LESAKA TECHNOLOGIES INC 10-Q

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, 2025, 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. 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, 2025. 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 This item generally discusses our results for the first quarter of fiscal 2026 compared to the first quarter of fiscal 2025. Merchant Division Performance in Merchant has been driven by: Merchant acquiring Merchant acquiring includes 87,847 devices deployed under the Adumo, Card Connect and Kazang brands. Q1 2026 Q1 2025 Q1 2024 Q1 2026 vs Q1 2025 Number of devices in deployment at period end 87,847 53,450 46,600 64% Total throughput for the period (ZAR billions) 9.2 4.2 3.6 117% ● 2026 is inclusive of approximately 29,000 devices deployed by Adumo with the Adumo transaction closing on October 1, 2024, the impact of which is not included in the prior period comparatives. ● Throughput increased to ZAR 9.2 billion for the quarter, driven mainly by the inclusion of Adumo in the first quarter of fiscal 2026 and 10% year-on-year growth attributable to Kazang Pay. 37 Software Our software solutions are offered through GAAP. Q1 2026 Q1 2025 Q1 2024 Q1 2026 vs Q1 2025 Number of GAAP sites at period end 9,772 n.a. n.a. nm Approximate ARPU per site (ZAR) (1) 3,184 n.a. n.a. nm (1) ARPU is calculated on a revenue per site basis, as monthly figure based on a three-month rolling average for the quarter ending September 30, 2025. ● GAAP was acquired on October 1, 2024. ● Monthly ARPU per site combines hardware on a rental basis and software subscription revenue, but excludes the merchant acquiring revenue when our software customers utilize our merchant acquiring payment solutions. Cash Q1 2026 Q1 2025 Q1 2024 Q1 2026 vs Q1 2025 Number of devices in deployment at period end 4,656 4,484 4,411 4% Cash settlements (throughput) for the period (ZAR billions) 27.5 28.7 27.6 (4%) Our cash business is experiencing differing secular trends in its two distinct markets: ● Small-to-Medium merchant sector: Ongoing decline in cash usage with flat net growth in vault activity in a more mature digital economy where cash is increasingly displaced by digital alternatives. ● Micro-merchant market: High cash prevalence and increasing digital adoption is supporting strong growth in the numbers of devices and cash settlements. Throughput in our vaults placed in the micro-merchant sector increased more than 70% to ZAR 4.9 billion in the first quarter of fiscal 2026, representing 18% of total vault throughput for the year compared to 10% a year ago. This is fast becoming a meaningful contributor to our cash offering. Lending Our lending solutions are offered to merchants through Capital Connect and Adumo Capital. Adumo Capital is a joint venture with Retail Capital, a division of Tyme Bank, with a 50:50 profit share. Q1 2026 Q1 2025 Q1 2024 Q1 2026 vs Q1 2025 Total lending origination volume for the period (ZAR millions) (1) 201 166 173 21% Total net loan book outstanding at period end (ZAR millions) (1) 470 273 280 72% (1) Amounts reflected above includes 100% of Adumo Capital’s credit disbursed and net loan book. ● The first quarter of fiscal 2026 is inclusive of lending origination volume (for three months) and the net loan book under the Adumo brand, with the Adumo transaction closing on October 1, 2024, the impact of which is not included in the prior period comparatives. ● Capital Connect comprises more than 70% of our merchant lending activity. ADP ADP in our Merchant Division includes prepaid solutions (airtime, data, electricity and gaming), bill payments, IMT and supplier enabled payments. IMT and bill payments are included in the supplier enabled throughput shown below, with supplier payments representing the most significant contributor to ADP throughput in the Merchant Division. Q1 2026 Q1 2025 Q1 2024 Q1 2026 vs Q1 2025 Number of devices in deployment at period end 97,519 89,044 77,111 10% Total throughput for the period (ZAR billions) 11.9 9.9 7.2 21% Prepaid solutions throughput for the period (ZAR billions) 4.9 4.7 4.3 4% Supplier enabled payments throughput for the period (ZAR billions) 7.1 5.2 2.9 37% 38 ● We had 97,519 devices deployed as of September 30, 2025, representing a 10% year-on-year growth. Core to our device placement strategy is the decision to focus