LESAKA TECHNOLOGIES INC 10-Q/A

Item 2. 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 ended June 30, 2024, and the unaudited condensed consolidated financial statements and the accompanying notes included in this Form 10-Q. U.S. securities laws require that when we publish any non-GAAP measures, we disclose the reason for using these non-GAAP measures and provide reconciliations to the most directly comparable GAAP measures. We discuss why we consider it useful to present these non -GAAP measures and the material risks and limitations of these measures, as well as a reconciliation of these non- GAAP measures to the most directly comparable GAAP financial measure below at “—Results of Operations—Use of Non-GAAP Measures” below. Restatement As previously described in the Explanatory Note above and in Note 1 to our unaudited condensed consolidated financial statements, we have restated our previously issued unaudited condensed consolidated financial statements and related notes as of September 30, 2024, and for the three months ended September 30, 2024. As a result, the previously reported financial information as of and for the three months ended September 30, 2024 in this Item 2, Management’s Discussion and Analysis of Financial Condition and Results of Operations has been updated to reflect the relevant restatement. Refer to Note 1 in our unaudited condensed consolidated financial statements for additional information related to the restatement, including descriptions of the adjustments and the impacts on our unaudited condensed consolidated financial statements. Other than the effect of the restatement as described in Note 1 in our unaudited condensed consolidated financial statements, this section has not been otherwise modified and does not reflect any information or events occurring after November 6, 2024, the filing date of the Original Filing, or modify or update those disclosures affected by events that occurred at a later date or facts that subsequently became known to the Company, except to the extent they are otherwise required to be included and discussed herein. Forward-looking statements Some of the statements in this Form 10-Q constitute forward-looking statements. These statements relate to future events or our future financial performance and involve known and unknown risks, uncertainties and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed, implied or inferred by these forward-looking statements. Such factors include, among other things, those listed under Item 1A.—“Risk Factors” in our Annual Report on Form 10-K for the year ended June 30, 2024. In some cases, you can identify forward-looking statements by terminology such as “may”, “will”, “should ”, “could”, “would”, “expects”, “plans”, “intends”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of such terms and other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements are reasonable, we do not know whether we can achieve positive future results, levels of activity, performance, or goals. Actual events or results may differ materially. We undertake no obligation to update any of the forward-looking statements after the date of this Form 10-Q to conform those statements to reflect the occurrence of unanticipated events, except as required by applicable law. You should read this Form 10-Q and the documents that we reference herein and the documents we have filed as exhibits hereto and thereto and which we have filed with the United States Securities and Exchange Commission (“SEC”) completely and with the understanding that our actual future results, levels of activity, performance and achievements may be materially different from what we expect. We qualify all of our forward-looking statements by these cautionary statements. Recent Developments Our mission at Lesaka is driven by a purpose to provide financial services and software to Southern Africa’s underserviced consumers (B2C) and merchants (B2B), improving people’s lives and increasing financial inclusion in the markets in which we operate. We offer a wide range of integrated payment solutions including transactional accounts (banking), lending, insurance, payouts, cash management solutions, card acceptance, supplier payments, software services and bill payments. By providing a full-service 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. Revenue 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 billion) in 2024. Operating loss of $0.05 million (ZAR 0.3 million) includes the impact of $1.7 million (ZAR 30.0 million) one-off Adumo transaction costs. We reported a net loss attributable to the company of $4.5 million (ZAR 81.0 million) during the first quarter of fiscal 2025 compared with a net loss of $5.7 million (ZAR 105.6 million) during the first quarter of fiscal 2024. 37 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 is a non- GAAP measure, refer to reconciliation below at “—Results of Operations —Use of Non-GAAP Measures”. We continue to broaden our product proposition and solve for both consumer and merchant pain-points. Merchant Division The year-on-year performance in our Merchant Division (“Merchant”) is supported by the robust secular trends underpinning financial inclusion, cash management and digitalization to empower micro-merchants, merchants and enterprise clients to transact efficiently and fulfill their potential. Performance in Merchant has been driven by: Our VAS and supplier payments business continues to see adoption by micro -merchants. Fiscal quarter ended September 30, Q1 2025 Q1 2024 Q1 2023 2025 vs. 2024 2 year CAGR % Approximate number of devices in deployment 1 89,040 77,000 57,000 16% 25% Total Throughput for the quarter (ZAR billions) 9.9 7.2 5.9 38% 30% Throughput for the quarter international money transfers (“IMT”) (ZAR billions) 1.3 0.3 1.6 333% (10%) Throughput for the quarter supplier payments (ZAR billions) 3.2 2 0.6 60% 131% Total throughput for the quarter excluding IMT and supplier payments (ZAR billions) 5.4 4.9 3.7 10% 21% 1. 