What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-11-06 compared with 2024-05-08 · 817 added, 1198 removed, 502 unchanged (80% of the section changed)

Management’s Discussion and Analysis of Financial

Condition and Results of Operations

Management’s Discussion and Analysis of

Financial Condition and Results of Operations

The following discussion should be read in conjunction with our Annual Report on Form 10-K for the year

44 unchanged sentences

“will”, “should

“plans,” “intends,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of such

terms and other

“plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms

comparable terminology.

24 unchanged sentences

Recent Developments

As of the date hereof, we have been successfully executing on our strategic objectives in building a leading fintech platform and

consolidating Southern

African fintech.

experienced continued improvement

in our financial

performance in the

third quarter of

fiscal 2024 with year-on-year revenue and profitability

improvements in both Merchant and Consumer divisions.

Operating income of $0.8 million (ZAR 15.0 million) improved

145% in ZAR, compared with an operating loss of $1.9 million

(ZAR 33.2 million) during the third quarter of fiscal 2023.

million) this

compared to $7.0 million (ZAR 124.6 million) in the third

quarter of fiscal 2023.

The continued resilience of our business model

challenging environment for our merchant and consumer customers demonstrates

the value our customers place on our services.

Our mission at Lesaka is

to enable merchants to compete and

grow, and to improve the lives of

South Africa’s grant beneficiaries

by providing access

to innovative financial

technology and value

creating solutions.

achieve this through our

vision to build

leading full-service

fintech platform

Africa, offering

cash management,

payment processing,

Services (“VAS”),

capital and financial services to merchants and underserved consumers.

underserviced

We offer a wide

integrated payment solutions

including transactional accounts

(banking), lending, insurance,

fintech platform in our connected ecosystem, we facilitate the digitization

of commerce in our markets.

We experienced continued improvement in our financial and operational performance in the first quarter of fiscal 2025.

of $145.5 million

(ZAR 2.6 billion) was

at the mid-point of

our revenue guidance

and compares to $136.1

million (ZAR 2.5

transaction costs.

attributable to

81.0 million)

first quarter

fiscal 2025 compared with a net loss of $5.7 million (ZAR 105.6 million) during

the first quarter of fiscal 2024.

Group Adjusted EBITDA of $9.4 million

(ZAR 168.1 million) was at

the mid-point of our guidance range,

representing the ninth

successive quarter of

Lesaka achieving or

outperforming its Group

Adjusted EBITDA guidance.

Group Adjusted EBITDA

GAAP measure, refer to reconciliation below at “—Results of Operations

—Use of Non-GAAP Measures”.

to broaden our product proposition and solve for both consumer and merchant

Merchant Division

The year-on-year growth achieved by our Merchant Division

is supported by the robust secular trends underpinning financial

inclusion, cash management and digitalization for micro, small and medium

enterprises (“MSMEs”), especially in the micro-

merchant sector of South Africa, where we have a leading market position.

Performance in our Merchant division has been driven by:

and supplier payments

business, continues to see

adoption by micro-merchants,

with a 12% year-on-year

growth in the number of devices deployed.

had approximately 80,250

devices deployed as of

March 31, 2024, compared

to approximately 71,800 devices

one year ago, and approximately

79,000 devices at the

end of the second quarter

of fiscal 2024.

to our device

placement strategy is

the decision to focus

on quality business and

optimizing our existing fleet,

which is reflected

in a healthy throughput and margin per device.

communicated,

significantly

comprise approximately

throughput, compared

to approximately

This change has had limited impact on profitability as money transfers are

a very low margin product.

throughput, excluding

the low-margin

money transfers, increased

36% year-on-year

traditionally

strongest quarter due to higher activity over the year-end festive

season benefitting certain product lines.

Whilst we saw

our traditional VAS

airtime and gaming,

been driven by the uptake of our supplier payments platform by micro-merchants.

As we bring more suppliers onto

The year-on-year

performance in

Division (“Merchant”)

robust secular

trends underpinning

cash management

digitalization

micro-merchants,

efficiently and fulfill their potential.

Performance in Merchant has been driven by:

and supplier payments business continues to see adoption by micro

Fiscal quarter ended September 30,

Approximate number of devices in deployment

Throughput for the quarter (ZAR billions)

international

(“IMT”) (ZAR billions)

Throughput for the quarter supplier

payments (ZAR billions)

Total throughput

for the quarter excluding IMT and supplier

payments (ZAR billions)

2025 includes approximately

5,430 devices attributable

to the acquisition of

effective May 1, 2024,

not enabled for VAS

and supplier payments on the Kazang platform.

approximately

third quarter

approximately

throughput volumes, compared to approximately 20% a year ago.

card acquiring solutions to

micro-merchants via Kazang Pay

and to small and medium

merchants through Card

Card-enabled POS devices increased to

approximately 50,200 as of March 31,

2024, a year-on-year growth of 21%.

Throughput on deployed devices increased 21% year-on-year

to R3.9 billion.

merchant sector remains

suspended as we

reported in the

previous quarter.

Capital Connect

disbursed ZAR 219

million during

this quarter, compared to ZAR 194 million

in the comparable period last year, representing a 13% increase.

Our digital cash management

offerings, Cash Connect and Kazang

Vaults, effectively “puts the bank” in approximately 4,460

merchants’ stores, compared to approximately 4,370 merchants’ stores a year ago.

We provide robust cash vaults in the

micro-merchant sector,

which enables

customer base

to significantly

mitigate their operational risks pertaining to cash management and

Acquisition of Touchsides

In February 2024 we announced the

acquisition of Touchsides

(Pty) Ltd (“Touchsides”).

With closing conditions

now satisfied,

the deal closed

data analytics and

insights company,

and highly complementary

Kazang business.

The acquisition significantly

expands Kazang’s

footprint in the informal

market by adding an

established solution

that has a strong presence in

the licensed tavern market.

has an installed base of over 10,000

active POS terminals across

South Africa’s licensed taverns, and processes more

than 1.5 million transactions

The business provides platform-as-a-service

software-as-a-service (“SaaS”)

licensed tavern

outlets, enabling

the measurement

time, management of stock levels and informing commercial decisions,

such as pricing and promotional offers.

data and insights

these terminals

and potential

through relationships

including fast-moving

consumer goods

companies, retailers,

wholesalers, route-to-market

suppliers, and

been allocated to our Merchant operating segment.

Acquisition of Adumo

we announced the

acquisition of Adumo

RF (Pty) Ltd, subject

to shareholder and

regulatory approvals.

serves approximately 23,000

active merchants.

operations include card acquiring,

integrated payments and reconciliation

services processing more than ZAR 24 billion in throughput per year.

The company’s corporate card services cover over 245,000 card

holders supporting payroll, incentives, rewards, and expense management.

also known as GAAP,

is the largest POS and

Software-as-a-Service solutions provider to the hospitality sector in

Southern Africa.

The acquisition

continues Lesaka’s

consolidation in

African fintech

ecosystem will

million active consumers, 119,000

merchants, and processes over ZAR

250 billion in throughput (cash, card

Group will have over 3,300 employees operating on the

ground in 5 countries:

South Africa, Namibia, Botswana, Zambia,

The acquisition enhances Lesaka's strengths in both the consumer

and merchant markets.

consideration will

combination of

of 17,279,803

and a ZAR 232 million ($12.5

million, translated at the prevailing rate of

ZAR 18.5 as of

May 6, 2024) payment in cash.