on quality business and optimizing our existing fleet, which is reflected in healthy throughput growth. ● Total throughput increased 21% to ZAR 11.9 billion year-on-year, driven by a 37% increase in supplier enabled payments. Unification of Merchant under Lesaka brands Over the past three years, we have brought together Kazang and Connect and subsequently added Adumo and GAAP to our Merchant Division. In 2025, we accelerated the integration of our micro-merchant and merchant businesses as we build an integrated, multi-product platform serving merchants of all sizes. The unification of our Merchant Division’s operations and the realignment of these brands under a single Lesaka identity is expected to optimize our Merchant Division. Consumer Division Our consumer base includes South African grant beneficiaries and other EasyPay Payouts cardholders. ● Our grant beneficiary base includes both permanent and non-permanent grant beneficiaries. As the division has evolved, both sub-categories of consumers are revenue generating and hence the combined consumer base metrics shown below are most appropriate to measure the performance of the division financially and operationally. Although historically we have shown these metrics separately, it is maintained that approximately 90% of the active consumer base are permanent grant beneficiaries. ● Our definition of an active consumer is any EPE consumer that has made a voluntary transaction (debit and/or credit) within the last 90 days. Consumers who may be charged a monthly banking fee but have not made a voluntary transaction in the last 90 days would not be considered an active consumer. ● The definition of an active consumer reflects the revenue generating engagement of our entire consumer base and more accurately tracks our current and future monetization strategy for the division. ● We will continue to show the EasyPay Payouts separately given this follows a different monetization model. Q1 2026 Q1 2025 Q1 2024 Q1 2026 vs Q1 2025 Transactional accounts (banking) - EPE Number of active consumers at period end (millions) 1.9 1.6 1.3 24% Approximate net activations for the period (thousands) 49 24 27 103% Lending - EasyPay Loans Approximate number of loans originated during the period (thousands) 354 286 222 24% Lending originations for the period (ZAR millions) 820 462 353 77% Loan portfolio outstanding at period end (ZAR millions) (1) 1,116 564 423 98% Insurance - EasyPay Insurance Approximate number of insurance policies written during the period (thousands) 57 49 38 16% Total active insurance policies on book at period end (thousands) 589 466 359 27% Gross written premium for the period (ZAR millions) 120 87 64 38% Average revenue per consumer per month, in the quarter, (active customers) (ZAR) (2) 89 78 73 13% EasyPay Payouts Approximate number of active cardholders (thousands) 211 n.a. n.a. nm Approximate load value for the period (ZAR millions) (3) 125 n.a. n.a. nm (1) Gross loan book, before provisions. (2) ARPU is calculated on a revenue per active consumer basis whereby an active consumer can be both a permanent and non- permanent grant. ARPU is a monthly figure based on a 3-month rolling average for the quarter ended September 30, 2025. (3) Represents a 3-month period for quarter one fiscal 2026. With the Adumo transaction closing on October 1, 2024, the impact is not included in the prior period comparatives. ● Driving customer acquisition, supported by increased focus on customer service using enhanced digital capabilities. o Net active account growth of approximately 49,000 for the period, compared to approximately 24,000 a y ear ago for the equivalent period. 39 o Growth in active consumers driven by strong performance from sales and distribution teams, with further product enhancements made to the lending product driving growth. o Development of a proprietary onboarding engine which allows for digital onboarding for banking, lending and insurance products at the point of engagement. Utilizing the new onboarding engine has improved operational efficiencies and driven higher cross-sell penetration for both existing consumers and new consumer onboards. EasyPay Loans o We originated approximately 354,000 loans during the period, with our loan portfolio outstanding, increasing 98% to ZAR 1.1 billion as of September 30, 2025, compared to ZAR 564 million as of September 30, 2024. 