EPE account numbers increased to just under 1.1 million active customers. We took a proactive approach to winning new customers with…

Thank you, Chris. Good morning and good afternoon, everyone. Thank you so much for the time you have afforded us. As Chris mentioned, I’ll be unpacking some of the details behind what we’re doing to target the consumer business returning to pay given by June 2022 and profitability as soon as possible thereafter. I will also use the time to explain some of the results we’ve seen already in this quarter. Chris mentioned that we have three levers we’re focusing on. Growth in active accounts, increase average revenue per user, ARPU and cost optimization. I’d like to focus on the first two. In order to drive growth in active accounts and increase ARPUs we’ve had to fundamentally rethink the way we do business and focus on gaining a better understanding of what our customers are actually looking for. Our customers are our customers by choice and to ensure that they trust us and choose to do business with us, we need to make sure that we need one, have the right sales team empowered with the right tools to be able to better serve them. Two, build a deeper relationship of trust with them. Thirdly, understand their needs and the type of products they are looking for to drive a bigger share of wallet, and ultimately higher ARPUs. And lastly, have the right distribution footprint to better service our customers in their communities. So at the beginning of our fiscal second quarter, we undertook a massive training program to up-skill our sales force nationally on all Net1 products, as well as to improve their sales acumen. This meant teaching them how to better connect with customers to intent a deeper relationship, as well as gain a better understanding of our customer needs. We have successfully trained about 90% of our…

Thank you, Lincoln, and good day, everybody. Now let’s turn to the details of our financial metrics for the quarter. Firstly, as Chris highlighted earlier, I wanted to point out the change in our segmental disclosure beginning the second quarter. The new segments are disclosed in the financial section of our earnings press release with more details in our fiscal second quarter 10-Q and they show the operating results of the group split into the two business units we are now looking at in order to manage our operations. We’ve decided to label our business units as consumer and merchant talking to the nature of the customers we serve in each segment. Consumer will comprise the financial services business, while merchant will comprise what we’ve been referring to as payments. When the Connect Group acquisition -- it will form part of the merchant segment. Moving on to the financial update for the quarter. Our performance was characterized by continued delivery on the turnaround in our consumer financial services business, which was partially offset by a slightly weaker performance in our merchant business, primarily as a result of supply chain delays due to the global chip shortage. On a normalized constant currency basis, total revenue for the quarter was down 4% year-over-year. On a reported basis, total revenue for the quarter was 31.1 million, which was also a 4% decrease year-over-year in U.S. dollar terms. The rand was broadly similar levels against the U.S. dollar during the second quarter of fiscal 2022 compared to the same period in the prior year. So let’s unpack this year-on-year quarterly performance in a little bit more detail focusing on our segments. I’ll start with the merchant business, which was the main driver of the low revenue number which was down 7% year-on-year in dollar…

Thank you. [Operator Instructions] Our first question is from Raj Sharma of B. Riley. Please go ahead.

Hello, good morning. I had a question. If you could kind of touch upon the EPE accounts, the number just under 1.1 million. Can you also talk about the churn in the accounts? Has there been substantial churn in the last quarter? And if you’re including the EPE Light numbers in the figure that you just gave of 1.1 million.

Hi Raj. Thank you for your question. I’ll try and just make sure I cover all of it. So firstly, the 1.1 million, just under 1.1 million active accounts does include the EPE Light customers. It’s still relatively small in terms of active accounts. So the contribution numbers is still relatively low. But we have included in that number. In terms of churn, I think what I’d say is, we are still learning. We still like understanding customer behavior, customer experience and really getting closer to the activity in this book. There is churn and as I say, we’re working on that, and really trying to understand it and root cause it. So we will, when we’re ready and have a clearer sort of sense of trends, be able to start giving you some sense of what that will look like. But for now, we feel it’s quite early days, and we’ve got really like two quarters, if you think about it behind us of this new strategy and so we are learning, and we don’t believe yet that we can really with confidence give you a sense of trends. I hope you understand that. Thank you.

Yes, sure. Thank you. And then my next question is on the merchant group sales. I mean, what would the sales have been if you didn’t have the delays on the equipment? And could you reiterate that you would see a recovery in the next two quarters? How much was the impact is what I’m trying to understand on the merchant group sales because of the chip shortages.

Hi Raj. The impact on the POS devices, since the POS devices that we were selling, that’s been primarily the impact. Look, it’s always a bit difficult to quantify exactly what that number is quarter-on-quarter, because the nature of these sales are, that they are quite lumpy. I think the one thing that we have confidence is that we have a committed order book and a strong committed order book that we’re expecting to come through in Q3 and Q4. Obviously, I think there’s been plenty of publicity around -- the chip shortage hasn’t gone away. But we have seen, we’ve had commitments from our suppliers around meeting the obligations that we have in terms of the orders that we’ve had from our customers. And so we were certainly in regular contract around making sure that we fulfill those orders and meet our expectations over the next couple of quarters.

Got it. Thank you. And then if I could ask Connect Group acquisition, what are the remaining approvals that are left? And could you talk about the timeline? Are you still expecting a close by the end of Q3?

Thanks, Raj. Yes, our timeline as I was saying earlier is largely unchanged. We feel the transaction is moving along in the timeframes that we previously communicated and expected. And so yes, sort of late March is our sort of guidance around that where we feel the transaction should close. Now, the key requirements to closing is competition commission approval, and we are in the midst of that process with the competition commission and it’s moving along again in the timeframes that we anticipated, and at this point, we have had no cause for concern or surprise. So I think the timeframes are moving as expected. The competition commission is the main requirement for us to receive approval and we’re hoping to get that all done and in place by the end of March.

Got it. Thank you. Just one last question on the account, in the new account growth I know that it was great to hear Lincoln talk extensively about all the efforts that are going into recalibrating the sales force. But could you give us a sense of what we should expect as ongoing new account, gross new account adds for the next couple of quarters? And your efforts into acquiring SASSA accounts, would those be materials for the next two quarters?

Raj, as we were saying, we feel it’s early days. We’ve really got to my mind, two quarters of data to go upon. We feel tremendously excited about the shift that’s going on in the business into sales, driven sales oriented organization. We have tremendous focus on improving our processes, training our staff as we said, getting out into the communities and really understanding our customer base. So we’re delighted with the progress we’ve made. But we just feel it’s too early at this point to make predictions or try and give estimations on let’s call it a steady state or even a trend around account growth. So my appeal would be, be patient with us. We are working full steam ahead. We’re giving everything to the turnaround out of this business and getting into breakeven as quickly as possible as we have said and as those trends emerge, we’ll be wanting to share them with you. Thank you.

Great, thank you so much. I’ll take my questions offline. Thank you again.

[Operator Instructions] It seems we have no further questions on the lines. I would like to hand back to Dara for closing comments.

Dara, it’s Chris, if I may, I’d like to just, I just wanted to conclude really by emphasizing that we remain excited about the progress towards our transformation and then turning around the financial services business through those three levers of customer acquisition, increased ARPU and reduced cost. And to ultimately deliver on our goal of building a leading South African FinTech platform for underserved consumers and merchants. And we remain committed to this and we look forward to sharing more on the journey in future calls. And so thank you very much, Operator and thank you to everybody for joining us on the call and for the interest in our business. Thank you.

Thank you. Ladies and gentlemen that concludes this conference for today. Thank you for joining us. You may now disconnect your lines.