Consideration,

(“Apis”), African

Rainbow Capital

largest shareholder

Holdings (RF)

(“Crossfin”), as

International Finance Corporation and Adumo management.

The transaction is expected

to close in the

third calendar quarter of

2024 and is subject

to shareholder and regulatory

and satisfaction of customary closing conditions.

September 30,

includes approximately

5,430 devices

in Touchsides

and supplier payments on the Kazang platform.

placement strategy

which is reflected in a healthy throughput growth and margin

and supplier payments throughput increased 38% to R9.9 billion.

We have separately disclosed supplier payments

from traditional VAS

as it is becoming a material contributor to our

throughput and attracts a lower gross profit margin.

Supplier payments

important part

-merchant ecosystem

developing as

provide a holistic offering to micro-merchants in informal markets.

international money

transfer throughput

recovered significantly

approaching the

Our card acceptance solutions to micro-merchants is through Kazang

Pay and to merchants through Card Connect.

Fiscal quarter ended September 30,

Approximate number of devices in deployment

Total Throughput

for the quarter (ZAR billions)

throughput to R4.2 billion for the quarter

solutions offered to merchants through Capital Connect in

the merchant market.

Fiscal quarter ended September 30,

Total credit disbursed

(ZAR millions)

Advance loan book

size at period

Capital Connect disbursed

ZAR 166 million

during Q1 2025,

compared to ZAR

173 million in

the comparable period

last year, representing

a 4% decrease, reflective of the deterioration

in financial strength of our merchants compared

have maintained our strict

credit criteria during the high

interest rate and inflationary

cycle resulting in

less merchants qualifying for new or renewals of credit lines.

more positive political

environment, the suspension

of load-shedding

and hopefully the

interest rate

more optimistic

this business

trend reflective

Connect disbursements

this quarter compared to ZAR 154 million a quarter ago (quarter four fiscal 2024.)

Capital Connect’s

lending proposition

is an important

enabling the merchants

Since inception, Capital Connect

has distributed more

billion of funding

to merchants and

funding of up to ZAR 5 million in under 24 hours.

Quick access to affordable and flexible opportunity capital is vital in

every stage of a merchant’s lifecycle,

enabling them to never miss an opportunity.

Kazang Pay Advance, our lending offering

in the micro-merchant sector, was suspended

in early fiscal 2024 following

the decision to discontinue the

current product, especially in the

high interest rate environment.

We continued to explore

other options

are monitoring

payment behavior

smaller loan book and applying stricter lending criteria before the official

relaunch later in fiscal 2025.

Our cash management and digitalization

solutions effectively “puts the bank” in approximately 4,480

merchants’ stores.

Fiscal quarter ended September 30,

Approximate number of devices in deployment

differentiator

digitalization of cash.

provide robust cash vaults in the SME sector (Cash Connect) and are building a presence

in the micro-merchant sector

(Kazang Vaults),

which enables our merchant

customer base to significantly

their operational risks pertaining to cash management and security.

towards digital

most significant

experienced challenges such as power outages, high price inflation and a slowdown in consumer spending, over the

past 24 months.

This impacted

the merchants we serve in

this sector and resulted in

increased bankruptcies and vault

upliftments which affected the net growth in the vault estate.

Consumer Division

strategic focus

areas underpinning

beneficiaries.

cross-selling

transactional

improve the lives

of historically underserviced

consumers and continue

to deliver against

our strategic focus

areas underpinning our

Progress made

active EasyPay

Everywhere (“EPE”)

account numbers;

(ii) increasing

average revenue per user (“ARPU”) through cross-selling;

optimization;

profitability

Division in third quarter of fiscal 2024.

The progress on our key initiatives is as follows:

and (iv) enhancing our product and service offering,

resulted in revenue and profitability growth in the Consumer Division in the

first quarter of fiscal 2025.

Fiscal quarter ended September 30,

Transactional accounts

(banking) - EasyPay Everywhere ("EPE")

Total active EPE transactional account base at quarter

end (millions)

Total active EPE transactional account base at quarter

end - Permanent grant recipients (millions)

quarter -Permanent grant recipients (number)

quarter - Permanent grant recipients (number)

Lending - EasyPay Loans

quarter (number)

Gross advances in the quarter (ZAR millions)

(ZAR millions)

Insurance - EasyPay Insurance

Approximate number

of insurance policies

the quarter (number)

Total active insurance

policies on book at quarter end

beneficiaries)

Gross loan book, before

Driving customer acquisition

Gross EPE account activations,

for the permanent base, during

our current quarter showed significant

improvement due to various strategic

We achieved approximately 63,000 gross account activations in

third quarter, compared

to approximately 38,000 in the

third quarter of fiscal 2023.

After accounting for churn, net

active account growth for the quarter

was approximately 28,000 accounts, compared to approximately 1,000

quarter of fiscal 2023.

transactional account

at approximately

which approximately

Gross EPE account

activations, continue to

grow at the new

levels for the permanent

base, post our marketing

distribution network enhancements

in fiscal 2024.

achieved approximately 62,000

gross account activations

the quarter which was pleasing in a traditionally quiet

quarter for us.

This compares to a higher

than usual activation

rate in quarter one fiscal

2024 due to significant migration

away from the South African

Post Office in that

activations of

was negatively

South African

Security Agency)

digital portal for switching.

Our total active EPE transactional account base stood at approximately 1.5 million at the end of September

approximately

(or approximately

permanent grant

balance comprises

are permanent

grant recipients.

Social Relief of Distress

6 unchanged sentences

deeper relationships

offering other products such as insurance and lending.

We do not offer the same breadth of service to the SRD grant

base due to the temporary nature of the grant.

offering products such as insurance and lending.

do not offer the same breadth of service to the SRD grant base

due to the temporary nature of the grant.

Progress on cross

2 unchanged sentences

consumer loan

increasing 28% to ZAR 509 million as at March 31, 2024, compared to ZAR 397

million as of March 31, 2023.

amended our credit scoring or other lending criteria and the growth is reflective of the demand

(“gross book”), increasing 34% to ZAR 564 million

as of September 30, 2024, compared to ZAR 423

million as of

September 30, 2023.

We have not amended our credit scoring or other lending criteria, and the growth is reflective of the demand for our

cross-selling

capabilities.

implementation

lending campaigns and encouraging results from our digital channels during

the current quarter.

The portfolio loss ratio,

calculated as the loans

written off during the

period as a percentage

of the total loan book,

remained at approximately 6% on an annualized basis, in line with the first and

second quarter of fiscal 2024.

EasyPay Insurance

insurance product continued

its strong growth

material contributor

to the improvement

overall ARPU.

We have been able to improve customer penetration to more than 30% of

our active permanent grant

account base as of March

31, 2024, compared to

approximately 28% as of March

rate continues

the implementation

lending campaigns and encouraging results from our digital channels.

approximately

new policies were written in the quarter, compared to approximately

36,000 in the comparable period in

active policies

to approximately

414,000 policies

compared to March 31, 2023.

our permanent

has increased

to approximately

third quarter

from approximately ZAR 78 in the third quarter of fiscal 2023.

percentage of the total

gross loan book at the

end of the quarter,

remained stable on an

annualized basis, compared

to quarter one fiscal 2024.