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 active consumer base and improved cross-selling initiatives driven by the launch of our new onboarding engine. o The credit loss ratio, calculated as the loans written off over the last 12 months as a percentage of the average gross loan book over the last 12 months is approximately 6.5% on an annualized basis, compared to the same period a year ago (Q1 2025). As the lending product mix scales to the larger and longer tenor loan product, we expect a modest but non-material increase in the credit loss ratio. 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 approximately 35% of our active consumer base as of September 30, 2025, compared to 34% as of September 30, 2024. o Approximately 57,000 new policies were written in the period, increasing 16% compared to the same period a year ago (Q1 2025). ARPU o ARPU for our active consumer base has increased to approximately ZAR 89 per month from approximately ZAR 78 compared to the same period a year ago (Q1 2025). ARPU reflects the definition of an active consumer and includes permanent and non-permanent grant beneficiaries. EasyPay Payouts o The number of active card holders was approximately 211,000 at the period end, with a load value of approximately ZAR 125 million. o Adumo Payouts was acquired on October 1, 2024 and subsequently rebranded to EasyPay Payouts. Enterprise Division ADP includes prepaid solutions and bill payments through channels such as retailer distribution networks and online banking apps. Q1 2026 Q1 2025 Q1 2024 Q1 2026 vs Q1 2025 ADP Total throughput for the period (ZAR billions) 12 11 9 13% Utilities (1) Total throughput for the period (ZAR millions) 396.3 n.a. n.a. nm Approximate number of active meters (thousands) 270 n.a. n.a. nm (1) The Recharger transaction closed on March 3, 2025. 40 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, 2025: ● Recoverability of Goodwill; ● Intangible Assets Acquired Through Acquisitions; ● Revenue recognition – principal versus agent considerations; ● Finance Loans Receivable and Allowance for Credit Losses; and ● Valuation of investment in Cell C. 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, 2025 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, 2025, 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, 2025 2024 2025 ZAR : $ average exchange rate 17.6379 17.9601 18.1644 Highest ZAR : $ rate during period 18.1650 18.5100 19.6350 Lowest ZAR : $ rate during period 17.2702 17.1144 17.1144 Rate at end of period 17.2702 17.1808 17.7554 41 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, 2025 and 2024, 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, 2025 2024 2025 Income and expense items: $1 = ZAR 17.6654 17.7176 17.9031 Balance sheet items: $1 = ZAR 17.2702 17.1808 17.7554 We have translated the results of operations and operating segment information for the three months ended September 30, 2025 and 2024, provided in the tables below using the actual average exchange rates per month (i.e. for each of July 2025, August 2025, and September 2025 for the first quarter of fiscal 2026) 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 u nderstand the changes in the underlying trends of our business. 42 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 audited consolidated financial statements in Note 18 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 securi ties, fair value adjustments to currency options), interest income, interest expense, income tax expense or loss from equity-accounted investments to our reportable segments. For fiscal 2025, we included an intercompany interest expense in our Consumer Segment Adjusted EBITDA. Once-off items represent 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. Group Adjusted EBITDA represents Segment Adjusted EBITDA after deducting group costs. Refer also “Results of Operations—Use of Non-GAAP Measures” below. In fiscal 2025 we closed the acquisitions of Adumo and Recharger and have integrated their businesses into our ours. Our fiscal 2025 financial results for the three months ended September 30, 2024, do not include these businesses because we acquired Adumo on October 1, 2024 and Recharger on March 3, 2025. We analyze our business and operations in terms of three inter-related but independent operating segments: (1) Merchant (2) Consumer and (3) Enterprise. In addition, corporate activities that are impracticable to allocate directly to the operating segments, as well as any inter-segment eliminations, are included in Grfiscaoup costs. Inter-segment revenue eliminations are included in Eliminations. First quarter of fiscal 2026 compared to first quarter of fiscal 2025 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 12% in U.S. dollars and 10% in ZAR, primarily due to the inclusion of Adumo and Recharger, higher transaction, insurance and lending revenues in Consumer, which was partially offset by a decrease in prepaid airtime revenue in Merchant; ● Operating income increase: Operating income increased primarily due to strong performance by Consumer and the contribution from Adumo and Recharger , which was partially offset by an increase in amortization of acquisition-related intangible assets related to the acquisition of Adumo and Recharger and higher operating costs; ● Lower net interest charge: Net interest charge decreased to $4.36 million (ZAR 76.9 million) from $4.45 million (ZAR 79.8 million) primarily due to a lower interest expense following lower interest rates and the exclusion of interest expense incurred under our borrowing arrangements related to our Consumer lending book in the first quarter of fiscal 2026 compared with 2025. On a comparable basis the equivalent interest expense related to the Consumer lending book for the first quarter of fiscal 2025 was included in interest expense ; and ● Foreign exchange movements: The U.S. dollar was flat against the ZAR during the first quarter of fiscal 2026 compared to the prior period. 43 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, 2025 2024 % $ ’000 $ ’000 change Revenue 171,448 153,568 12% Cost of goods sold, IT processing, servicing and support 118,440 118,909 (0%) Selling, general and administration 39,637 26,698 48% Depreciation and amortization 12,894 6,276 105% Transaction costs related to Adumo, Recharger and Bank Zero acquisitions 94 1,730 (95%) Operating income (loss) 383 (45) nm Loss on impairment of equity-accounted investment 584 - nm Interest income 539 586 (8%) Interest expense 4,898 5,032 (3%) Loss before income tax (benefit) expense (4,560) (4,491) 2% Income tax (benefit) expense (146) 78 nm Net loss before earnings from equity-accounted investments (4,414) (4,569) (3%) Earnings from equity-accounted investments - 27 nm Net loss (4,414) (4,542) (3%) Add net loss attributable to non-controlling interest 117 - nm Net loss attributable to us (4,297) (4,542) (5%) Table 4 In South African Rand Three months ended September 30, 2025 2024 % ZAR ’000 ZAR ’000 change Revenue 3,023,546 2,756,877 10% Cost of goods sold, IT processing, servicing and support 2,089,010 2,134,828 (2%) Selling, general and administration 698,672 479,183 46% Depreciation and amortization 227,366 112,660 102% Transaction costs related to Adumo, Recharger and Bank Zero acquisitions 1,762 30,491 (94%) Operating income (loss) 6,736 (285) nm Loss on impairment of equity-accounted investment 10,342 - nm Interest income 9,496 10,517 (10%) Interest expense 86,410 90,328 (4%) Loss before income tax (benefit) expense (80,520) (80,096) 1% Income tax (benefit) expense (2,572) 1,402 nm Net loss before earnings from equity-accounted investments (77,948) (81,498) (4%) Earnings from equity-accounted investments - 475 nm Net loss (77,948) (81,023) (4%) Add net loss attributable to non-controlling interest 2,058 - nm Net loss attributable to us (75,890) (81,023) (6%) Revenue increased by $17.9 million (ZAR 266.7 million) or 11.6% (in ZAR 9.7%). The increase was primarily due to the inclusion of Adumo and Recharger, the impact of an increase in certain issuing fee base prices year-over-year, and transaction activity in our issuing business, and an increase in insurance premiums collected and lending revenues (including interest) following higher loan originations , which was partially offset by a decrease in the volume of prepaid airtime sold. 