Hello, everyone, and welcome to the Lesaka Technologies webcast and conference call for the third 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 dial-in numbers provided. Management will address any questions you may have at the end of this presentation. For those joining us via the webcast, you can ask your questions live by raising your hand at Zoom. For joining via the Zoom teleconference line, you cannot ask your questions live. The webcast link, Zoom conference call dial-in numbers as well as our press release and supplementary investor presentation are available on our Investor Relations website at ir.lesakatech.com. Additionally, Lesaka filed its Form 10-Q after the U.S. market closed yesterday, which is available on our Investor Relations website. 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, we report results in U.S. dollars under U.S. GAAP. However, it is important to note that our operational currency is the South African rand, and as such we analyze our performance in the South African rand. In this presentation, we will discuss our results in South African rand, which is non-GAAP. This assist investors' understanding of the underlying trends in our business. As you know, the company's results can be significantly affected by the currency fluctuation between the dollar and the rand. Taking a quick look at today's agenda, Ali Mazanderani, Chairman of Lesaka, will give an update of the key developments and progress on strategic objectives. Steve Heilbron, Head of the Merchant Division and Corporate Development, 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 performance this quarter. Naeem Kola, Group CFO, will present a detailed overview of our financial performance for the 3 months ended March 31, 2024, and update you on the Q4 and full year guidance. With all that said, I'd now like to turn the call over to Ali.

Good morning and good afternoon, and welcome to the third quarter 2024 earnings webcast and conference call. Today, we report another quarter of growth and improvement in financial performance. Lesaka is not recognizable from 2 years ago when we announced the closing of the Connect acquisition and introduced our consumer turnaround plans. Our 9-month year-to-date revenue of ZAR 7.8 billion is up 14% year-on-year in constant currency terms, and our EBITDA of ZAR 501 million is up 69% in constant currency terms. In the last quarter, we have achieved revenue of ZAR 2.6 billion and EBITDA of ZAR 183 million. We have reduced our net debt to Group adjusted EBITDA to 2.6x this quarter from 4.2x in Q3 2023, and we now have two successive quarters of positive fundamental earnings per share. We have consistently delivered on the expectation set and indeed exceeded our EBITDA guidance for the period and revised upwards that guidance for the full financial year. With the signing and announcement of the Adumo transaction yesterday, which remains subject to shareholder votes and regulatory approvals, we anticipate continuing to consolidate the market and cement our position as the leading independent fintech platform in Southern Africa. Our primary market is currently South Africa with its 62 million population and $381 billion economy. But with Adumo, we augment our presence in Namibia, Botswana, and Zambia and expand into Kenya. Together, this represents a 140 million population addressable market, larger than that of Mexico or Japan. Post completion, Lesaka will be a company with over 3,300 employees across these 5 countries. We'll be processing more than ZAR 40 billion in card, ZAR 100 billion in VAS and ZAR 110 billion in cash throughput. We will have over 1.7 million active consumers, 89,000 micro merchants or informal traders, as they have…

Thank you, Ali. 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 risks 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 risks. We ended the third quarter with over 80,250 devices deployed in the micro-merchant market, representing a 12% year-on-year growth rate. Core to our device placement strategy is the decision to focus on quality business by retaining high volume and profitable clients and optimizing our existing fleet, which is reflected in a healthy throughput and margin per device. At a throughput level, excluding international money transfers, we experienced a 36% year-on-year growth rate. We saw pleasing growth in our traditional VAS products of electricity, airtime, and gaming and strong growth driven by our continued momentum in the uptake of our supplier payments platform by micro merchants. As we continue to populate our supplier platform, we should see these volumes continue to outperform. Whilst a lower-margin product, it's a key value add to our merchants and their suppliers as it significantly reduces their cash risks. Further, it drives our Kazang Vaults cash business as merchants use their cash to top-up their wallets to pay their suppliers. We are…

