Hello, everyone, and welcome to the Lesaka Technologies Webcast and Conference Call for the Second Quarter of Fiscal 2024. As a reminder, the webcast is being recorded, and the presentation can be accessed through the webcast link as well as dialing into the Zoom conference call dial-in numbers provided. Management will address any questions you may have at the end of the presentation. [Operator Instructions] The Webcast link, Zoom conference call dial-in numbers as well as the press release and supplementary investor presentation are available on the Investor Relations website at ir.lesakatech.com. Additionally, Lesaka filed its Form 10-Q after the US market closed yesterday, which is also available on the Lesaka Investor Relations website. 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 as a domestic filer in the United States, Lesaka reports results in US dollars under US GAAP. However, it is important to note that the operational currency is the South African rand. And as such, we analyzed our performance in South African rand. In this presentation, we will discuss our results in South African rand, which is non-GAAP. This assists 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 US dollar and the South African rand. Taking a look at today's agenda, Chris Meyer, Group CEO of Lesaka, will start with an overview of performance highlights for the second quarter of fiscal 2024 and a review of Lesaka's progress against its key strategic objectives. Steven Heilbron, CEO Connect Group and Head of Merchant Division, will provide an update on the Merchant Division, followed by Lincoln Mali, CEO of Lesaka Southern Africa, who will take us through the Consumer Division's performance this quarter. Naeem Kola, Group CFO, will present a detailed overview of our financial performance for the three months ended December 31, 2023, and update you on the Q3 and full year guidance. Chris will then provide some closing remarks, after which Lesaka's incoming Executive Chairman, Ali Mazanderani, will introduce himself and outline his thoughts on Lesaka's mission and strategy. Thereafter, we will open the floor for any questions you may have. I'd now like to turn the call over to Chris.

Good morning, good afternoon, and welcome to our second quarter 2024 earnings webcast and conference call. Today, we are pleased to present another quarter of continued growth and improvement in financial performance. The second quarter is characterized by higher volumes in our Merchant and Consumer divisions over the festive season, which is buoyed performance. Full marks to the whole team who have all worked so hard over this period to make sure our customer needs were met and as a result, have delivered an excellent set of results. The economic environment in South Africa remains a challenge for our merchants and consumer customers. Encouragingly, inflation has come back into SAB's target range, but interest rates are still at 14-year highs. We will hopefully see a reduction in rates during 2024, which will alleviate some pressure on consumers. Load shedding or power cuts which disrupt our merchants trading improved marginally during the past two quarters. However, we cannot as yet count on this being a long-term improvement in power supply. Overall, we do not anticipate any major change in the economic outlook for South Africa, but are optimistic that our business model will remain resilient and that we will continue to deliver on both growth and profitability. Naeem will talk to the numbers in more detail, but I would like to note one or two highlights in our group performance. As noted, Q2 is typically our biggest quarter of the year due to the festive season and we were very pleased to see a number of volume records achieved in the month of December and for the quarter as a whole. In particular, Kazang VAS delivered over ZAR3 billion in VAS throughput for the first time ever in the month of December, contributing to a VAS throughput record of ZAR8 billion…

Thank you, Chris. Quarter 2 is a very busy period for us and our merchants. This is driven by the increased spending during the festive season, which benefits our card acquiring, our supplier payments and cash digitalization businesses in particular. Our portfolio covers products and services, increasing consumer convenience and purchases in our merchant stores as well as physical and fintech solutions to assist our merchants reduce cash risk and improve working capital and business efficiencies. This comprehensive solution helps us understand our merchants businesses and cash flows better which, in turn, helps us drive an improved value proposition solving for our merchants pain points as they grow and compete. This is the source of our competitive advantage. Our merchants use our Kazang devices to sell a range of value-added services to their customers, including data, airtime, gaming and electricity. They can also use these devices for our supplier payments platform, allowing them to make electronic payments to approximately 700 active suppliers, greatly reducing both their and their suppliers' cash risk. We ended the second quarter with over 79,000 devices deployed in the informal markets, representing a 23% year-on-year and a 3% quarter-on-quarter growth rate. As mentioned last quarter, we have seen a significant change in product mix, with international money transfers reducing due to a change in the regulatory environment, which affected the industry and can be clearly seen in this graph. Fortunately, this is a lower-margin product for us, limiting the impact on profitability. Excluding IMTs, we saw a 51% growth in throughput year-on-year and 16% quarter-on-quarter. Our supplier payments platform continued its excellent growth on the back of partnerships with major FMCG suppliers, which we discussed at our last quarterly results briefing. We continue to bring new suppliers onto our platform. Our card acquiring business is operated…