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 decreased by $0.5 million (ZAR 45.8 million) or 0.4% (in ZAR 2.1%), primarily due to the decrease in the prepaid airtime costs, which was partially offset by the inclusion of Adumo, an increase in lending r elated expenditures (including interest expense) and higher insurance-related claims and third-party transaction fees. 44 Selling, general and administration expenses increased by $12.9 million (ZAR 219.5 million), or 48.5% (in ZAR 45.8%). The increase was primarily due to the inclusion of Adumo and Recharger; higher employee-related expenses (including the impact of annual salary increases), an increase in the allowance for credit losses as a result of higher lending activities by Consumer, and the year-over-year impact of inflationary increases on certain expenses, which was partially offset by lower stock-based compensation charges. Depreciation and amortization expense increased by $6.6 million (ZAR 114.7 million), or 105.4% (101.8%). The increase was due to the inclusion of acquisition-related intangible asset amortization related to intangible assets identified pursuant to the Adumo and Recharger acquisitions and an increase in depreciation expense related to additional POS devices deployed . Transaction costs related to Adumo, Recharger and Bank Zero acquisitions during the first quarter of fiscal 2025 included costs incurred related to the Adumo acquisition which closed in October 2024. We did not incur significant transaction costs during the first quarter of fiscal 2026. Refer to Note 2 to our unaudited condensed consolidation financial statements for additional information. Our operating income (loss) margin for the first quarter of fiscal 2026 and 2025 was 0.2% and (0.0)%, 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 Cell C during the first quarter of fiscal 2026 or 202 5, respectively, or any fair value adjustments for MobiKwik during the first quarter of fiscal 2025. We continue to carry our investment in Cell C at $0 (zero). Refer to Note 5 to our unaudited condensed consolidation financial statements for the methodology and inputs used in the fair value calculation for Cell C. Interest on surplus cash of was $0.5 million (ZAR 9.5 million) compared with $0.6 million (ZAR 10.5 million) during the first quarter of fiscal 2025, and decrease due to lower interest rates. Interest expense decreased to $4.9 million (ZAR 86.4 million) from $5.0 million (ZAR 90.3 million). In ZAR, the decrease was primarily due to lower interest rates and the exclusion of interest expense incurred under our borrowing arrangements related to our Consumer lending book in the first quarter of fiscal 2026 compared with 2025. On a comparable basis the equivalent interest expense related to the Consumer lending book for the first quarter of fiscal 2025 was included in interest expense. First quarter of fiscal 2026 income tax benefits was $0.1 million (ZAR 2.6 million) compared to income tax expense of $0.1 million (ZAR 1.4 million) in fiscal 2025. Our effective tax rate for fiscal 2025 was impacted by the tax expense recorded by our profitable South African operations and non-deductible expenses (including transaction-related expenditures). The income tax benefit was impacted by a higher deferred tax benefit as a result of the reduction in the useful lives of certain of our brand and trademark intangible assets which has resulted in an increase in amortization expense during the three months ended September 30, 2025. 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. 45 Results of operations by operating segment The composition of revenue and the contributions of our business activities to operating loss are illustrated below: Table 5 In United States Dollars Three months ended September 30, 2025 % of 2024 % of % change Operating Segment $ ’000 total $ ’000 total Consolidated revenue: Merchant 126,950 74% 123,651 81% 3% Consumer 30,576 18% 21,072 14% 45% Enterprise 14,853 9% 11,883 8% 25% Subtotal: Operating segments 172,379 101% 156,606 103% 10% Eliminations (931) (1%) (3,038) (3%) (69%) Total consolidated revenue 171,448 100% 153,568 100% 12% Group Adjusted EBITDA: Merchant (1) 9,190 60% 7,554 81% 22% Consumer (1) 8,493 55% 4,396 47% 93% Enterprise (1) 1,269 8% 362 4% 251% Group costs (3,611) (23%) (2,949) (32%) 22% Group Adjusted EBITDA (non-GAAP) (2) 15,341 100% 9,363 100% 64% (1) Segment Adjusted EBITDA for the three months ended September 30, 2025, includes retrenchment costs of $0.2 million for Merchant and Consumer of $0.1 million. 