EasyPay Insurance

Our insurance product sales continue to grow and

is a material contributor to the

improvement in our overall ARPU.

September 30, 2024, compared to 31% as of September 30, 2023.

Approximately 49,000 new policies

in the quarter, compared to

approximately 38,000 in the

comparable period in fiscal

The total number

policies has grown 30% to approximately 466,000 policies as of September 30, 2024, compared to 359,000 policies

as of September 30, 2023.

In April 2024 we launched a new benefit where existing policyholders and new clients could elect

to cover up to six

dependent family

cover ranging

benefit more than 25 00 clients have elected to cover their dependent family

ARPU for our permanent client

base has increased to

approximately ZAR 91 for the

first quarter of fiscal

approximately ZAR 83 in the first quarter of fiscal 2024.

Adumo Payouts

the Adumo Payouts

business officially became part

of the Consumer

We are looking forward

contribution will be reflected in our quarter two fiscal 2025 results.

Board and Leadership Changes in quarter one fiscal 2025

Leadership changes

On February 29, 2024 Mr.

Chris Meyer completed his tenure

as Group CEO of Lesaka, a

position he held since July 1,

Ali Mazanderani

responsibilities

Mazanderani has been

integral to the

development of Lesaka’s

strategy and has

been a Non-Executive

Director since

leadership, Mr.

Kuben Pillay,

commenced his

Independent Director of Lesaka on February 1, 2024.

Smith was appointed

as Group Chief

Financial Officer

taking over these

responsibilities from

continue to augment our executive capability to accommodate the growing size of the business and deliver on the opportunity in front

Merchant pillar within Lesaka’s Merchant

Board changes

Similarly, on completion of the Adumo acquisition Dean Sparrow, Group CEO of Crossfin

Technology Holdings (RF) (Pty) Ltd,

was appointed to the Board as an independent non-executive director

and joined Lesaka’s Capital Allocation Committee.

Chris Meyer and Monde Nkosi, non-executive directors, stepped

down as directors of the Board in October 2024.

Acquisition of Adumo

Adumo transaction

which enhances

our platform,

adding customers

products, as well as

The completion

of this transaction

marks the beginning

of a new chapter

in the Lesaka story.

be included in our results for the full second quarter of fiscal 2025.

Going forward Lesaka will be run in four distinct pillars

transaction is the

catalyst to approach

the market with

a more customer

-centric operating

reporting standpoint,

we will continue

to maintain the

Consumer Division

and Merchant Division

split however

we will present

KPIs and performance with a more granular breakdown.

Our Consumer segment

will remain substantially

the same however

the perimeter will

be expanded to

include the Adumo

Merchant segment,

the Adumo transaction

opportunity to

business into

three component

organized around distinct customers.

Micro-Merchant,

Merchant and Enterprise.

Micro-merchants are

typically sole

proprietors, often

address these

customers through

materially improve

a substantial

offerings available

their digital journey.

Here we have an opportunity again to expand our total addressable market through wallet growth.

offerings, the

Adumo business has

merchant acquiring and

software at point

the Lesaka offering

will be amongst

most comprehensive in the market in meeting the needs of small and medium size businesses

in the region.

Our Enterprise

segment will focus

corporates, mobile network

operators, banks,

governments and

municipalities.

solutions include a

new payment switch, Prism

Switch, our Point

Of Sale hardware

business branded Prism

POS (previously known

as NUETS), our bill payments platform EasyPay, as well as a third party vending and security business.

As well as serving third party

corporates it will also service some of the technology needs of our other pillars, Consumer,

Micro-Merchant and Merchant.

Critical Accounting Policies

30 unchanged sentences

Recent accounting pronouncements not yet adopted

as of March 31, 2024

pronouncements not yet adopted as

of March 31, 2024, including

the expected dates of adoption

and effects on our financial

results of operations and cash flows.

as of September 30, 2024

pronouncements

condition, results of operations and cash flows.

Currency Exchange Rate Information

2 unchanged sentences

Three months ended

Nine months ended

September 30,

$ average exchange rate

9 unchanged sentences

Thus, the average rates used

to translate this data for the three and six months

ended March 31, 2024 and 2023, vary slightly

from the averages shown in the table

ended September

vary slightly

averages shown

following table:

Three months ended

Nine months ended

September 30,

Income and expense items:

Balance sheet items:

have translated the

results of operations and

operating segment information

for the three and

nine months ended March

2024, provided in

the tables below using

the actual average exchange

rates per month (i.e.

January 2024, February

and March 2024

for the third

quarter of fiscal

2024) between the

reduce the reconciliation

of information

translated the results of operations and

operating segment information for the

three months ended September 30,

the tables below

using the actual

average exchange

rates per month

and September 2024 for the

first quarter of fiscal

2025) between the USD and

ZAR in order to reduce

the reconciliation of information

presented to our chief

42 unchanged sentences

reconciliation

unaudited condensed

consolidated financial

statements in

chief operating

decision maker

Group Chief Executive

Officer until February 29,

our Executive Chairman

from March 1,

2024, and each

of them evaluates

segment performance based

on segment earnings

before interest, tax,

depreciation and amortization

(“EBITDA”), adjusted for

sentence (“Segment

Adjusted EBITDA”)

operating segment.

allocate once-off

defined below), stock-based compensation charges,

depreciation and amortization, impairment of goodwill or other

intangible assets,

certain lease expenses (“Lease expenses”), other items (including gains or losses on disposal of investments, fair value adjustments to

equity securities, fair

value adjustments to

currency options), interest

income, interest expense,

income tax expense

accounted investments to

our reportable segments.

Once-off items represents

non-recurring expense items,

including costs related

acquisitions and transactions consummated

or ultimately not pursued.

The Lease expenses reflect lease

expenses (refer to Note

reconciling items to reconcile the reportable segments’ Segment Adjusted

EBITDA to our loss before income tax expense.

Group Adjusted

EBITDA represents

Adjusted EBITDA

after deducting

Lease expenses

“Results of Operations—Use of Non-GAAP Measures” below.

Connect is included for the entire year to date of fiscal 2024 and 2023.

allocate once

defined below),

compensation charges,

and amortization,

adjustments to equity securities, fair value adjustments to

currency options), interest income, interest expense, income

tax expense or

loss from equity-accounted investments to our reportable segments.

Once-off items represents non-recurring expense items, including

costs related

The Stock-based

reflect stock-based compensation expense and are both excluded

from the calculation of Segment Adjusted EBITDA

and are therefore

reported as reconciling items to reconcile the reportable segments’

Segment Adjusted EBITDA to our loss before income

Effective from fiscal 2025, all lease charges are allocated to our operating segments, whereas in

fiscal 2024 we presented certain lease

charges which were previously reported on a separate

line in our Consumer and Merchant operating segments.

Operations—Use of Non-GAAP Measures” below.

We analyze our business and operations in terms of two

9 unchanged sentences

in Eliminations.

Third quarter of fiscal 2024 compared to third quarter

First quarter of fiscal 2025 compared to first quarter

of fiscal 2024

The following

a significant

of operations

third quarter

with the same period in the prior year:

Higher revenue:

in ZAR, primarily

increase in low

margin prepaid

airtime sales and

other value-added services, as well

as higher transaction, insurance and lending revenues,

which was partially offset by lower

hardware sales revenue in our POS hardware distribution business given the

lumpy nature of bulk sales;

Operating income generated:

Operating profitability

continues to improve

as a result of

the increase in

the trading activity

as noted above off of a stable selling, general and administration base;

interest charge:

interest charge

million) from

81.0 million) primarily due to higher interest rates;

Foreign exchange

stronger against

compared to the prior period, which adversely impacted our U.S.