Good morning and afternoon, everyone. Thank you, Steve. I'm very proud as I report on the results for the second quarter today. We started our efforts to transform the Consumer division in 2021, and it has been a very difficult journey. Notwithstanding the hard yards that we have had to work, the team's dedication and commitment to executing our strategy is not only making a real difference in people's lives, but is also delivering stronger growth and profitability each quarter. As the only financial service provider focused exclusively on grant recipients, we dedicate 100% of our resources to understanding and servicing their needs as effectively as possible through product design, fit for people distribution networks and service channels. At the last two quarters, I spoke in some detail about our initiative to grow our EPE customer base and how we are positioning ourselves to take advantage of changes in the grant distribution market. Our gross account activations continued the upward trend from approximately 60,000 in quarter 4 2023 to 76,000 in quarter 1 and now 122,000 for quarter 2. This also compares very favorably to our gross account activations a year ago of 43,000, a year-on-year increase of 188%. Churn also improved this quarter, which resulted in a net account activation of over 92,000 compared to approximately 42,000 in quarter 1, 2024 and 10,000 in quarter 2, 2023. Natural chain is a factor in the grant space as child support grant sees when 18 and as mortality impacts old age grands. We estimate the net impact to be approximately 10% to 12% per annum. It is very exciting to see the growth coming through after all the hard work and enthusiasm with which our teams have approached this task. Our EPE account base is a crucial number for us as…

our guidance range and group adjusted EBITDA exceeding the upper end of our guidance range for the quarter. As a reminder, Lesaka is a domestic filer in the United States. We report results in US dollars under US GAAP. However, our operational currency is South African rand and as such, we analyze our performance in South African rand. Looking at the consolidated income statement for the quarter, we grew revenue by 13% to ZAR2.7 billion compared to Q2 2023. Revenue increased by 6% compared to Q1 2024, partly due to seasonality. In US dollars, consolidated revenue was $144 million for the quarter, up 6% compared to $136 million in Q2 2023, negatively impacted by the 7% depreciation of the rand against the dollar over the period. Operating income increased to ZAR43 million compared to ZAR4 million in Q1 and an operating loss of ZAR38 million a year ago. Operating income for Q2 2024 includes an ZAR18 million, $1 million non-cash gain related to the release of a foreign currency translation reserve upon liquidation of a dormant subsidiary. Depreciation and amortization of ZAR109 million includes ZAR67 million related to the amortization of acquired intangibles from the Connect Group acquisition. Acquired asset amortization is both a non-operational and a non-cash charge. Our net interest expense decreased 2% to ZAR81 million in Q2 2024 from ZAR83 million in Q1 2024 through further cash optimization measures across the group. Q2 2024 versus Q2 2023 is mainly impacted by the increase in the benchmark interest rate in South Africa in Q2 2024 compared to Q2 2023. Net income before income taxes, adding back ZAR67 million related to the amortization of acquired intangibles for the quarter, is ZAR29 million compared to a loss of ZAR7 million in the previous quarter and a loss of ZAR43 million…

Thank you, Naeem. As detailed in our public filing in December 2023, I will be stepping down as Group CEO on the 29th of February 2024. I've dedicated all my energy over the past 2.5 years to the turnaround and rebuilding of the Lesaka platform. And in doing so, spending the majority of that time apart from my family who live in the UK. I believe I've achieved what we set out to do when we started this journey, and I will be leaving Lesaka as a strong platform poised for growth and scale. The time is right for me to return to my family and hand over to a new leader who will take this extraordinary group of people into an exciting future at Lesaka. Ali Mazanderani has assumed the role of Executive Chairman as of 1 February 2024. And Ali has been integrally involved in Lesaka since 2020 and when he presented his vision and the strategy at our results in Q4 2020. And I'd like to welcome Ali and give him the opportunity to share a few thoughts. Ali?