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) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non- GAAP Measures”. Table 6 In South African Rand Three months ended September 30, 2025 % of 2024 % of % change Operating Segment ZAR ’000 total ZAR ’000 total Consolidated revenue: Merchant 2,239,035 74% 2,220,022 81% 1% Consumer 539,006 18% 378,063 14% 43% Enterprise 261,904 9% 213,997 8% 22% Subtotal: Operating segments 3,039,945 101% 2,812,082 103% 8% Eliminations (16,399) (1%) (55,205) (3%) (70%) Total consolidated revenue 3,023,546 100% 2,756,877 100% 10% Group Adjusted EBITDA: Merchant (1) 162,076 60% 135,510 81% 20% Consumer (1) 149,710 55% 78,681 47% 90% Enterprise (1) 22,407 8% 6,568 4% 241% Group costs (63,619) (23%) (52,654) (32%) 21% Group Adjusted EBITDA (non-GAAP) (2) 270,574 100% 168,105 100% 61% (1) Segment Adjusted EBITDA for the three months ended September 30, 2025, includes retrenchment costs of ZAR 0.2 million for Merchant and Consumer of ZAR 3.8 and ZAR 2.6 million for the first quarter of fiscal 2026. 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) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non- GAAP Measures”. 46 Merchant Segment revenue primarily increased due to the inclusion of Adumo, which was partially offset by lower ADP revenue earned, including from lower prepaid airtime volumes sold. While overall ADP volumes increased, prepaid airtime revenue contributes a significant portion of our overall ADP revenue, and therefore a drop in the volume of the prepaid airtime revenue impacts our reported revenue generated. The increase in Segment Adjusted EBITDA is primarily due the inclusion of the contribution from Adumo, lower cost of goods sold, IT processing, servicing and support and lower employment-related expenditures, which was partially offset by higher operating expenses incurred. 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 2026 and 2025 was 7.2% and 6.1%, respectively. Consumer Segment revenue increased primarily due to higher transaction fees generated from the higher EPE account holders base, the impact of an increase in certain issuing fee base prices year-over-year, and transaction activity in our issuing business, insurance premiums collected, lending revenues following an increase in loan originations and the inclusion of Adumo. This increase in revenue has translated into improved profitability, which was partially offset by a higher allowance for credit losses following an increase in loan originations during the quarter, higher insurance-related claims, interest expense (of approximately ZAR 19.9 million; Sep 2024: ZAR 14.9 million ) incurred to fund our lending book and the year-over-year impact of inflationary increases on certain expenses. Our Segment Adjusted EBITDA margin for the first quarter of fiscal 2026 and 2025 was 27.8% and 20.9%, respectively. Enterprise Segment revenue and Segment Adjusted EBITDA increased primarily due to the inclusion of Recharger. Our Segment Adjusted (loss) EBITDA margin for the first quarter of fiscal 2026 and 2025 was 8.54% and 3.0%, 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 the first quarter of fiscal 2026 increased compared with the prior period due to offset by higher employee costs resulting from an increase in the number of individuals allocated to group costs and base salary adjustments and higher consulting and legal fees, which was partially offset by lower bonus expense. 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 U.S. 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 impairment/ disposal of equity-accounted investments, change in fair value of equity securities), (earnings) loss from equity-accounted investments, stock-based compensation charges and once-off items. We included an intercompany interest expense in our Consumer Segment Adjusted EBITDA for three months ended September 30, 2024. Once-off items represents non-recurring income and expense items, including costs related to acquisitions and transactions consummated or ultimately not pursued. 