The following factors had a significant impact on

our results of operations during the first

quarter of fiscal 2025 as compared with

the same period in the prior year:

processing fees in Merchant,

as well as higher transaction, insurance and lending revenues in Consumer, which was partially

offset by fewer low margin prepaid airtime sales;

Adumo-related

due to an increase trading activity as noted above;

Lower net interest

charge decreased

to $4.4 million

(ZAR 79.8 million)

from $4.5 million

million) primarily due to lower interest rates on our borrowings, which was partially

offset by higher over borrowings;

the prior period,

which adversely

impacted our U.S.

dollar reported

results The ZAR

was 5% stronger

dollar during

first quarter

period, which

positively impacted

reported results.

4 unchanged sentences

In United States Dollars

Three months ended March 31,

Three months ended September 30,

Cost of goods sold, IT processing, servicing and support

2 unchanged sentences

Transaction costs related to Adumo acquisition

Operating income (loss)

Loss on disposal of equity-accounted investments

Operating (loss) income

Reversal of allowance for EMI doubtful debt receivable

Interest income

Interest expense

Loss before income tax expense (benefit)

Income tax expense (benefit)

Net loss before earnings from equity-accounted investments

Earnings from equity-accounted investments

Loss before income tax expense

Income tax expense

Net loss before earnings (loss) from equity-accounted investments

Earnings (Loss) from equity-accounted investments

Net loss attributable to us

In South African Rand

Three months ended March 31,

Three months ended September 30,

Cost of goods sold, IT processing, servicing and support

2 unchanged sentences

Transaction costs related to Adumo acquisition

Operating income (loss)

Loss on disposal of equity-accounted investments

Operating (loss) income

Reversal of allowance for EMI doubtful debt receivable

Interest income

Interest expense

Loss before income tax expense (benefit)

Income tax expense (benefit)

Net loss before earnings from equity-accounted investments

Earnings from equity-accounted investments

Loss before income tax expense

Income tax expense

Net loss before earnings (loss) from equity-accounted investments

Earnings (Loss) from equity-accounted investments

Net loss attributable to us

Revenue increased

0.2 billion),

primarily due

transaction volumes processed, insurance premiums collected

and lending revenues following an increase in loan originations,

was partially offset

hardware sales in

our POS hardware

distribution business

lumpy nature of

Refer to discussion above at “—Recent Developments”

for a description of key trends impacting our revenue this quarter.

Cost of goods

sold, IT processing, servicing

and support increased

by $2.6 million

(ZAR 0.1 billion), or

Revenue increased by

$9.5 million (ZAR

78.0 million), or

6.9% (in ZAR, 3.1%

primarily due to

the increase in low

margin prepaid airtime

sales and higher

insurance-related claims, which

were partially offset

the lower cost of goods sold related to fewer hardware sales.

Selling, general and administration expenses decreased

by $1.4 million (ZAR 3.4 million),

or 5.8% (in ZAR 0.8%).

), primarily due

administration expenses,

partially offset

related expenses, higher

stock-based compensation charges

year-over-year impact of

inflationary increases on

certain expenses.

Depreciation and amortization expense

decreased by $0.2 million, or 3.1%

and in ZAR increased by

ZAR 2.2 million or 2.1%.

In the ZAR, the increase was due to an increase in depreciation expense related

to additional POS devices deployed.

Transaction costs related to Adumo

acquisition includes fees

paid to external

service providers associated

with legal, commercial,

financial and tax due diligence activities performed and other legal

and advisory services procured.

Our operating income (loss) margin for

the third quarter of fiscal 2024 and 2023 was 0.6% and(1.4)

%, respectively.

to an increase in

the volume of

business, and an

increase in insurance

premiums collected and

lending revenues following

originations, which was

airtime sales.

Developments”

trends impacting our revenue this quarter.

IT processing,

servicing and

support increased

in ZAR, decreased

primarily the

prepaid airtime

was partially

insurance-related

claims and third-party transaction fees.

administration

primarily due

employee-related expenses

(including annual

annual salary

increases) and

year-over-year

increases on certain expenses.

Depreciation and amortization expense increased by $0.4 million (ZAR 3.5 million), or 7.2%

The increase was due to an

increase in depreciation expense related to additional POS devices deployed

Transaction costs related to Adumo acquisition

includes fees paid to

external service providers associated

with legal and advisory

services procured to close the transaction on October 1, 2024.

Our operating (loss) income margin

for the first quarter of fiscal 2025 and 2024

was (0.0)% and 0.2%, respectively.

the components of operating loss margin under “—Results of operations

by operating segment.”

We did not record any changes in the fair

value of equity interests in MobiKwik and

Cell C during the third

quarter of fiscal 2024

We did not record any changes in the fair value of equity interests in MobiKwik and Cell C

during the first quarter of fiscal 2025

or 2024, respectively.

4 unchanged sentences

in the fair value calculation for Cell C.

investment in Finbond.

cash increased

higher interest rates.

Interest expense

million) from

million), primarily

lower interest

expense incurred

borrowing for

calendar 2023,

which was partially

higher overall

base interest rates

overall borrowings

during the third

quarter of fiscal 2024 compared with comparable period in the prior quarter.

Fiscal 2024 tax

expense was $0.9

million (ZAR 17.6 million)

compared to a tax

benefit of $(0.9) million

(ZAR (15.4) million)

operations, a

benefit related

to acquisition-related

intangible asset

amortization, non-deductible

expenses, the

losses incurred by certain

of our South African businesses and

the associated valuation allowances created

related to the deferred tax

assets recognized regarding net operating losses incurred by these entities.

Our effective tax

rate for fiscal 2023

was impacted by a

reduction in the enacted

South African corporate

income tax rate from

28% to 27% from January 2023 (but backdated to July 1, 2022), the tax expense recorded by our profitable South African operations,

a deferred tax

benefit related to

acquisition-related intangible asset

amortization, non-deductible expenses, the

on-going losses incurred

higher overall average cash balances on deposit during the first quarter

of fiscal 2025 compared with 2024.

Interest expense increased to $5.0

million from $4.9 million

and, in ZAR, decreased

to ZAR 90.3 million

from ZAR 91.4 million.

In ZAR, the decrease was primarily as a result of lower interest expense incurred

on certain of our borrowing for which we were able

to negotiate lower

rates of interest towards

calendar 2024, which

was partially offset

by higher overall

borrowings during

the first quarter of fiscal 2025 compared with comparable period

in the prior quarter.

effective tax rate for fiscal 2025 was impacted

by the tax expense recorded by our profitable South

African operations, a deferred tax

benefit related to acquisition-related

intangible asset amortization, non-deductible

expenses (in transaction-related expenses),

going losses incurred by

certain of our

South African businesses

and the associated

valuation allowances created related to

tax assets recognized regarding net operating losses incurred by these entities.