Thank you, Chris. I'd like to take this opportunity to thank Chris for the excellent job he has done. He joined when the company had significant cash ban, uncertainty in the outlook of the Consumer division and the need to quickly achieve scale in the Merchant division. He leaves behind a cash-generating business with scale and further potential. On top of this, Lesaka has strong corporate governance, excellent leadership, and people passionate about our purpose of bringing financial inclusion to underserved communities. Under Chris' leadership, we have come a long way in a short period. Chris is remaining on our Board as a Non-Executive Director, and I'm delighted he is available to support me during the handover phase. I look forward to working with him in that capacity. I'm excited to take on the role of Chairman of Lesaka, and I'm very much looking forward to working with Lincoln, Steve and Naeem and the rest of the leadership team in executing our strategy. I believe they have already created the leading fintech in South Africa, and we have the potential to build on that foundation and truly establish Lesaka as the leading fintech on the continent. In 2020, I outlined our vision for Lesaka. That vision was covered by my personal and professional experience. I was brought up in South Africa on a farm in the east of the country and in Mpumalanga, the place where the sun rises, that is my emotional home. After completing Economics degrees at the University of Pretoria, I got postgraduate scholarships at Oxford University and the London School of Economics. These were subsequently augmented by an MBA at INSEAD in France and a Masters in Business Law at St. Gallen in Switzerland. I've lived and worked in many countries, experiences that have given me…

And thank you, Ali. We're now going to open up the call for Q&A sessions. [Operator Instructions] Our first question is going to come from Raj Sharma of B. Riley.

Hi, thank you for taking my questions. Congratulations on ongoing good results. My first question is for Lincoln and a couple other questions for Steve and then overall question -- Lincoln, the pace of adding the EPE accounts has picked up well, any specific new initiatives that you've implemented? And can we determine if they -- if we are making inroads into the SASSA account acquisition?

Thank you, Raj. This is a continuation of all the plans we've been talking about, vetting in our people, training them, guiding them, building their relationship with SASSA, strong marketing presence on the ground, better customer service, improved digitization in how we engage our customers. All of those things have given us a competitive edge. And we now have got the fastest-growing unit as compared to other banks, except for one. So we think that, that process will continue, and we think that we can make even more in growth into that base.

Great. Thank you. And then can you talk about the impact of load shedding? Any color on its impact going forward?

Lincoln, I'm happy to take that question. Raj, thank you for the question. Nice to hear your voice. Welcome. Load shedding, I think, has become very much a part of life in South Africa. It's something that has been built in to the business model, both ours and more broadly, our merchant customer base. And we've learned a debt. South Africa is an adaptable place, a resilient place. I think as we said over the last couple of quarters, we've seen a reduction in the number of hours of load shedding. So there has been an improvement in the availability factor, which measures electricity supply in the country, but it's still a significant constraint in the country. And we -- at this point feel it's too early to predict any long-term improvement. But as I say, I think it's very much built into the way of life, into the operating model for both ourselves and our customer base. And we always learn to adapt.

Yeah. Thank you. And then I just had a question on the new acquisition. Is it reasonable to expect more? How did this come about this opportunity? What you -- are you hunting for little acquisitions like these? Are there more opportunities like these? And also, can you give a sense on the contribution to the top line and sort of the valuation metric?

Raj, I'll take that question as well as its broad in nature around strategy. So as we mentioned earlier in my opening remarks, M&A is an important aspect for us of building and scaling our business. We look at it in sort of broadly two buckets. One is around adding scale, and the other is around adding to our proposition for our customer base. And largely, we see it in the merchant space, most often, the Touchsides acquisition falls into the latter. It's about broadening our proposition. We're active. We look at things all the time. We're evaluating opportunities in a number of different areas. And we feel that it's an important aspect of the future growth for our business. Ali, I don't know if you want to comment at all or I think you've covered it. All right. Thanks, Raj.

Thanks. Okay. And then for Steve, can you talk a little bit about the credit business deterioration of the merchants? What is your outlook on the strategy going forward, are you going to change credit standards? Or what are your expectations for the business -- this business going forward and this contribution -- ongoing contribution?

At the outset, let me say actually in January this year, the month has just passed, we probably had one of our most active months from a credit perspective. So -- as I said in our reflection on the results, we felt that things were starting to improve to some extent. Our retailers had been through a tough period we thought that credit extension could start to improve, and we're starting to see some of that come through. We didn't change our credit criteria over the last period. We simply became a lot more stringent so that we could protect any potential loss. But I'm glad to say that our retailers are resilient and our strategy remains, which is to continue to add participants to our platform, create the leverage network effect and credit is a very important part of that aspect, both in the formal and informal markets.

Great. Thank you for taking my questions. Again, excellent results and congratulations. I’ll take it offline.

Thank you, Raj. Our next question is a live one from Theodore O'Neill from Hills research. Theo, unmute your line and you can go ahead. Theodore O’Neill: Thank you very much. First question for Steve is about the Touchside acquisition. Is there opportunity to leverage the analytics that come with that acquisition across the platform, across the entire merchant division? And is AI part of that?