47 The table below presents the reconciliation between U.S. GAAP net loss attributable to Lesaka to Group Adjusted EBITDA: Table 7 Three months ended September 30, 2025 2024 $ ’000 $ ’000 Loss attributable to Lesaka - GAAP (4,297) (4,542) Add net loss attributable to non-controlling interest 117 - Net loss (4,414) (4,542) Earnings from equity accounted investments - (27) Net loss before earnings from equity-accounted investments (4,414) (4,569) Income tax (benefit) expense (146) 78 Loss before income tax expense (4,560) (4,491) Interest expense 4,898 5,032 Interest income (539) (586) Net loss on impairment of equity-accounted investment 584 - Operating income (loss) 383 (45) PPA amortization (amortization of acquired intangible assets) 9,134 3,747 Depreciation and amortization 3,760 2,529 Stock-based compensation charges 1,861 2,377 Interest adjustment - (831) Once-off items (1) 267 1,805 Unrealized gain FV for currency adjustments (64) (219) Group Adjusted EBITDA - Non-GAAP 15,341 9,363 (1) The table below presents the components of once-off items for the periods presented: Table 8 Three months ended September 30, 2025 2024 $ ’000 $ ’000 Transaction costs 173 75 Transaction costs related to Adumo and Recharger acquisitions and certain compensation costs 94 1,730 Total once-off items 267 1,805 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 transaction costs related to the acquisition of Recharger over a number of quarters, and the transactions are generally non-recurring. . 48 Liquidity and Capital Resources As of September 30, 2025, our cash and cash equivalents were $72.2 million and comprised of U.S. dollar-denominated balances of $1.3 million, ZAR-denominated balances of ZAR 1.2 billion ($69.2 million), and other currency deposits, primarily Botswana pula, of $1.7 million, all amounts translated at exchange rates applicable as of September 30, 2025. The decrease in our unrestricted cash balances from June 30, 2025, was primarily due to application of the proceeds received from the disposal of MobiKwik to reduction our general banking facilities, the utilization of cash reserves to fund certain scheduled repayments of our borrowings, which was partially offset by the positive contribution from our operating segments. 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. Refer to Note 12 to our consolidated financial statements for the year ended June 30, 2025, as well as Note 9 to these condensed consolidated financial statements for additional information related to our borrowings. Our ability to make payments on our indebtedness and to fund our operations may be dependent upon the operating income and the distribution of funds from our subsidiaries. However, as local laws and regulations and/or the terms of our indebtedness restrict certain of our subsidiaries from paying dividends and transferring assets to us, there is no assurance that our subsidiaries will be permitted to provide us with sufficient dividends, distributions or loans when necessary. We will make a cash payment of ZAR 175.0 million ($10.1 million) in March 2026 related to the cash portion of the deferred consideration due to the seller of Recharger. We are required to make a scheduled debt repayment of ZAR 150 million ($8.7 million) in February 2026. We expect to pay ZAR 100 million ($5.8 million) payment on closing of the Bank Zero transaction. All amounts translated at exchange rates as of September 30, 2025. Available short-term borrowings Summarized below are our short-term facilities available and utilized as of September 30, 2025: Table 9 RMB GBF RMB Other Nedbank $ ’000 ZAR ’000 $ ’000 ZAR ’000 $ ’000 ZAR ’000 Total short-term facilities available, comprising: Total overdraft 40,584 700,901 - - - - Indirect and derivative facilities (1) - - 5,831 100,700 9,065 156,556 Total short-term facilities available 40,584 700,901 5,831 100,700 9,065 156,556 Utilized short-term facilities: Overdraft 12,488 215,671 - - - - Indirect and derivative facilities (1) - - 1,917 33,099 122 2,104 Total short-term facilities utilized 12,488 215,671 1,917 33,099 122 2,104 Interest rate, based on South African prime rate 10.00% N/A N/A (1) Other facilities include 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. In terms of a commitment provided to the lender under the CTA entered into on February 27, 2025, we have undertaken not to utilize more than ZAR 5.0 million ($0.3 million) of the Nedbank Facility. Long-term borrowings We have aggregate long-term borrowing outstanding of ZAR 3.6 billion ($208.1 million translated at exchange rates as of September 30, 2025) as described in Note 12. These borrowings include outstanding long-term borrowings obtained by Lesaka SA of ZAR 3.1 billion, which was used to refinance our previous long-term borrowings. We have utilized all of these long-term borrowings. As of September 30, 2025, we also have a revolving credit facility, of ZAR 400.0 million which is utilized to fund a portion of our merchant finance loans receivable book and an asset backed facility of ZAR 227.0 million which is utilized to partially fund the acquisition of POS devices and vaults. 