Our effective

expense recorded

profitable South

African operations,

deferred tax benefit related to acquisition-related intangible asset amortization, non-deductible expenses, the on-going losses incurred

by certain of our

9 unchanged sentences

results during

our fourth quarter.

entire remaining

Finbond during the

third quarter

Finbond during

below presents the relative (loss) earnings from our equity-accounted investments:

Three months ended March 31,

loss from equity-accounted investments

Three months ended September 30,

Share of net loss

income (loss) from equity-accounted investments

Results of operations by operating segment

2 unchanged sentences

In United States Dollars

Three months ended March 31,

Three months ended September 30,

Operating Segment

3 unchanged sentences

Group Adjusted EBITDA:

Lease expenses

Group Adjusted EBITDA (non-GAAP)

(1) Segment Adjusted EBITDA Consumer includes retrenchment

costs of $0.01 million for the third quarter of fiscal 2024.

(2) Lease expenses which

were previously excluded

from the calculation of

Group Adjusted EBITDA

have now been included

in the calculation.

This change is

in response to comments received from

the staff of the SEC in

March 2024 regarding our non-GAAP

financial reporting.

Comparative information has been adjusted to conform

with the updated presentation.

million and $0.06 million, respectively,

for the first quarter of fiscal 2025.

Consumer Segment Adjusted EBITDA.

The prior period has been

re-presented to conform with current

period presentation.

“—Results of Operations—

Presentation of Merchant and Consumer by segment for fiscal 2024 and 2023

including lease charges”.

(3) Group Adjusted EBITDA

4 unchanged sentences

In South African Rand

Three months ended March 31,

Three months ended September 30,

Operating Segment

3 unchanged sentences

Group Adjusted EBITDA:

Lease expenses

Group Adjusted EBITDA (non-GAAP)

(1) Segment Adjusted EBITDA

for Consumer includes retrenchment

0.1 million for the

third quarter of

(2) Lease expenses which

were previously excluded

from the calculation of

Group Adjusted EBITDA

have now been included

in the calculation.

This change is

in response to comments received from

the staff of the SEC in

March 2024 regarding our non-GAAP

financial reporting.

Comparative information has been adjusted to conform

with the updated presentation.

Adjusted EBITDA

Segment Adjusted

EBITDA Consumer

include retrenchment

million and ZAR 1.1 million, respectively,

for the first quarter of fiscal 2025.

Consumer Segment Adjusted EBITDA.

The prior period has been re-presented

to conform with current period presentation.

(3) Group Adjusted EBITDA

3 unchanged sentences

GAAP Measures”.

Segment revenue increased due to the increase in prepaid airtime vouchers

sold and other value-added services provided, which

was partially offset

hardware sales in

our POS hardware

distribution business

lumpy nature of

lower revenue

services transaction

volumes processed

international money transfers).

In ZAR, the increase in Segment Adjusted EBITDA is

primarily due to the higher sales activity, which

was partially offset by lower

hardware sales.

Connect records

a significant proportion of

its airtime sales in

revenue (see further below)

and cost of sales,

while only earning

a relatively small margin.

This significantly depresses

the Segment Adjusted

EBITDA margins

shown by the business.

Our Segment Adjusted

EBITDA margin (calculated

as Segment Adjusted EBITDA

divided by revenue) for

the third quarter of

Segment revenue

primarily increased

value-added services

provided (prepaid

and high transactions volumes from

our vault and cash

management operations resulting in higher

processing fees, which was

offset by fewer low margin prepaid airtime sales.

In ZAR, the modest decrease in Segment Adjusted EBITDA is primarily due higher

operating expenses incurred, especially employment-related expenditures, to expand

our offering, which was partially offset by

airtime sales

small margin.

significantly depresses

Adjusted EBITDA

the business.

first quarter

experience a shift

sale of pinned

prepaid airtime

and distribution of

pinless prepaid

airtime, with the

of pinned airtime sales decreasing, which results in a lower revenue

and related cost of sales, and an overall improved margin.

Adjusted EBITDA margin

(calculated as Segment

Adjusted EBITDA

divided by revenue)

for the first

fiscal 2025 and 2024 was 6.3% and 6.4%, respectively.

16 unchanged sentences

paid for upfront by the

customer and contract is

customer and contract is paid

MNOs sell prepaid products directly to their customers and also indirectly

to their customers through distribution

to their customers through distribution channels

(which include wholesalers, retailers and other parties, including ourselves).

30 unchanged sentences

merchants) as the airtime is sold by the merchant to MNOs customers (so called Pinless airtime).

insurance premiums collected and lending revenues following an increase in loan originations.

This increase in revenue has translated

into improved profitability,

which was partially

offset by higher

insurance-related claims and

higher employee-related

the year-over-year impact of inflationary increases on certain expenses.

account holders

increase in certain

issuing fee base

prices and transaction

activity in our

issuing business,

insurance premiums collected

revenues following

originations.

This increase

has translated

into improved

profitability,

partially offset

insurance-related

interest expenses

(of approximately

million) incurred

year-over-year

during fiscal

have this facility

2024, however,

have been unable

to finalize terms as

the separate lending

facility will form part

of a broader financing

Therefore, we

included an intercompany interest expense in our Consumer Segment Adjusted

EBITDA for the first quarter of fiscal 2025.

Our Segment Adjusted EBITDA margin for the

third quarter of fiscal 2024 and 2023 was 24.3%

first quarter of fiscal 2025 and 2024 was 20.9%

and 13.6%, respectively.

7 unchanged sentences

and directors’ and officers’ insurance premiums.

decreased modestly

compared with

external audit,

legal fees and

lower provision

for executive bonuses,

which was partially

higher employee

(base salary) costs,

consulting fees and

to date fiscal 2024 compared to year to date fiscal 2023

The following factors

had a significant

impact on our

results of operations

during the year

to date fiscal

2024 as compared

the same period in the prior year:

Higher revenue:

Our revenues increased 14% in

ZAR, primarily due to an increase

in low margin prepaid airtime

other value-added services, as well

as higher transaction, insurance and lending revenues,

which was partially offset by lower

hardware sales revenue in our POS hardware distribution business given the

lumpy nature of bulk sales;

profitability

various cost reduction initiatives in Consumer implemented in prior periods as well as the contribution

from Connect;

Higher net interest charge:

The net interest charge increased to

$12.8 million (ZAR 239.0 million) from

$12.1 million (ZAR

211.3 million) primarily due to higher interest

compared to the prior period, which adversely impacted our U.S.

reported results.

Consolidated overall results of operations

This discussion is based on the amounts prepared in accordance with U.S.

The following tables show the changes in the items comprising our statements of

operations, both in U.S.

dollars and in ZAR:

In United States Dollars

Nine months ended March 31,

Cost of goods sold, IT processing, servicing and support

Selling, general and administration

Depreciation and amortization

Transaction costs related to Adumo acquisition

Operating income (loss)

Reversal of allowance for EMI doubtful debt receivable

Net loss on disposal of equity-accounted investments

Interest income

Interest expense

Loss before income tax expense (benefit)

Income tax expense (benefit)

Net loss before loss from equity-accounted investments

Loss from equity-accounted investments

Net loss attributable to us

In South African Rand

Nine months ended March 31,

Cost of goods sold, IT processing, servicing and support

Selling, general and administration

Depreciation and amortization

Transaction costs related to Adumo acquisition

Operating income (loss)

Reversal of allowance for EMI doubtful debt receivable

Net loss on disposal of equity-accounted investments

Interest income

Interest expense

Loss before income tax expense (benefit)

Income tax expense (benefit)

Net loss before loss from equity-accounted investments

Loss from equity-accounted investments

Net loss attributable to us

Revenue increased by $23.4 million (ZAR 1.0 billion), or 5.9% (in ZAR, 14.1%), primarily

due to the increase in the number of

transaction volumes processed, insurance premiums collected

and lending revenues following an increase in loan

originations, which

was partially offset

hardware sales in

our POS hardware

distribution business

lumpy nature of

Cost of goods sold, IT processing, servicing and

support increased by $15.0 million (ZAR

0.7 billion), or 4.8% (in ZAR,

primarily due to

the increase in low

margin prepaid airtime

sales, which were

partially offset by

the lower cost of

goods sold related

to fewer hardware sales.