2025 includes approximately 5,430 devices attributable to the acquisition of Touchsides, effective May 1, 2024, which are not enabled for VAS and supplier payments on the Kazang platform. ● We had approximately 89,040 devices deployed at September 30, 2024, representing a 16% year-on-year growth compared to approximately 77,000 devices as of September 30, 2023, and a 2-year CAGR of 25% compared to September 30, 2022. This includes approximately 5,430 devices in Touchsides sites that are not yet enabled for VAS and supplier payments on the Kazang platform. ● Core 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 growth and margin per device. ● VAS 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 is an important part of the micro -merchant ecosystem we are developing as part of our strategy to provide a holistic offering to micro-merchants in informal markets. ● VAS throughput, excluding IMT and supplier payments increased 10% to R5.4 billion. Our supplier payments throughput increased by 60% year on year to R3.2 billion as we added further suppliers onto our platform. The international money transfer throughput recovered significantly and is approaching the levels from quarter one fiscal 2022. Our card acceptance solutions to micro-merchants is through Kazang Pay and to merchants through Card Connect. Fiscal quarter ended September 30, Q1 2025 Q1 2024 Q1 2023 2025 vs. 2024 2 year CAGR % Approximate number of devices in deployment 1 53,450 46,600 27,700 15% 39% Total Throughput for the quarter (ZAR billions) 4.3 3.6 2.3 18% 36% ● The trend towards digital payments continued year on year with a 15% increase in devices and a 18% increase in throughput to R4.2 billion for the quarter 38 Our lending solutions offered to merchants through Capital Connect in the merchant market. Fiscal quarter ended September 30, Q1 2025 Q1 2024 Q1 2023 2025 vs. 2024 2 year CAGR % Total credit disbursed (ZAR millions) 166 196 226 (15%) (14%) Total net loan book size at period end (ZAR millions) 273 285 274 (4%) 0% Capital Connect credit disbursed (ZAR millions) 166 173 190 (4%) (7%) Capital Connect loan book size at period end (ZAR millions) 273 280 254 (3%) 4% Kazang Pay Advance credit disbursed (ZAR millions) 0 23 36 n/m n/m Kazang Pay Advance loan book size at period end (ZAR millions) 0 5 20 n/m n/m ● 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 to a year ago. We 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. ● With a more positive political environment, the suspension of load-shedding and hopefully the start of an interest rate down cycle, we are more optimistic this business can resume a growth trend reflective in the 8% increase in Capital Connect disbursements this quarter compared to ZAR 154 million a quarter ago (quarter four fiscal 2024.) ● Capital Connect’s lending proposition is an important component in enabling the merchants we serve to compete and grow. Since inception, Capital Connect has distributed more than ZAR 3 billion of funding to merchants and can provide 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 with respect to this offering with it now in live pilot phase. We are monitoring payment behavior on a 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, Q1 2025 Q1 2024 Q1 2023 2025 vs. 2024 2 year CAGR % Approximate number of devices in deployment 1 4,480 4,400 4,200 2% 3% Cash settlements (throughput) for the quarter (ZAR billions) 28.7 27.6 27.5 4% 2% o Our cash business remains a vital product in our merchant offering and is a key differentiator for us in the digitalization of cash. We 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 mitigate their operational risks pertaining to cash management and security. o Whilst there is trend towards digital payments, cash remains as the most significant portion of retail transactions especially in informal markets. This business is primarily exposed to the mid-market SMEs, a sector which has 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 In our Consumer Division we offer transactional accounts (banking), insurance, lending and payments solutions designed to improve the lives of historically underserviced consumers and continue to deliver against our strategic focus areas underpinning our growth strategy. Progress made on these levers: (i) growing active EasyPay Everywhere (“EPE”) account numbers; (ii) increasing average revenue per user (“ARPU”) through cross-selling; (iii) cost optimization; 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. 39 Consumer Fiscal quarter ended September 30, Q1 2025 Q1 2024 Q1 2023 2025 vs. 2024 Transactional accounts (banking) - EasyPay Everywhere ("EPE") Total active EPE transactional account base at quarter end (millions) 1.5 1.3 1.2 14% Total active EPE transactional account base at quarter end - Permanent grant recipients (millions) 1.3 1.1 1.1 18% Approximate Gross EPE account activations for the quarter -Permanent grant recipients (number) 62,000 76,000 45,000 (19%) Approximate Net EPE account activations for the quarter - Permanent grant recipients (number) 26,000 42,000 3,000 (39%) Lending - EasyPay Loans Approximate number of loans originated during the quarter (number) 286,000 222,000 198,000 28% Gross advances in the quarter (ZAR millions) 451 353 289 28% Loan book size, before allowances, at quarter end 1 (ZAR millions) 564 423 351 34% Insurance - EasyPay Insurance Approximate number of insurance policies written in the quarter (number) 49,000 38,000 25,000 29% Total active insurance policies on book at quarter end (number) 466,000 359,000 268,000 30% Average revenue per customer per month, as of September 30, (permanent grant beneficiaries) (ZAR) 91 83 71 10% 1. Gross loan book, before provisions. ● Driving customer acquisition o Gross EPE account activations, continue to grow at the new levels for the permanent base, post our marketing and distribution network enhancements in fiscal 2024. We achieved approximately 62,000 gross account activations in 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 quarter driven by concerns around its going concern status and its failure to timeously distribute grants timeously. Net activations of 26,000 in the quarter was negatively impacted by the closure of the SASSA ( South African Social Security Agency) digital portal for switching. o Our total active EPE transactional account base stood at approximately 1.5 million at the end of September 2024, of which approximately 1.3 million (or approximately 88%) are permanent grant recipients. The balance comprises Social Relief of Distress (“SRD”) grant recipients, which was introduced during the COVID pandemic and extended in calendar year 2023. o Our priority is to grow our permanent grant recipient customers base, where we can build deeper relationships by offering 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. ● Progress on cross selling EasyPay Loans o We originated approximately 286 000 loans during the quarter, with our consumer loan book, before allowances (“gross book”), increasing 34% to ZAR 564 million as of September 30, 2024, compared to ZAR 423 million as of September 30, 2023. o We have not amended our credit scoring or other lending criteria, and the growth is reflective of the demand for our tailored loan product for this market, growth in EPE bank account customer base and improved cross-selling capabilities. o The loan conversion rate continues to improve following the implementation of a number of targeted Consumer lending campaigns and encouraging results from our digital channels. o The portfolio loss ratio of approximately 6%, calculated as the loans written off over the last 12 months as a 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. 