So as Chris covered, we're very excited about this opportunity for a variety of reasons. Firstly, it introduces a whole new vertical for us. So the tavern space and specifically the licensed tavern space is a critical vertical in the South African informal markets. It's not an area that we have real traction in. We've been playing there for a relatively short period of time and are making good progress, but we believe this will allow us to scale significantly. We will drive very hard our card acquiring, our VAS offering as well as what this now enables us to do is to play in the Platform as a Service, Software as a Service and data monetization. So critical to this product is the fact that we see close to ZAR17 billion of value going through these terminals. We provide the merchants with a mechanism through the software to be able to track inventory, sales and promotional activity. That data is hugely valuable, and we bought it really for the data insights capability as well as to extend into the vertical with everything else that we do. And to your point, it is very much within our [gun sights] (ph) to take that particular offering across our other verticals as well. It helps us to bring in the FMCG links and monetize that data both from the consumer and to the business. Theodore O’Neill: Thanks. And for Lincoln, I'm curious, the year-over-year quarterly ARPU was up 15%. And I was wondering if there's any particular reason that's favorable?

I think that if you look at both our growth in our EPE accounts, growth in our lending and growth in our insurance, all of those have been market improvements. And you've seen that a lot in December. So we have very, very good December. So this quarter really represents as Chris pointed out earlier, record numbers of sales in our EPE, in our insurance and in our loans. And that augurs very well for our ARPU growth. Theodore O’Neill: Thank you very much.

Thank you, Theo. We now are going to take a question from [indiscernible] and I'm going to read it if she submitted over the chat. Guys, does the recent acquisition of [indiscernible] earn merchant collaboration with AB InBev?

I actually believe it should significantly enhance our relationship with AB InBev. The reality is we are now the Switzerland of the market. Previously, Touchsides would have been owned by Heineken. You can understand this is a data insights business and the data analytics in our hands as an independent is probably very much enhancing in terms of what we can offer in that vertical to all suppliers into the tavern space. So we actually are enthusiastic about the opportunity in our hands in relation to what we can now achieve with the likes of SAB, et cetera. Theodore O’Neill: Thank you. That’s helpful. Next one is a strategic question. Can I just expect more acquisitions as EBITDA increases. And as you think about your M&A strategy, are you thinking bolt-on or transformational?

Thanks for the question. I think it's probably fairly similar to the one we received from Raj. I don't want to repeat, but we described the two sort of broad areas that we would focus on from an M&A perspective. M&A being an important aspect of our strategy to scale the business and build relevance with our customer base. So yes, I think it's fair to say you should expect to see further activity in those buckets. The bucket is being around scale and then relevance and we are active. We are looking at things, we're evaluating things, but we evaluate things against a very clear set of criteria with a very disciplined approach. So we want to make sure we make the right choices that can enhance this business and build the platform. Ali, I don't know if you would like to comment, give you the opportunity to maybe say something.

No, thanks, Chris. I mean I need to echo what you say and say that there is opportunities in both subsectors that are represented there, and each will be assessed on a case-by-case basis.

Thank you.

Great. Last question right now, and this comes from Jared Houston of All Weather Capital. Can you guys provide an outlook for net debt-to-EBITDA post Touchside acquisition?

Naeem, do you want to address that?

Yeah, sure. Thanks, Chris. Yeah. Look, so we're not seeing any material impact on our net debt-to-EBITDA ratio because of the Touchside acquisition. I mean, as we mentioned, the acquisition has been fully funded from our current resources, and we don't see an impact on that material impact coming from that.

Thanks, Naeem.

Great. And this -- obviously, Raj and Theo both asked about M&A. But Jared wants to know, as you think about M&A, will equity be a part of that? Will you -- how will you fund M&A? How are you thinking about that strategically?

[indiscernible]. And one of the aspects will be how to fund a particular transaction. And so equity would play into that. So as much as debt or any other form of financing of transactions. So where it's appropriate, we would consider it, and we consider it against a number of metrics that we need to think about in that regard.

Okay. Thank you. And here's my last question from Jared. Can you provide any updates on the potential of mobile click and a status update on where that stands?

Yeah, sure. Yeah. Look, I think as we mentioned, and it's public information that they've now submitted a rate hearing and the way to come through for an IPO in the Indian market. I mean where it stands at the moment is that, obviously, we're watching it very closely, and we're in close contact with management to ascertain how they're looking at this. And I think in terms of performance of MobiKwik, the performance of the business has been strong. And going forward, we would keep a watchful eye in terms of valuations as it comes closer to them doing and launching an IPO.

Well, thank you for that update. And that concludes the Q&A. Those are all the questions. We appreciate everybody for participating. Thank you, management.