Good morning and afternoon, everyone. Thank you, Steve. It's been another successful quarter for the Consumer division as we continue to build on and benefit from the hard work during our restructuring and realignment as a customer and sales focused organization. We saw gross EPE account activations of 63,000, significantly improved from 38,000 last year. We have seen a period of relative stability in the SA Post Office, which has reduced the number of grant beneficiaries switching to alternative financial institutions. After accounting for churn, which was fairly stable during the quarter, we had 28,000 new account activations. Natural churn is effecter of the grant space as child support grant seize when a child turns 18 and as mortality impacts old age grants. We estimate the net impact to be approximately 10% to 12% per annum. Our onboarding processes and activation rates are continual focus areas for our teams as we build our EPE account base and deliver additional financial services to them. We've seen very, very encouraging results from our digital channel this quarter. We have a USSD and a voice branch or call center, which are becoming more meaningful contributors in our distribution network. Our voice branch averages 12,500 calls per month and is currently responsible for over 4,000 loan initiations per month with a record in March. Our USSD channel is delivering excellent results, processing 43,000 successful lending applications in quarter 3, record electricity and airtime sales in March, over 735,000 dials from 155,000 customers. Our [indiscernible] shows that on average our account holders can spend between ZAR 100 and ZAR 200 in transport and related costs during a loan application, which is material considering the size of the loans. Interacting through our voice branch and USSD channels avoid this expense for our customers. And we will…

Thank you, Lincoln. The third quarter of fiscal 2024 was another quarter of year-on-year growth and improvement in our financial performance, reflecting positive operational momentum in both divisions. This was achieved despite a challenging trading environment in South Africa. We also made strategic progress positioning Lesaka as a leading fintech. Ali and Steve spoke about the Touchsides and Adumo acquisitions, which both scale and broaden our product offering. Another key strategic objective is the reduction of the net debt and leverage with an improvement in generating positive cash flow from operating activities and significant growth in the group adjusted EBITDA. A year ago, we were in a cash burn position, but we have moved to a position where our net cash provided by operating activities was ZAR 118 million this quarter compared to net cash used in operating activities of ZAR 92 million last year. As a reminder, Lesaka is a domestic filer in the United States. We report results in U.S. dollars under U.S. GAAP. However, our operational currency is South African rand. And as such, we analyze our performance in South African rand. Turning to our revenue and group adjusted EBITDA for the quarter, we grew revenue at 9% year-on-year from ZAR 2.4 billion to ZAR 2.6 billion, which is marginally lower than our guidance range of ZAR 2.7 billion to ZAR 2.8 billion. As Steve mentioned earlier, this relates to an increase in the percentage of PIN-less or direct top-up airtime and data bundles being sold versus PIN-based or voucher airtime. On PIN-less airtime and data bundles, we act as an agent capacity. Only the commission earned is reported as revenue. For PIN-based airtime, will act as a principal and recognize the total face value as revenue. Our revenue is marginally lower than guidance as PIN-less airtime…

[Operator Instructions] And now we're going to take our first question from Frank Geng of Briarwood.

Congrats on the quarter, everyone, and on the Adumo transaction. Just wanted to quickly ask on the Adumo deal. Any indications on the valuation of the deal? Anything on sort of the historical growth rates on the asset in the past? And indication of when the deal might be done and sort of the process from here?

So the purchase consideration implies an EV to EBITDA multiple of approximately 9x. And then on the core Adumo business, has a stand-alone growth profile of circa 20% normalized year-on-year EBITDA growth in rand terms. In terms of process, the transaction is subject to shareholder approval, and there is a process that needs to be gone through in that respect. We've commenced the process to prepare for the shareholder meeting, and it's expected to culminate in a meeting in August with proxy materials expected to be circulated in late June. And those materials will contain substantially more details regarding Adumo's business and will include its historical financial statements and the required unaudited pro forma statements.

Our next question comes from Raj Sharma of B. Riley Securities.

So I'd like to ask a few questions on the Adumo deal. Firstly, just what is the -- what was and what is the strategic rationale for doing the deal?

So I mean, I think, Raj, the presentation sort of outlined aspects of that. I think there is clearly benefits associated with the augmentation of the talent pool, benefits associated with the scale, benefits associated with reinforcing our position also in neighboring geographies. But the core benefit is that the business has augmentative qualities in both the consumer and the merchant divisions. And what I would like to do is probably ask Lincoln in that respect to talk on the consumer side and Steve on the merchant side.

Thanks so much, Ali. Right. If you think about our consumer business, we have been laser focused on the consumer grant space where we've got more than 1.5 million active customers. We've been asked a number of times as to when will we start to think of a broader market outside the grant space. What this does is to start to give us an eye into that base. With Adumo Payouts -- they've got about 245,000 active customers that they've got through our Adumo Payouts. We can start to now see that as where we can start to put credit in insurance, whereas in other solutions, into that base. So it starts to move our customer base from the 1.5 million active customers that we have to now 1.7 million customers and start to give us the opportunities to go beyond the social grant space while we still have the engine of the EPE base and our core focus, but it starts to give us an opportunity to broaden our business beyond that. Steve?