40 EasyPay Insurance o Our insurance product sales continue to grow and is a material contributor to the improvement in our overall ARPU. We have been able to improve customer penetration to 34% of our active permanent grant account base as of September 30, 2024, compared to 31% as of September 30, 2023. Approximately 49,000 new policies were written in the quarter, compared to approximately 38,000 in the comparable period in fiscal 2024. The total number of active policies has grown 30% to approximately 466,000 policies as of September 30, 2024, compared to 359,000 policies as of September 30, 2023. o In April 2024 we launched a new benefit where existing policyholders and new clients could elect to cover up to six of their dependent family members with cover ranging from ZAR 5 000 to ZAR 30 000. Since the launch of this benefit more than 25 00 clients have elected to cover their dependent family members. ARPU o ARPU for our permanent client base has increased to approximately ZAR 91 for the first quarter of fiscal 2025, from approximately ZAR 83 in the first quarter of fiscal 2024. Adumo Payouts o On 1 October the Adumo Payouts business officially became part of the Consumer Division. We are looking forward to working with them as we build out the Consumer offering beyond the grant recipient space. The Adumo contribution will be reflected in our quarter two fiscal 2025 results. Board and Leadership Changes in quarter one fiscal 2025 Leadership changes On October, 1 2024 Dan Smith was appointed as Group Chief Financial Officer taking over these responsibilities from Naeem Kola, who transitioned to Group Chief Operating Officer. Mr. Smith was also appointed to the Board. As Lesaka scales, we will continue to augment our executive capability to accommodate the growing size of the business and deliver on the opportunity in front of us. Paul Kent, the CEO of Adumo, joined the Lesaka executive team on completion of the Adumo transaction to oversee the Merchant pillar within Lesaka’s Merchant Division. 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 On October 1, 2024, we announced the closing of the Adumo transaction which enhances our platform, adding customers and products, as well as scale. The completion of this transaction marks the beginning of a new chapter in the Lesaka story. Adumo will be included in our results for the full second quarter of fiscal 2025. Going forward Lesaka will be run in four distinct pillars The Adumo transaction is the catalyst to approach the market with a more customer -centric operating model. From a financial reporting standpoint, we will continue to maintain the Consumer Division and Merchant Division split however we will present our 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 Payouts business. In our Merchant segment, the Adumo transaction provides the opportunity to segment the business into three component parts organized around distinct customers. Micro-Merchant, Merchant and Enterprise. Micro-merchants are typically sole proprietors, often operating in the informal economy. We address these customers through the Kazang and Touchsides brands. In South Africa the focus will be to augment the product offering and cross-sell to existing customers so that we can materially improve the unit economics, as we have been doing. Outside of South Africa, in neighboring geographies, there are a substantial number of sole traders who have very limited offerings available to them to empower them on their digital journey. Here we have an opportunity again to expand our total addressable market through wallet growth. 41 The Merchant pillar is made up of the existing Connect operations, as well as the bulk of Adumo, specifically its merchant acquiring and processing business and its GAAP hospitality platform. The Connect business has cash and credit as key product offerings, the Adumo business has merchant acquiring and software at point of sale. Combined 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 on large corporates, mobile network operators, banks, governments and municipalities. Our 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 Our unaudited condensed consolidated financial statements have been prepared in accordance with U.S. GAAP, which requires management to make estimates and assumptions about future events that affect the reported amount of assets and liabilities and disclosure of contingent assets and liabilities. As future events and their effects cannot be determined with absolute certainty, the determination of estimates requires management’s judgment based on a variety of assumptions and other determinants such as historical experience, current and expected market conditions and certain scientific evaluation techniques. Critical accounting policies are those that reflect significant judgments or uncertainties and may potentially result in materially different results under different assumptions and conditions. We have identified the following critical accounting policies that are described in more detail in our Annual Report on Form 10-K for the year ended June 30, 2024: ● Business Combinations and the Recoverability of Goodwill; ● Intangible Assets Acquired Through Acquisitions; ● Revenue recognition – principal versus agent considerations; ● Valuation of investment in Cell C; ● Recoverability of equity securities and equity-accounted investments; ● Deferred Taxation; ● Stock-based Compensation; ● Accounts Receivable and Allowance for Doubtful Accounts Receivable; and ● Lending. Recent accounting pronouncements adopted Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description of accounting pronouncements adopted, including the dates of adoption and the effects on our