Selling, general and administration expenses decreased by $3.8 million, or 5.4%, and in ZAR increased by ZAR 23.8 million, or

was primarily

employee-related

expenses related

the expansion

management team and

the year-over-year impact of

inflationary increases on employee

-related expenses, which were

partially offset

by the benefits of various cost reduction initiatives in Consumer.

Depreciation and amortization expense decreased by $0.4 million, or 2.4%, and in ZAR increased by ZAR 16.0 million or 5.1%.

In the ZAR, the increase was due to an increase in depreciation expense related to

additional POS devices deployed.

Transaction costs related to Adumo

acquisition includes fees

paid to external

service providers associated

with legal, commercial,

financial and tax due diligence activities performed and other legal

and advisory services procured.

Our operating income (loss) margin for the year to date fiscal 2024 and 2023 was 0.8% and (2.2)%, respectively.

components of operating loss margin under “—Results of operations

by operating segment.”

did not record

any changes in the

fair value of

equity interests in MobiKwik

and Cell C during

date fiscal 2024

or 2023, respectively.

During the year to date fiscal 2024, we received an outstanding amount of $0.3

million related to the sale Carbon in fiscal 2023,

which resulted

loans receivable

million recorded

gain of $0.3 million

related to the disposal

of our entire interest

in Carbon during the

year to date fiscal

Refer to Note

unaudited condensed consolidated financial statements for additional

information regarding this disposal.

We recorded a net

comprising a loss

million related to

minor portion

in Finbond and a $0.25 million gain related to the disposal of our entire interest in Carbon during the year to

date fiscal 2023.

Note 5 to our unaudited condensed consolidated financial statements for

additional information regarding this disposal.

million) from

million), primarily

higher interest rates.

Interest expense increased

to $14.3 million

(ZAR 268.3 million)

from $13.4 million

(ZAR 233.3 million),

primarily as a

of higher overall interest rates and higher overall borrowings

during the year to date fiscal 2024 compared with

comparable period in

was partially

lower interest

expense incurred

borrowing for

able to negotiate lower rates of interest during the latter half of fiscal 2023

and again towards the end of calendar 2023.

Fiscal 2024 tax expense was $1.9 million (ZAR 35.2 million) compared to a tax benefit of $(0.5) million (ZAR (8.1) million) in

Our effective tax

rate for fiscal

2024 was impacted by

the tax expense

recorded by our profitable

South African operations,

a deferred tax

benefit related to

acquisition-related intangible asset

amortization, non-deductible expenses, the

on-going losses incurred

by certain of our

South African businesses and

the associated valuation allowances

created related to the

deferred tax assets

regarding net operating losses incurred by these entities.

Our effective tax

rate for fiscal 2023

was impacted by a

reduction in the enacted

South African corporate

income tax rate from

28% to 27% from January 2023 (but backdated to July 1, 2022), the tax expense recorded by our profitable South African operations,

a deferred tax

benefit related to

acquisition-related intangible asset

amortization, non-deductible expenses, the

on-going losses incurred

by certain of our

South African businesses and

the associated valuation allowances

created related to the

deferred tax assets recognized

regarding net operating losses incurred by these entities.

Finbond is listed on the Johannesburg Stock

Exchange and reports its six-month results during

our first half and its

annual results

during our fourth quarter.

below presents the relative (loss) earnings from our equity-accounted

Nine months ended March 31,

Share of net loss

Results of operations by operating segment

The composition of revenue and the contributions of our business activities to operating

loss are illustrated below:

Our group costs for fiscal

2025 increased compared with the prior

period due to higher employee

costs resulting from an increase

in the number of

individuals allocated to group

costs and base salary

adjustments, higher bonus

expense, travel, consulting and

Presentation of Merchant and Consumer by segment for fiscal 2024 and 2023 including lease charges

The tables below present Merchant and Consumer EBITDA for fiscal 2024

and 2023, including lease charges, as well as the

dollar/ ZAR exchange rates applicable per fiscal quarter and year:

In United States dollars

Nine months ended March 31,

Operating Segment

Consolidated revenue:

Operating segments

consolidated revenue

Group Adjusted EBITDA:

Lease expenses

Group Adjusted EBITDA (non-GAAP)

(1) Segment Adjusted EBITDA for Merchant includes retrenchments costs of $0.2 million and Consumer includes retrenchment

costs of $0.2 million for year to date fiscal 2024.

(2) Lease expenses which

were previously excluded

from the calculation of

Group Adjusted EBITDA

have now been included

in the calculation.

This change is

in response to comments received from

the staff of the SEC in

March 2024 regarding our non-GAAP

financial reporting.

Comparative information has been adjusted to conform

with the updated presentation.

(3) Group Adjusted EBITDA

is a non-GAAP measure, refer

to reconciliation below at

“—Results of Operations—Use of

GAAP Measures”.

In South African Rand

Nine months ended March 31,

Operating Segment

Consolidated revenue:

Operating segments

consolidated revenue

Income and expense items:

In United States dollars

Group Adjusted EBITDA:

Lease expenses

Group Adjusted EBITDA (non-GAAP)

retrenchments

retrenchment costs of ZAR 2.9 million for year to date fiscal 2024.

(2) Lease expenses which

were previously excluded

from the calculation of

Group Adjusted EBITDA

have now been included

in the calculation.

This change is

in response to comments received from

the staff of the SEC in

March 2024 regarding our non-GAAP

financial reporting.

Comparative information has been adjusted to conform

with the updated presentation.

(3) Group Adjusted EBITDA

is a non-GAAP measure, refer

to reconciliation below at

“—Results of Operations—Use of

GAAP Measures”.

Segment revenue increased due to the increase in prepaid

airtime vouchers sold and other value-added services provided, which

was partially offset

hardware sales in

our POS hardware

distribution business

lumpy nature of

lower revenue

services transaction

volumes processed

international money transfers).

In ZAR, the increase in Segment Adjusted EBITDA

is primarily due to the higher sales activity, which

was partially offset by lower hardware sales

Our Segment Adjusted EBITDA margin for the year

to date fiscal 2024 and 2023 was 6.8% and 7.3%, respectively.

Segment revenue increased

primarily due to

more transaction fees

generated from the

higher EPE account

holders base, higher

insurance revenues, and an increase

in lending revenue as

a result of an

increase in loan originations.