From a merchant perspective, and I think Ali touched that the exciting thing from a former merchant perspective is it gives us much deeper penetration in terms of that particular segment. And it takes us now to servicing in the formal segment north of 290-odd-thousand merchants. It significantly bolsters our card acquiring capability in the formal merchant space as well as taking us into the software point-of-sales business. I think further to that, the opportunity for us to take our cash, our VASs and our credit offering across the channel is further broadened and it enhances our unit economics, both in terms of our cost of client acquisition as well as our lifetime value from a customer perspective. So as you've understood from a merchant perspective, historically, we've had significant growth in our micro merchant space. But in our former merchant space, this gives us, again, real strength in the card and software space which when added to our cash and credit gives us a bundled offering, which we think will allow us to be a lot more competitive as we take our offering to this niche.

I have a couple of questions, if I can, for Naeem. Are you assuming any debt with the transaction? Can you talk about the terms on the debt, and would you look to refinance it? And then also I have a question on you funding the cash portion of proceeds via internal financing. Can you elaborate on that, please?

Raj, yes. So look, I think to answer the question, I'll answer the second part first. In terms of the cash funding internally, we are in the process of selling down our position as you're aware on the [indiscernible] stock that we hold. And we're fairly confident that we'd be able to use that to fund a cash portion of the proceeds that we need to do. In terms of the debt, the debt position on Adumo is quite low. And we have facilities in place under our current structure to be able to fund a further portion to settle some of the funding requirements that we need. So we're not seeing or expecting any increase in cost of funding. We are seeing this to be beneficial to us from an overall leverage ratio as well.

And then just last question. Would Adumo's EBITDA profitability compare more to the merchant or to consumer in terms of the margins?

It's definitely more aligned towards the merchant side of the business. Most of their products are very similar to our merchant side of the business, Raj.

And would you also have the airtime fees in the principal agency issue with Adumo?

We see that as an opportunity because currently, the Adumo business does not do any VAS services through their channels. That definitely will be one of our cross-sell opportunities that we would add on to their platform. So that would be an opportunity for us. And I think if the question is that are we going to have this PIN versus PIN-less, it is something that we would need to forecast a lot more accurately.

Our next question comes from Sven Thorson, Banker. He submitted; consumer has seen remarkable growth in full year '24 with margins widening significantly. Loan insurance penetration rates are up considerably. How much scope is there to increase these penetration rates?

I think there are opportunities. We have got our staff well trained. I think they are engaging with our customers. We can penetrate more into our base. And I think that when you start to see how ARPU has grown, it means that there is more opportunity to penetrate in that base and more of an opportunity for us to have more cross-sell opportunities. So we do see still much more scope. You see, what, 30% on the insurance side. So there is space to do much more in there, and we are focused on that a lot. And I think we've shared for the first time where the EPE plus loan plus insurance looks like now, and you can see the scope for that to grow in the short and medium term.

And our final question today comes from Theo O'Neill of Hill's Research. Theo O’Neill : Okay. Questions for Lincoln here. You mentioned cross-selling a couple of times on the call. And I was wondering did you see anything surprising in the cross-selling success? And what do you see as critical for continuing success in cross-selling?

No, we're not surprised. It's part of our stated aims. We said up front that we will grow our EPE base and we'd cross-sell into that base. And what we've been doing from a marketing point of view has created the need and the momentum. Secondly, we've invested in digital channel capabilities that enable people now to get a loan through our USSD channel, which we've seen grow and be able to do that through the call center. And thirdly, we've created capacity for lead generation. So that also is helping us. And then lastly and most importantly, training our staff, and now suddenly the customers are giving each other feedback about the benefits that they're getting from Lesaka so that it's not only what you get from a transaction point of view, we can be able now to give you a loan, we can give you an insurance, and we have now added value added services in working with our colleagues at Kazang. So we want to broaden our solution set. And so we see more opportunities going forward. Theo O’Neill : And you -- in the prepared remarks, you identified inflation hitting certain expenses. I was wondering if you could give us some more detail on your thoughts there, what you're seeing.

Sorry, the context of our comment on inflation was really just the impact it has on the retail merchant, and it refers specifically to the formal market where we've seen those merchants have been through a process of COVID. We had the period of disruption in South Africa a year ago and then a dampening in consumer demand. So that was the context of that comment. I hope that answers your question. Yes. Theo O’Neill : Yes, it does.

Well, thank you, gentlemen. That concludes the Q&A session. There are no more questions in queue. This concludes the call. So we thank everybody for participating and look forward to our next quarterly update.