unaudited condensed consolidated financial statements. Recent accounting pronouncements not yet adopted as of September 30, 2024 Refer to Note 1 to our unaudited condensed consolidated financial statements for a full description of recent accounting pronouncements not yet adopted as of September 30, 2024, including the expected dates of adoption and effects on our financial condition, results of operations and cash flows. Currency Exchange Rate Information Actual exchange rates The actual exchange rates for and at the end of the periods presented were as follows: Table 1 Three months ended Year ended September 30, June 30, 2024 2023 2024 ZAR : $ average exchange rate 17.9601 18.6457 18.7070 Highest ZAR : $ rate during period 18.5100 19.2202 19.4568 Lowest ZAR : $ rate during period 17.1144 17.6278 17.6278 Rate at end of period 17.1808 18.9236 18.1808 42 Translation exchange rates for financial reporting purposes We are required to translate our results of operations from ZAR to U.S. dollars on a monthly basis. Thus, the average rates used to translate this data for the three months ended September 30, 2024 and 2023, vary slightly from the averages shown in the table above. Except as described below, the translation rates we use in presenting our results of operations are the rates shown in the following table: Three months ended Year ended Table 2 September 30, June 30, 2024 2023 2024 Income and expense items: $1 = ZAR 17.7176 18.7088 18.6844 Balance sheet items: $1 = ZAR 17.1808 18.9236 18.1808 We have translated the results of operations and operating segment information for the three months ended September 30, 2024 and 2023, provided in the tables below using the actual average exchange rates per month (i.e. for each of July 2024, August 2024, 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 operating decision maker. The impact of using this method compared with the average rate for the quarter and year to date is not significant, however, it does result in minor differences. We believe that presentation using the average exchange rates per month compared with the average exchange rate per quarter and year to date improves the accuracy of the information presented in our external financial reporting and leads to fewer differences between our external reporting measures which are supplementally presented in ZAR, and our internal management information, which is also presented in ZAR. Results of Operations The discussion of our consolidated overall results of operations is based on amounts as reflected in our unaudited condensed consolidated financial statements which are prepared in accordance with U.S. GAAP. We analyze our results of operations both in U.S. dollars, as presented in the unaudited condensed consolidated financial statements, and supplementally in ZAR, because ZAR is the functional currency of the entities which contribute the majority of our results and is the currency in which the majority of our transactions are initially incurred and measured. Presentation of our reported results in ZAR is a non-GAAP measure. Due to the significant impact of currency fluctuations between the U.S. dollar and ZAR on our reported results and because we use the U.S. dollar as our reporting currency, we believe that the supplemental presentation of our results of operations in ZAR is useful to investors to understand the changes in the underlying trends of our business. 43 Our operating segment revenue presented in “—Results of operations by operating segment” represents total revenue per operating segment before intercompany eliminations. A reconciliation between total operating segment revenue and revenue, as well as the reconciliation between our segment performance measure and net loss before tax (benefits) expense, is presented in our unaudited condensed consolidated financial statements in Note 17 to those statements. Our chief operating decision maker is our Executive Chairman and he evaluates segment performance based on segment earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for items mentioned in the next sentence (“Segment Adjusted EBITDA”) for each operating segment. We do not allocate once -off items (as defined below), stock-based compensation charges, depreciation and amortization, impairment of goodwill or other intangible assets, 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 or loss from equity-accounted investments to our reportable segments. Once-off items represents non-recurring expense items, including costs related to acquisitions and transactions consummated or ultimately not pursued. The Stock-based compensation adjustments 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 tax expense. Effective from fiscal 2025, all lease charges are allocated to our operating segments, whereas in fiscal 2024 we presented certain lease charges on a separate line outside of our operating segments. Prior period information has been re-presented to include the lease charges which were previously reported on a separate line in our Consumer and Merchant operating segments. Group Adjusted EBITDA represents Segment Adjusted EBITDA after deducting group costs. Refer also “Results of Operations—Use of Non-GAAP Measures” below. We analyze our business and operations in terms of two inter-related but independent operating segments: (1) Merchant Division and (2) Consumer Division. In addition, corporate activities that are impracticable to allocate directly to the operating segments, as well as any inter-segment eliminations, are included in Group costs. Inter-segment revenue eliminations are included in Eliminations. First quarter of fiscal 2025 compared to first quarter of fiscal 2024 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: ● Higher revenue: Our revenues increased 0% in ZAR, primarily due to an increase in value-added services activity, higher low margin prepaid airtime sales and processing fees in Merchant, as well as higher transaction, insurance and lending revenues in Consumer; ● Operating income improvement, before transaction costs: Operating income, before Adumo-related transaction costs, increased due to an increase trading activity as noted above; ● Lower net interest charge: Net interest charge decreased to $4.4 million (ZAR 79.8 million) from $4.5 million (ZAR 83.1 million) primarily due to lower interest rates on our borrowings, which was partially offset by higher over borrowings; and ● Foreign exchange movements: The U.S. dollar was 5% stronger against the ZAR during the first quarter of fiscal 2025 compared to the prior period, which adversely impacted our U.S. dollar reported results The ZAR was 5% stronger against the U.S. dollar during first quarter of fiscal 2025 compared to the prior period, which positively impacted our U.S. dollar reported results. 44 Consolidated overall results of operations This discussion is based on the amounts prepared in accordance with U.S. GAAP. The following tables show the changes in the items comprising our statements of operations, both in U.S. dollars and in ZAR: Table 3 In United States Dollars Three months ended September 30, 2024 2023 (As restated) (A) (As restated) (A) $ ’000 $ ’000 % change Revenue 153,568 136,089 13% Cost of goods sold, IT processing, servicing and support 118,909 107,490 11% Selling, general and administration 26,726 22,515 19% Depreciation and amortization 6,276 5,856 7% Transaction costs related to Adumo acquisition 1,702 - nm Operating (loss) income (45) 228 nm Reversal of allowance for EMI doubtful debt receivable - 250 nm Interest income 586 449 31% Interest expense 5,032 4,909 3% Loss before income tax expense (4,491) (3,982) 13% Income tax expense 78 264 (70%) Net loss before earnings (loss) from equity-accounted investments (4,569) (4,246) 8% Earnings (Loss) from equity-accounted investments 27 (1,405) nm Net loss attributable to us (4,542) (5,651) (20%) (A) Revenue and cost of goods sold, IT processing, servicing and support for the three months ended September 30, 2024, have been restated and increased by $8.0 million to correct the misstatements discussed in Note 1 to the unaudited condensed consolidated statement of operations. Table 4 In South African Rand Three months ended September 30, 2024 2023 (As restated) (A) (As restated) (A) ZAR ’000 ZAR ’000 % change Revenue 2,756,877 2,537,659 9% Cost of goods sold, IT processing, servicing and support 2,134,828 2,004,465 7% Selling, general and administration 479,677 419,861 14% Depreciation and amortization 112,660 109,166 3% Transaction costs related to Adumo acquisition 29,997 - nm Operating (loss) income (285) 4,167 nm Reversal of allowance for EMI doubtful debt receivable - 4,741 nm Interest income 10,517 8,368 26% Interest expense 90,328 91,429 (1%) Loss before income tax expense (80,096) (74,153) 8% Income tax expense 1,402 4,825 (71%) Net loss before earnings (loss) from equity-accounted investments (81,498) (78,978) 3% Earnings (Loss) from equity-accounted investments 475 (26,657) nm Net loss attributable to us (81,023) (105,635) (23%) (A) Revenue and cost of goods sold, IT processing, servicing and support for the three months ended September 30, 2024, have been restated and increased by ZAR 141.2 million to correct the misstatements discussed in Note 1 to the unaudited condensed consolidated statement of operations. Revenue increased by $17.5 million (ZAR 219.2 million), or 12.8% (in ZAR, 8.6%), primarily due to an increase in the volume of value-added services provided (prepaid airtime and gaming), high transactions volumes from our vault and cash management operations resulting in higher processing fees, an increase in certain issuing fee base prices and transaction activity in our issuing business, an increase in low margin prepaid airtime sales and an increase in insurance premiums collected and lending revenues following higher loan originations. 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 $11.4 million (ZAR 130.4 million) or 10.6% ( 6.5%), primarily due to the increase in low margin prepaid airtime sales, higher insurance-related claims and third-party transaction fees. 45 Selling, general and administration expenses increased by $4.2 million (ZAR 59.8 million), or 18.7% (in ZAR 14.2%). The increase was primarily due to higher employee-related expenses (including annual bonuses and annual salary increases) and higher stock-based compensation charges; higher consulting, legal and travel expenses, and the year-over-year impact of inflationary increases on certain expenses. Depreciation and amortization expense increased by $0.4 million (ZAR 3.5 million), or 7.2% (3.2%). 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. We discuss 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 first quarter of fiscal 2025 or 2024, respectively. We continue to carry our investment in Cell C at $0 (zero). Refer to Note 4 for the methodology and inputs used in the fair value calculation for Cell C. Interest on surplus cash increased to $0.6 million (ZAR 10.5 million) from $0.4 million (ZAR 8.4 million), primarily due to 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 the end of 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. Fiscal 2025 tax expense was $0.1 million (ZAR 1.4 million) compared to $0.3 million (ZAR 4.8 million) in fiscal 2024. Our 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), 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. 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 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 quarter and its annual results during our fourth quarter. We sold our entire remaining interest in Finbond during the first quarter of fiscal 2024. The table below presents the relative (loss) earnings from our equity-accounted investments: Table 5 Three months ended September 30, 2024 2023 $ % $ ’000 $ ’000 change Finbond - (1,445) nm Share of net loss - (278) nm Impairment - (1,167) nm Other 27 40 (33%) Total income (loss) from equity-accounted investments 27 (1,405) nm 46 Results of operations by operating segment The composition of revenue and the contributions of our business activities to operating loss are illustrated below: Table 6 In United States Dollars Three months ended September 30, 2024 (As restated) (A) % of total 2023 % of (As restated) (A) (As restated) (A) Operating Segment $ ’000 $ ’000 total % change Consolidated revenue: Merchant (A) 133,283 86% 121,361 89% 10% Consumer 21,072 14% 15,580 11% 35% Subtotal: Operating segments 154,355 100% 136,941 100% 13% Eliminations (787) - (852) - (8%) Total consolidated revenue (A) 153,568 100% 136,089 100% 13% Group Adjusted EBITDA: Merchant (1)(2) 7,916 84% 7,725 96% 2% Consumer (1)(2) 4,396 47% 2,120 26% 107% Group costs (2,949) (31%) (1,822) (22%) 62% Group Adjusted EBITDA (non-GAAP) 9,363 100% 8,023 100% 17% (A) Revenue has been restated and increased by $8.0 million to correct the misstatements discussed in Note 1 to the unaudited condensed consolidated statement of operations. (1) Segment Adjusted EBITDA Merchant and Segment Adjusted EBITDA Consumer include retrenchment costs of $0.01 million and $0.06 million, respectively, for the first quarter of fiscal 2025. (2) Lease expenses which were previously presented on a separately line in fiscal 2024 are now included in Merchant and Consumer Segment Adjusted EBITDA. The prior period has been re-presented to conform with current period presentation. See also “—Results of Operations— Presentation of Merchant and Consumer by segment for fiscal 2024 and 2023 including lease charges”. (3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non- GAAP Measures”. Table 7 In South African Rand Three months ended September 30, 2024 % of 2023 % of (As restated) (A) (As restated) (A) Operating Segment ZAR ’000 total ZAR ’000 total % change Consolidated revenue: Merchant (A) 2,393,012 87% 2,263,001 89% 6% Consumer 378,063 14% 290,629 11% 30% Subtotal: Operating segments 2,771,075 101% 2,553,630 100% 9% Eliminations (14,198) (1%) (15,971) - (11%) Total consolidated revenue (A) 2,756,877 100% 2,537,659 100% 9% Group Adjusted EBITDA: Merchant (1)(2) 142,078 84% 143,910 96% (1%) Consumer (1)(2) 78,681 47% 39,612 26% 99% Group costs (52,654) (31%) (33,980) (22%) 55% Group Adjusted EBITDA (non-GAAP) 168,105 100% 149,542 100% 12% (A) Revenue has been restated and increased by ZAR 141.2 million to correct the misstatements discussed in Note 1 to the unaudited condensed consolidated statement of operations. (1) Segment Adjusted EBITDA Merchant and Segment Adjusted EBITDA Consumer include retrenchment costs of ZAR 0.2 million and ZAR 1.1 million, respectively, for the first quarter of fiscal 2025. (2) Lease expenses which were previously presented on a separately line in fiscal 2024 are now included in Merchant and Consumer Segment Adjusted EBITDA. The prior period has been re-presented to conform with current period presentation. (3) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non- GAAP Measures”. 47 Merchant Segment revenue primarily increased due to a higher volume of value-added services provided (prepaid airtime and gaming), higher low margin prepaid airtime sales and high transactions volumes from our vault and cash management operations resulting in higher processing fees. 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 higher gross margin (calculated as revenue less cost of goods sold, IT processing, servicing and support). We record a significant proportion of our 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 first quarter of fiscal 2025 and 2024 was 5.9% and 6.4%, respectively. Prepaid airtime sales In South Africa and other countries, mobile network operators (“MNOs”) offer prepaid or contract (or postpaid) services to their customers to telephony services using a mobile telephony network or networks. MNOs also offer similar products (prepaid or postpaid) for mobile data which uses other wireless network protocols such as wireless fidelity (“wifi”). We use the term “prepaid airtime” to include both of these prepaid products. Generally speaking, the difference between the two models is that prepaid is paid for upfront by the customer and contract is paid in arrears. MNOs sell prepaid products directly to their customers and also indirectly to their customers through distribution channels (which include wholesalers, retailers and other parties, including ourselves). We sell a variety of products through our distribution channels, including prepaid airtime, prepaid electricity, gaming vouchers. We refer to these products collectively as VAS. In order to “load” airtime onto a mobile device an MNOs customer requires a prepaid airtime voucher. A unique code is assigned to each prepaid airtime voucher and is required to activate the prepaid airtime on a mobile device. Like certain tangible goods, once sold, our customers cannot return prepaid airtime vouchers to us (except of course if there is a defect in the service provided by us, which rarely occurs). We can either purchase an agreed quantity of prepaid airtime vouchers upfront directly from wholesalers or other parties (so called “Pinned airtime” - these electronic vouchers are stored on a server owned and maintained by us and we treat these vouchers as inventory) or we can “interface” directly into a wholesaler and deliver the airtime voucher directly to our customers (typically merchants) as the airtime is sold by the merchant to MNOs customers (so called Pinless airtime). Consumer Segment revenue increased primarily due to higher transaction fees generated from the higher EPE account holders base, an increase in certain issuing fee base prices and transaction activity in our issuing business, 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 interest expenses (of approximately ZAR 15.0 million) incurred to fund our lending book and the year-over-year impact of inflationary increases on certain expenses. We intend to obtain a separate lending facility to fund a portion of our lending during fiscal 2025. We expected to have this facility in place on July 1, 2024, however, we have been unable to finalize terms as the separate lending facility will form part of a broader financing package. Therefore, we have 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 first quarter of fiscal 2025 and 2024 was 20.9% and 13.6%, respectively. Group costs Our group costs primarily include employee related costs in relation to employees specifically hired for group roles and costs related directly to managing the US-listed entity; expenditures related to compliance with the Sarbanes-Oxley Act of 2002; non- employee directors’ fees; legal fees; group and US-listed related audit fees; and directors’ and officers’ insurance premiums. 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 legal fees. 48 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 U.S. dollar/ ZAR exchange rates applicable per fiscal quarter and year: Table 8 Fiscal 2024 In United States dollars Quarter 1 Quarter 2 Quarter 3 Quarter 4 F2024 $ ’000 $ ’000 $ ’000 $ ’000 $ ’000 Group Adjusted EBITDA: Merchant 7,725 8,388 8,145 7,843 32,101 Consumer 2,120 2,575 3,757 4,227 12,679 Group costs (1,822) (2,011) (2,199) (1,812) (7,844) Group Adjusted EBITDA (non-GAAP) 8,023 8,952 9,703 10,258 36,936 Income and expense items: $1 = ZAR 18.71 18.71 18.88 18.47 18.68 Table 9 Fiscal 2023 In United States dollars Quarter 1 Quarter 2 Quarter 3 Quarter 4 F2023 $ ’000 $ ’000 $ ’000 $ ’000 $ ’000 Group Adjusted EBITDA: Merchant 7,580 8,780 7,980 7,924 32,264 Consumer (1,893) 171 1,263 2,134 1,675 Group costs (2,300) (2,256) (2,293) (2,260) (9,109) Group Adjusted EBITDA (non-GAAP) 3,387 6,695 6,950 7,798 24,830 Income and expense items: $1 = ZAR 17.13 17.52 17.93 18.74 17.94 Use of Non-GAAP Measures U.S. securities laws require that when we publish any non-GAAP measures, we disclose the reason for using these non-GAAP measures and provide reconciliations to the most directly comparable GAAP measures. The presentation of Group Adjusted EBITDA is a non-GAAP measure. We provide this non-GAAP measure to enhance our evaluation and understanding of our financial performance and trends. We believe that this measure is helpful to users of our financial information understand key operating performance and trends in our business because it excludes certain non-cash expenses (including depreciation and amortization and stock-based compensation charges) and income and expenses that we consider once-off in nature. Non-GAAP Measures Group Adjusted EBITDA is earnings before interest, tax, depreciation and amortization (“EBITDA”), adjusted for non- operational transactions (including loss on disposal of equity-accounted investments, gain related to fair value adjustments to currency options), (earnings) loss from equity-accounted investments, stock-based compensation charges and once-off items. Once-off items represents non-recurring income and expense items, including costs related to acquisitions and transactions consummated or ultimately not pursued. 49 The table below presents the reconciliation between GAAP net loss attributable to Lesaka to Group Adjusted EBITDA: Table 10 Three months ended September 30, 2024 2023 $ ’000 $ ’000 Loss attributable to Lesaka - GAAP (4,542) (5,651) (Earnings) loss from equity accounted investments (27) 1,405 Net loss before (earnings) loss from equity-accounted investments (4,569) (4,246) Income tax expense 78 264 Loss before income tax expense (4,491) (3,982) Interest expense 5,032 4,909 Interest income (586) (449) Reversal of allowance for doubtful EMI loan receivable - (250) Operating income (loss) (45) 228 PPA amortization (amortization of acquired intangible assets) 3,747 3,608 Depreciation and amortization 2,529 2,248 Stock-based compensation charges 2,377 1,759 Interest adjustment (831) - Once-off items (1) 1,805 78 Unrealized (gain) loss FV for currency adjustments (219) 102 Group Adjusted EBITDA - Non-GAAP 9,363 8,023 (1) The table below presents the components of once-off items for the periods presented: Table 11 Three months ended September 30, 2024 2023 $ ’000 $ ’000 Transaction costs 103 78 Transaction costs related to Adumo acquisition 1,702 - Total once-off items 1,805 78 Once-off items are non-recurring in nature, however, certain items may be reported in multiple quarters. For instance, transaction costs include costs incurred related to acquisitions and transactions consummated or ultimately not pursued. The transactions can span multiple quarters, for instance in fiscal 2025 we incurred significant transaction costs related to the acquisition of Adumo over a number of quarters, and the transactions are generally non-recurring. Liquidity and Capital Resources As of September 30, 2024, our cash and cash equivalents were $49.7 million and comprised of U.S. dollar-denominated balances of $2.0 million, 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 of our borrowings, purchase ATMs and vaults, pay annual bonuses, pay for expenses included in our group costs, and to make an investment in working capital, which was partially offset by positive contribution from our Merchant and Consumer operations and utilization. We generally invest any surplus cash held by our South African operations in overnight call accounts that we maintain at South African banking institutions, and any surplus cash held by our non-South African companies in U.S. dollar-denominated money market accounts. Historically, we have financed most of our operations, research and development, working capital, and capital expenditures, as well as acquisitions and strategic investments, through internally generated cash and our financing facilities. When considering whether to borrow under our financing facilities, we consider the cost of capital, cost of financing, opportunity cost of utilizing surplus cash and availability of tax efficient structures to moderate financing costs. For instance, in fiscal 2022, we obtained loan facilities from RMB to fund a portion of our acquisition of Connect. Following the acquisition of Connect, we now utilize a combination of short and long-term facilities to fund our operating activities and a long-term asset-backed facility to fund the acquisition of POS devices and vaults. Refer to Note 12 to our consolidated financial statements for the year ended June 30, 2024, for additional information related to our borrowings. 50 Available short-term borrowings Summarized below are our short-term facilities available and utilized as of September 30, 2024: Table 12 RMB Facility E RMB Indirect RMB Connect Nedbank $ ’000 ZAR ’000 $ ’000 ZAR ’000 $ ’000 ZAR ’000 $ ’000 ZAR ’000 Total short-term facilities available, comprising: Overdraft - - - - 9,895 170,000 - - Overdraft restricted as to use (1) 52,384 900,000 - - - - - - Total overdraft 52,384 900,000 - - 9,895 170,000 - - Indirect and derivative facilities (2) - - 7,858 135,000 - - 9,112 156,556 Total short-term facilities available 52,384 900,000 7,858 135,000 9,895 170,000 9,112 156,556 Utilized short-term facilities: Overdraft - - - - 9,895 170,000 - - Indirect and derivative facilities (2) - - 1,927 33,100 - - 123 2,110 Total short-term facilities available - - 1,927 33,100 9,895 170,000 123 2,110 Interest rate, based on South African prime rate 11.50% 11.40% (1) Overdraft may only be used to fund ATMs and upon utilization is considered restricted cash. We did 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 exchange contracts to support guarantees issued by RMB and Nedbank to various third parties on our behalf. Long-term borrowings We have aggregate long-term borrowing outstanding of ZAR 2.6 billion ($148.5 million translated at exchange rates as of September 30, 2024) as described in Note 8. These borrowings include outstanding long-term borrowings obtained by Lesaka SA of ZAR 1.0 billion, including accrued interest, which was used to partially fund the acquisition of Connect. The Lesaka SA