49 Restricted cash 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, 2025, includes restricted cash of $0.1 million that has been ceded and pledged. 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 provided by operating activities during the first quarter of fiscal 2026 was $8.9 million (ZAR 157.6 million) compared to net cash utilized of $4.1 million (ZAR 73.3 million) during the first quarter of fiscal 2025. Excluding the impact of income taxes, our cash provided by operating activities during the first quarter of fiscal 2026 was positively impacted by improved contribution from our all of our operating segments, fewer quarterly movements within our Merchant and Enterprise businesses related to quarter-end transaction processing activities compared to the prior quarter end, which was partially offset by the impact of cash utilized for the significant net growth in our Consumer finance loans receivable books . During the first quarter of fiscal 2026, we paid second provisional South African tax payments of $0.3 million (ZAR 4.9 million) primarily related to certain of our recently acquired subsidiaries that have not yet aligned their tax year to our June 30 tax year end. We also paid taxes related to prior tax years in South Africa of $0.3 million (ZAR 5.8 million). We paid taxes totaling $0.1 million in other tax jurisdictions, primarily in Botswana during the first quarter of fiscal 2026. During the first quarter of fiscal 2025, we paid taxes totaling $0.1 million in other tax jurisdictions, primarily in Botswana. Taxes paid (refunded) during the first quarter of fiscal 2026 and 2025 were as follows: Table 10 Three months ended September 30, 2025 2024 2025 2024 $ $ ZAR ZAR ’000 ’000 ’000 ’000 First provisional payments 46 - 821 - Second provisional payments 284 - 4,936 - Taxation paid related to prior years 330 - 5,763 - Tax refund received (20) (113) (349) (2,053) Total South African taxes paid 640 (113) 11,171 (2,053) Foreign taxes paid 70 68 1,243 1,213 Total tax paid (refunded) 710 (45) 12,414 (840) Cash flows from investing activities First quarter Cash used in investing activities for the first quarter of fiscal 2026 included capital expenditures of $4.0 million (ZAR 70.3 million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $1.1 million (ZAR 20.1 million), primarily related to the capitalization of development costs, during the first quarter of fiscal 2026. 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. We also incurred expenditures of $0.2 million (ZAR 3.1 million), primarily related to the capitalization of development costs, during the first quarter of fiscal 2025. 50 Cash flows from financing activities First quarter During the first quarter of fiscal 2026, we utilized $28.0 million from our South African general banking facilities to partially fund the growth of our Consumer lending book, and repaid $40.7 million utilizing the funds received from the disposal of MobiKwik. We utilized $2.8 million of our long-term borrowings to finance the acquisition of POS devices and vehicles to fund our Merchant lending book. We repaid $1.1 million of long-term borrowings and in accordance with our repayment schedule under our asset-based facilities. We also paid fees of $0.03 million related the September 2025 refinance of our facility to fund the growth of Merchant lending book. 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. Off-Balance Sheet Arrangements We have no off -balance sheet arrangements. Capital Expenditures We expect capital spending for the second quarter of fiscal 2026 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 2026 and 2025 are discussed under “—Liquidity and Capital Resources —Cash flows from investing activities.” Our capital expenditures for the past three fiscal years were funded through internally generated funds, or our asset-backed borrowing arrangements. We had outstanding capital commitments as of September 30, 2025, of $0.1 m illion. We expect to fund these expenditures through internally generated funds and available facilities. 51