This increase in revenue,

with the cost reduction

initiatives initiated in fiscal

2022 and through

fiscal 2023, have

translated into a turnaround

in the Consumer

Division and the

realization of sustained

positive Segment Adjusted

EBITDA in year

to date fiscal 2024

compared with year

Consumer Segment Adjusted EBITDA during the year to date fiscal 2024 was also impacted by higher credit losses (as a

increase in originations)

and higher insurance-related

higher number of

insurance policies) compared

with the year to date fiscal 2023.

Our Segment Adjusted EBITDA margin for the year

to date fiscal 2024 and 2023 was 19.5% and 1.8%, respectively.

Our group costs for

fiscal 2024 decreased compared

with the prior period

due to lower external

audit, legal and consulting

and lower provision for executive bonuses, which was partially offset

by higher employee costs and travel expenses.

Income and expense items:

Use of Non-GAAP Measures

29 unchanged sentences

or ultimately

Lease expenses

previously excluded

calculation of

Group Adjusted

the calculation.

change is in response

to comments received from

the staff of the

SEC in March 2024

regarding our non-GAAP

financial reporting.

Comparative information has been adjusted to conform

with the updated presentation.

The table below presents the reconciliation between GAAP net loss attributable

1 unchanged sentence

Three months ended

Nine months ended

September 30,

Loss attributable to Lesaka - GAAP

1 unchanged sentence

Net loss before (earnings) loss from equity-accounted investments

Income tax (benefit) expense

Income tax expense

Loss before income tax expense

2 unchanged sentences

Reversal of allowance for doubtful EMI loan receivable

Net gain on disposal of equity-accounted investment

Operating income (loss)

3 unchanged sentences

Stock-based compensation charges

Interest adjustment

Once-off items

Unrealized loss FV for currency adjustments

Unrealized (gain) loss FV for currency adjustments

Group Adjusted EBITDA - Non-GAAP

2 unchanged sentences

Three months ended

Nine months ended

September 30,

Transaction costs

Transaction costs related to Adumo acquisition

(Income recognized) Expenses incurred related to closure of legacy

Indirect taxes provision

Separation of employee expense

Employee misappropriation of company funds

Total once-off

6 unchanged sentences

The transactions can span

costs related

the acquisition

number of quarters, and the transactions are generally non-recurring.

currency translation

deconsolidation of

a subsidiaries

costs incurred

in the process of

deregistering/ liquidation and

therefore we consider

these costs non-operational

and ad hoc in

Indirect tax provision

includes non-recurring indirect

taxes which have been

provided related to

prior periods following an

investigation from a tax authority.

We incurred separation costs related to the termination of certain senior-level employees, including

an executive officer and

senior managers, during the

period and we

consider these specific terminations

a non-recurring nature.

Employee misappropriation of company funds represents a once-off

loss incurred.

Liquidity and Capital Resources

As of March 31, 2024, our cash and cash equivalents were

As of September 30, 2024, our

cash and cash equivalents were $49.7

million and comprised of U.S.

dollar-denominated

$3.4 million, ZAR-denominated balances

million ($49.9 million), and

other currency deposits, primarily

Botswana pula,

dollar-denominated balances

of $2.0 million,

all amounts translated

at exchange rates

applicable as of

March 31, 2024.

The increase in

our unrestricted cash

from June 30,

2023, was primarily

positive contribution from

our Merchant and Consumer

operations and utilization

borrowings facilities

certain components

partially offset

utilization of

cash reserves

scheduled and

ZAR-denominated balances of

ZAR 791.0 million

($46.0 million), and

other currency deposits,

primarily Botswana

pula, of $1.7

million, all amounts

translated at exchange

rates applicable as of

September 30, 2024.

The decrease in

our unrestricted

cash balances from June 30, 2024, was

primarily due to the utilization of cash

reserves to fund certain scheduled and

other repayments

borrowings, purchase

and vaults, and

purchase ATMs

investment in

invest any surplus cash held by our

South African operations in overnight

working capital,

which was partially

positive contribution

Consumer operations

invest any surplus cash held by

our South African operations in overnight

call accounts that we maintain at

26 unchanged sentences

Summarized below are our short-term facilities available and utilized as of

March 31, 2024:

September 30, 2024:

RMB Facility E

6 unchanged sentences

Utilized short-term

Overdraft restricted as to

Indirect and derivative

1 unchanged sentence

South African prime rate

(1) Overdraft may only be used to fund ATMs

and upon utilization is considered restricted cash.

(1) Overdraft may only

be used to fund

and upon utilization is

considered restricted cash.

not utilize this facility

at the end of September 2024, and expect to cancel the facility in the second

quarter of fiscal 2025.

(2) Indirect and derivative facilities may only be used for guarantees, letters of credit and forward

2 unchanged sentences

Long-term borrowings

We have aggregate long-term borrowing outstanding of ZAR 2.6 billion ($135.7 million translated at

exchange rates as of March

borrowings include

long-term borrowings

September 30, 2024)

as described in Note

These borrowings

include outstanding long-term

borrowings obtained by Lesaka

ZAR 1.0 billion,

including accrued

interest, which

partially fund

the acquisition of

arrangements were amended in March 2023 to

include a ZAR 200 million revolving

credit facility.

facility during the nine

months ended March

31, 2024, and

settled all drawn

2024, with the

full balance available

for utilization

in the future.

In contemplation

of the Connect

transaction, Connect

obtained total facilities

billion, which

were utilized to

repay its existing

borrowings, to fund

its capital expenditures

and to settle

obligations under the transaction

documents, and which has subsequently been upsized for its operational requirements and has an outstanding balance as of March 31,

We have settled all drawn amounts

of September 30,

balance available for

utilization in the

contemplation of the

Connect transaction,

Connect obtained total facilities

of ZAR 1.3 billion,

which were utilized to

repay its existing borrowings,

portion of its capital

expenditures and

to settle obligations

transaction documents,

has subsequently

been upsized for

its operational

requirements and has

an outstanding balance

as of September 30,

2024, of ZAR 1.2

also have a revolving

credit facility,

300.0 million

merchant finance loans receivable book.

Restricted cash

facilities with RMB

to access cash

in South Africa.

Our cash, cash

equivalents and

restricted cash

our consolidated

2024, includes

of ZAR 300.0 million which is utilized to fund a portion of our merchant finance

loans receivable book.

On September 30, 2024, we obtained

a ZAR 665.0 million funding facility from

RMB which has been used on October 1,

to (i) settle an amount of ZAR 232.2 million due to the

Adumo sellers;

(ii) pay ZAR 207.2 million to acquire 2,601,410 shares of

common stock from

one of the Adumo

sellers’ indirect shareholders;

(iii) pay ZAR 147.5

million notified by

Investec Bank Limited

to Adumo and us as

a result of the acquisition,

(iv) pay an origination fee

of ZAR 7.6 million to

RMB and (v) pay ZAR

of transaction-related expenses.

Restricted cash

related to cash withdrawn from our debt facility to

This cash may only be used to fund ATMs and is considered restricted

as to use and therefore is classified as restricted cash on our consolidated

balance sheet.

September 30, 2024,

credit facilities

order to access

fund our ATMs in South

of this facility is included in our cash, cash equivalents

and restricted cash presented in our consolidated statement

of cash flows.

considered restricted as to use and therefore is classified as restricted cash on

our consolidated balance sheet.

also entered into cession and pledge

10 unchanged sentences

cash presented in our consolidated

statement of cash flows as of March 31, 2024, includes restricted cash of $0.1 million

that has been ceded and pledged.

statement of cash flows as of September 30, 2024, includes restricted cash of

$0.1 million that has been ceded and pledged.