borrowing arrangements were amended in March 2023 to include a ZAR 200 million revolving credit facility. We have settled all drawn amounts in full as of September 30, 2024, with the full balance available for utilization in the future. In contemplation of the Connect transaction, Connect obtained total facilities of ZAR 1.3 billion, which were utilized to repay its existing borrowings, to fund a portion of 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 September 30, 2024, of ZAR 1.2 billion, We also have a revolving credit facility, 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, 2024 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 our 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 70.0 million of transaction-related expenses. Restricted cash As of September 30, 2024, we had credit facilities with RMB in order to access cash to fund our ATMs in South Africa. Utilization of this facility is included in our cash, cash equivalents and restricted cash presented in our consolidated statement of cash flows. We did not utilize the facility at the end of September 2024. Any cash drawn under the facility 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. We have also entered into cession and pledge agreements with Nedbank related to our Nedbank indirect credit facilities and we have ceded and pledged certain bank accounts to Nedbank. The funds included in these bank accounts are restricted as they may not be withdrawn without the express permission of Nedbank. Our cash, cash equivalents and restricted cash presented in our consolidated statement of cash flows as of September 30, 2024, includes restricted cash of $0.1 million that has been ceded and pledged. 51 Arrangement with African Bank to fund our ATMs In September 2024, we entered into an arrangement with African Bank Limited (“African Bank”) and certain cash-in-transit service providers to fund our ATMs. Under this arrangement, African Bank will use its cash resources to fund our ATMs and it is specifically recorded that the cash in our ATMs are African Bank’s property. Therefore, 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 in our consolidated statement of financial position. Cash withdrawn from our ATMs by our EPE customers and other consumers are settled through the interbank settlement system from the ATM users bank account to African Bank’s bank accounts. We pay African Bank a monthly fee for the service provided which is calculated based on the cumulative daily outstanding balance of cash utilized multiplied by the South African prime interest rate less 1%. We are exposed to the risk of cash lost while it is in our ATMs (i.e. from theft) and are required to repay African Bank for any shortages. Cash flows from operating activities First quarter Net cash used operating activities during the first quarter of fiscal 2025 was $4.1 million (ZAR 73.3 million) compared to net cash provided by operating activities of $3.4 million (ZAR 63.1 million) during the first quarter of fiscal 2024. Excluding the impact of income taxes, our cash used in operating activities during the first quarter of fiscal 2025 includes cash utilized for the settlement of working capital movements within our merchant business related to quarter-end transaction processing activities and which were settled in the following week (our fourth quarter of fiscal 2024 closed on a Sunday), and the net growth in our consumer and merchant finance loans receivable books, which was partially offset by was positively impacted by the contribution from Merchant and 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 (refunded) paid during the first quarter of fiscal 2025 and 2024 were as follows: Table 13 Three months ended September 30, 2024 2023 2024 2023 $ $ ZAR ZAR ‘000 ‘000 ‘000 ‘000 Taxation paid related to prior years - 572 - 10,859 Tax refund received (113) (31) (2,053) (640) Total South African taxes paid (113) 541 (2,053) 10,219 Foreign taxes paid 68 63 1,213 1,196 Total tax (refund) paid (45) 604 (840) 11,415 Cash flows from investing activities First quarter Cash used in investing activities for the first quarter of fiscal 2025 included capital expenditures of $4.0 million (ZAR 70.3 million), primarily due to the acquisition of vaults and POS devices . Cash used in investing activities for the first quarter of fiscal 2024 included capital expenditures of $2.8 million (ZAR 52.6 million), primarily due to the acquisition of vaults. 52 Cash flows from financing activities First quarter During the first quarter of fiscal 2025, we utilized $23.9 million from our South African overdraft facilities to fund our ATMs and our cash management business through Connect, and repaid $31.0 million of those facilities. We utilized $0.8 million of our long- term borrowings to fund the acquisition of certain capital expenditures and for working capital requirements. We repaid $5.5 million of long-term borrowings in accordance with our repayment schedule as well as to settle a portion of our revolving credit facility utilized. During the first quarter of fiscal 2024, we utilized $59.6 million from our South African overdraft facilities to fund our ATMs and our cash management business through Connect, and repaid $62.8 million of those facilities. We utilized approximately $2.5 million of our long-term borrowings to fund the acquisition of certain capital expenditures and for working capital requirements. We repaid approximately $2.6 million of long-term borrowings in accordance with our repayment schedule as well as to settle a portion of our revolving credit facility utilized. Off-Balance Sheet Arrangements We have no off -balance sheet arrangements. Capital Expenditures We expect capital spending for the second quarter of fiscal 2025 to primarily include spending for acquisition of POS devices, vaults, computer software, computer and office equipment, as well as for our ATM infrastructure and branch network in South Africa. Our capital expenditures for the first quarter of fiscal 2025 and 2024 are discussed under “—Liquidity and Capital Resources —Cash flows from investing activities.” All of our capital expenditures for the past three fiscal years were funded through internally generated funds, or, following the Connect acquisition, our asset-backed borrowing arrangement. We had outstanding capital commitments as of September 30, 2024, of $0.3 million. We expect to fund these expenditures through internally generated funds and available facilities. 53