Arrangement with African Bank to fund our ATMs

cash-in-transit

service providers

arrangement, African

cash resources

specifically recorded that the cash in our ATMs are African Bank’s property.

as we have not utilized a facility to obtain the

cash, and do not own or control the cash for an extended period

of time, we do not record cash or cash equivalents and borrowings

consolidated statement

Cash withdrawn

EPE customers

consumers are

settled through the interbank settlement

system from the ATM

users bank account to African

service provided

which is calculated

the cumulative

daily outstanding

cash utilized

multiplied by the South African prime interest rate

exposed to the risk of cash lost while it is in our

theft) and are required to repay African Bank for any shortages.

Cash flows from operating activities

Third quarter

Net cash provided by

operating activities during the

third quarter of fiscal

2024 was $19.2 million

(ZAR 362.1 million) compared

to net cash used in operating

activities of $5.1 million (ZAR 91.6

million) during the third quarter of

Excluding the impact

processing activities

impacted by a

public holiday

settled in the

following week.

We didn’t pay any significant taxes during the

third quarter of fiscal

During the third quarter

of fiscal 2023, we

provisional South African

tax payments of $0.3

million (ZAR 5.1

million) related to certain

First quarter

used operating

activities during

73.3 million)

cash provided by operating activities

of $3.4 million (ZAR 63.1

million) during the first quarter

of fiscal 2024.

Excluding the

of income taxes, our cash used in operating activities during the first quarter of fiscal 2025 includes cash utilized for the settlement of

settled in the following week (our fourth quarter of

fiscal 2024 closed on a Sunday), and the

net growth in our consumer and merchant

Consumer businesses.

We didn’t pay

any significant taxes during the first quarter of fiscal 2025.

During the first quarter of fiscal 2024, we paid second

provisional South

African tax payments

of $- million

(ZAR - million)

related to certain

Connect entities’ 2024

tax year that had

not yet been aligned with ours.

Taxes paid during

the third quarter of fiscal 2024 and 2023 were as follows:

Three months ended March 31,

First provisional payments

Second provisional payments

Tax refund received

Total South African

Foreign taxes paid

Net cash provided by operating activities during the year to

date of fiscal 2024 was $23.1 million (ZAR 434.0 million)

to net cash used

in operating activities of

$9.3 million (ZAR 162.7 million)

during the year to

date of fiscal 2023.

Excluding the impact

processing activities

impacted by a

public holiday

settled in the

following week.

During the year to date of

fiscal 2024, we paid first provisional

South African tax payments of

$2.7 million (ZAR 49.5 million)

related to our 2024 tax year and South African tax

payments related to prior years of $0.6

million (ZAR 12.2 million).

During the year

to date of fiscal 2023, we paid first provisional South African

tax payments of $3.0 million (ZAR 50.8 million) related to our 2023 tax

and additional

second provisional

South African

and as discussed above.

Taxes paid during

the year to date of fiscal 2024 and 2023 were as follows:

Nine months ended March 31,

First provisional payments

Second provisional payments

tax year that

yet been aligned with ours.

Taxes (refunded)

paid during the first quarter of fiscal 2025 and 2024 were as follows:

Three months ended September 30,

Taxation paid related

3 unchanged sentences

Foreign taxes paid

tax (refund) paid

Cash flows from investing activities

Third quarter

activities for

capital expenditures

First quarter

million), primarily due to the acquisition of vaults and POS devices

activities for

million), primarily due to

the acquisition of vaults and

During the third quarter of

fiscal 2023, we received proceeds

$0.3 million related to the sale of minor positions in Finbond.

activities for

included capital

expenditures of

million), primarily due

to the acquisition

of vaults and

the year to date

of fiscal 2024,

we received proceeds

related to the

sale of remaining

interest in Finbond

and $0.25 million

related to the

second (and final)

tranche from the

disposal of our entire equity interest in Carbon.

activities for

2023 included

capital expenditures

million (ZAR 229.9

million), primarily

the acquisition

received proceeds

million related

first tranche

equity interest

$0.4 million related to the sale of minor positions in Finbond.

million), primarily due to the acquisition of vaults.

Cash flows from financing activities

Third quarter

During the third

quarter of fiscal 2024

we utilized $24.9 million

from our South

African overdraft facilities

First quarter

first quarter of

fiscal 2025, we

utilized $23.9

our South African

overdraft facilities

and our cash management business through Connect, and repaid

5 unchanged sentences

working capital requirements.

During the third quarter of fiscal 2023,

we utilized $128.2 million from our South African overdraft facilities to fund

cash management business

through Connect,

and repaid $136.0

million of those

utilized approximately

million of our long-term borrowings to fund our merchant

finance loans receivable business, to fund the acquisition

of certain capital

expenditures and for working

capital requirements.

We repaid approximately $2.0 million of long-term borrowings

in accordance with

our repayment schedule.

received $0.1 million from the exercise of stock options.

also paid $0.2 million to repurchase shares

from employees in order for the employees to settle taxes due related to the vesting of shares of restricted stock and to settle the strike

price due and taxes due related to the exercise of stock options.

During the year to date

of fiscal 2024, we utilized

$153.5 million from our

South African overdraft facilities to

fund our ATMs

cash management

first quarter of

we utilized $59.6

our South African

overdraft facilities

business through

repaid $172.2

those facilities.

utilized $14.4

long-term borrowings

the acquisition

capital expenditures

working capital

requirements.

million of long-term borrowings

in accordance with

our repayment schedule as

approximately

million of our long-term borrowings

to fund the acquisition of

certain capital expenditures and

for working capital requirements.

repaid approximately

$2.6 million of

long-term borrowings in

accordance with our

repayment schedule as

settle a portion

of our revolving

credit facility

also paid $0.2

million to repurchase

shares from employees

the employees to

settle taxes due

related to the

vesting of shares of restricted stock.

During the year to date

of fiscal 2023, we utilized

$441.5 million from our South

African overdraft facilities to fund

cash management business

through Connect,

and repaid $448.3

million of those

utilized approximately

million of our long-term borrowings to fund our merchant

finance loans receivable business, to fund the acquisition

of certain capital

expenditures and for working

capital requirements.

We repaid approximately $5.3 million of long-term borrowings

in accordance with

our repayment schedule.

received $0.4 million from the exercise of stock options.

also paid $0.5 million to repurchase shares

from employees in order for the employees to settle taxes due related to the vesting of shares of restricted stock and to settle the strike

price due and taxes due related to the exercise of stock options.

of our revolving credit facility utilized.

Off-Balance Sheet Arrangements

3 unchanged sentences

expect capital

include spending

for acquisition

spending for the

second quarter of

to primarily include

spending for acquisition

of POS devices,

computer software, computer and office equipment, as well as for

our ATM infrastructure and branch network in South Africa.

Our capital expenditures for the third quarter of fiscal 2024 and 2023 are discussed under “—Liquidity

and Capital Resources—Cash

Our capital expenditures for

the first quarter of fiscal

and 2024 are discussed under

“—Liquidity and Capital Resources

flows from investing activities.” All

8 unchanged sentences

capital commitments

of March 31, 2023, of $0.2 million.

expect to fund these expenditures through internally generated funds and available

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis