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 second quarter of fiscal 2026 compared to the second quarter of fiscal 2025. Group Lesaka launched its new brand in November 2025 and will take the remainder of the 2026 calendar year to roll out the refreshed brand throughout the organization. This was more than a brand refresh, it is a necessary step in a set of strategic initiatives designed to create a “One Lesaka” identity for our customers and our employees. The brand is underpinned by a set of values that encapsulates what Lesaka stands for and the behaviors expected of all Lesaka employees. The lease for our new Johannesburg head office was finalized. This will consolidate the three different offices across Johannesburg into a single hub, fostering faster integration, simplification and result in positive long-term financial impact. We aim to complete the move by the end of this fiscal year. A similar exercise is underway for our Durban and Cape Town regional hubs. We have made continued progress in simplifying the business: ● Each of Lesaka’s three divisions are now measured on clear KPIs that have a direct impact on financial outcomes. Merchant and Consumer are measured on number of customers and ARPU (Average Revenue Per User), whilst Enterprise is measured on throughput volumes and take rates. We disclose these KPIs in the following tables per division. ● We disposed of non-core assets such as Cell-C for ZAR 50 million. ● Finalized the Cash Paymaster Services liquidation, releasing provisions of ZAR 65 million. Regarding the Bank Zero transaction, Lesaka has received Competition Commission approval. Completion of the transaction is conditional upon obtaining regulatory approvals from the Prudential Authority and the Financial Surveillance Department of the South African Reserve Bank, as well as the satisfaction of other outstanding conditions precedent set forth in the agreement. 49 Merchant Division In the second quarter of fiscal 2026, we introduced a refined reporting framework for the Merchant division to better represent the primary drivers of our revenue and performance. Developed through a comprehensive review of our operational analytics, this framework aligns our Merchant metrics, specifically active merchant count and blended ARPU with our Consumer division to provide a holistic view of our ecosystem. We are treating this updated approach as a baseline for future comparisons to ensure consistent reporting across our channels; as such, this transition may result in non-material inconsistencies with certain legacy metrics. Our definition of an active merchant is any merchant that has made a voluntary transaction (debit and/or credit) within the last 90 days. Previously, we reported on a points of presence basis, which was more focused on our device estate. This updated methodology of an active merchant reflects the revenue generating engagement of our entire Merchant base and more accurately tracks our current and future monetization strategy for the division. Average Revenue Per User excludes once-off and non-recurring revenue such as hardware and installation costs as well as revenue from international subsidiaries, which are generally non-recurring in nature. We manage our Merchant operations through two distinct channels: Community, which focuses on local, high-growth businesses acquired through direct, face-to-face sales and rapid conversion cycles; and Corporate, which serves large -scale organizations and franchises requiring customized, multi-product solutions through a strategic, long-term sales process. The underlying drivers of ARPU performance are based on cross-sell product penetration and the individual product related KPI’s are shown below. Q2 2026 Q2 2025 Q2 2026 vs Q2 2025 Merchant Division Active Merchants 132,443 122,846 8% Merchant ARPU (1) (ZAR per month) 1,835 2,030 (10%) Product Penetration Rate: 1+ Products 46% 47% (1%) Product Penetration Rate: 2+ Products 8% 10% (16%) Merchant Division: Merchant Acquiring Active Merchants 73,521 67,830 8% Total Payment Volume ("TPV") (ZAR billions) 12.1 11.3 7% Merchant Division: Software Active Merchants 10,133 9,689 5% Merchant Division: Cash Management Active Merchants 4,891 4,910 (0%) Total Payment Volume ("TPV") (ZAR billions) 31.9 30.4 5% Merchant Division: Lending Lending Origination (ZAR millions) 205 153 35% Net Lending Portfolio Outstanding (ZAR millions) 389 305 28% Merchant Division: Alternative Digital Products Active Merchants 102,346 94,516 8% Total Payment Volume ("TPV") (ZAR billions) 14.0 11.0 27% Total Payment Volume ("TPV") - Prepaid Solutions (ZAR billions) 5.0 4.9 3% Total Payment Volume ("TPV") - Supplier Enabled Payments (ZAR billions) 9.0 6.1 46% Notes: (1) ARPU is calculated on a revenue per active merchant basis based on a 3-month rolling average for the quarter ended December 31, 2025. Notable developments within Merchant Division: Within Merchant Acquiring: TPV attributable to Community segment increased to ZAR 4.2 billion for the second quarter of fiscal 2026 and 13% year-on-year growth. Within Cash: Our business is experiencing differing secular trends in its two distinct markets. At the Corporate level, cash continues to experience a downward trend of growth as digital payment adoption progressively increases in this sector. At the Community level, cash vault placements drove a 77% year-on-year increase in total cash TPV this quarter, now accounting for 19% of all processed cash TPV processed. This signals rapid growth among merchants within this segment aiming to digitize their cash holdings. 50 Within ADP: Core to our device placement strategy is the decision to focus on quality business and optimizing our existing fleet. This can be seen through the TPV growth which is primarily driven by our Supplier Enabled Payment product. This enables Community Merchants to digitize their required payments to suppliers at competitive pricing and introduces them to the Lesaka Merchant ecosystem. 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. The underlying drivers of ARPU performance are based on cross-sell product penetration and the individual product related KPI’s are shown below. Q2 2026 Q2 2025 Q2 2026 vs Q2 2025 Consumer Division Active Consumers (Millions) 2.0 1.6 21% ARPU (1) (ZAR per month) 91 79 15% Product Penetration Rate: 1+ Products 49% 46% 8% Product Penetration Rate: 2+ Products 19% 16% 16% Consumer Division: Transactional Accounts Active Consumers (Millions) 2.0 1.6 21% Net Activations (Thousands) 72 91 (21%) Consumer Division: Lending Number of Loans Originated (Thousands) 449 336 34% Lending Origination (ZAR millions) 1,156 617 88% Lending Portfolio Outstanding (ZAR millions) (2) 1,459 709 106% Consumer Division: Insurance Number of Insurance Policies Written (Thousands) 70 50 41% Active Insurance Policies (Thousands) 641 496 29% Gross Written Premium (ZAR millions) 134 97 38% Consumer Division: EasyPay Payouts Approximate number of active cardholders (Thousands) 247 217 14% Approximate load value for the period (ZAR millions) 226 179 27% Notes: (1) 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 December 31, 2025. (2) Gross loan book, before provisions. Notable developments within Consumer Division: Within Transactional Accounts: Largest net active account growth in the quarter as compared against all other competitors, validated from public data. Growth in active consumers driven primarily by continued product and technology innovation, including but not withstanding to Bonngwe (our proprietary CRM engine) and CreditEase (our USSD distribution platform). These improvements to sales consultant and consumer experiences have driven higher cross-sell penetration for both existing and new c onsumer onboards. 51 Within Lending: 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. Our credit loss ratios have remained relatively flat over the time period despite the increase in both lending originations and loan portfolio and are well below our provisioning. As we continue to scale the lending product, we carefully monitor both our provisioning levels and risk exposures. Currently we maintain our provision policy at 6.5%. Enterprise Division Our Enterprise Division primarily consists of our ADP offering (which includes prepaid solutions and bill payments) through channels such as retailer distribution networks and digital banking apps. Following the acquisition of Recharger on March 3, 2025, we now report on the performance under the Utilities product. The underlying drivers of performance are primarily based on TPV processed. Individual product related KPI’s are shown below Q2 2026 Q2 2025 Q2 2026 vs Q2 2025 Enterprise Division: ADP Total Payment Volume ("TPV") (ZAR billions) 11.9 10.1 18% Enterprise Division: Utilities Active Meters (Thousands) 357.3 335.7 6% Total Payment Volume ("TPV") (ZAR millions) 465.0 402.8 15% Notable developments within Enterprise Division: Within ADP: We continue to deepen our integration with South Africa’s leading financial and retail institutions, successfully activating three key strategic partnerships during the period. Our footprint expanded by over 3,350 physical points of presence through the deployment of bill payment facilitation at 850 Spar locations and airtime distribution at more than 2,500 Shoprite sites. Furthermore, we onboarded Investec enabling their clients to now purchase airtime directly through the Investec app, with all transactions processed through our ADP platform. 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; and ● Finance Loans Receivable and Allowance for Credit Losses. 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 December 31, 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 December 31, 2025, including the expected dates of adoption and effects on our financial condition, results of operations and cash flows. 52 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 Six months ended Year ended December 31, December 31, June 30, 2025 2024 2025 2024 2025 ZAR : $ average exchange rate 17.1189 17.9054 17.3784 17.9327 18.1644 Highest ZAR : $ rate during period 17.5082 18.8296 18.1650 18.8296 19.6350 Lowest ZAR : $ rate during period 16.5828 17.3354 16.5828 17.1144 17.1144 Rate at end of period 16.5828 18.8296 16.5828 18.8296 17.7554 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 and six months ended December 31, 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 Six months ended Year ended Table 2 December 31, December 31, June 30, 2025 2024 2025 2024 2025 Income and expense items: $1 = ZAR 16.9556 17.8495 17.3855 17.7967 17.9031 Balance sheet items: $1 = ZAR 16.5828 18.8296 16.5828 18.8296 17.7554 We have translated the results of operations and operating segment information for the three and six months ended December 31, 2025 and 2024, provided in the tables below using the actual average exchange rates per month (i.e. for each of October 2025, November 2025, and December 2025 for the second 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. 53 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. 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 ours. Our fiscal 2025 financial results for the three and six months ended December 31, 2024, includes Adumo from October 1, 2024, and does not include Recharger because we acquired 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 Group costs. Inter-segment revenue eliminations are included in Eliminations. Second quarter of fiscal 2026 compared to second quarter of fiscal 2025 The following factors had a significant impact on our results of operations during the second quarter of fiscal 2026 as compared with the same period in the prior year: ● Lower revenue in ZAR: Our revenues increased 1% in U.S. dollars but decreased by 3% in ZAR, primarily due to a decrease in prepaid airtime revenue which was partially offset by the inclusion of Recharger, higher transaction, insurance and lending revenues in Consumer; ● Operating income increase: Operating income increased primarily due to strong performance by Consumer and the contribution from Recharger in Enterprise, which was partially offset by an increase in amortization of acquisition-related intangible assets related to change of useful lives of certain brand intangibles assets and a lower contribution from Merchant; ● Lower net interest charge: Net interest charge decreased to $4.08 million (ZAR 69.9 million) from $5.55 million (ZAR 99.4 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 second quarter of fiscal 2026 compared with 2025. On a comparable basis the equivalent interest expense related to the Consumer lending book for the second quarter of fiscal 2025 was included in interest expense ; and ● Foreign exchange movements: The U.S. dollar was 5% weaker against the ZAR during the second quarter of fiscal 2026 compared to the prior period, which positively impacted our U.S. dollar reported results. 54 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 December 31, 2025 2024 % $ ’000 $ ’000 change Revenue 178,734 176,216 1% Cost of goods sold, IT processing, servicing and support (A) 122,691 130,866 (6%) Selling, general and administration (A)(1) 40,278 36,358 11% Depreciation and amortization 13,568 8,223 65% Transaction costs related to Adumo, Recharger and Bank Zero acquisitions 47 222 (79%) Operating income 2,150 547 293% Change in fair value of equity securities 2,971 (33,731) nm Other income 3,883 - nm Loss on disposal of equity-accounted investment - 161 nm Loss on disposal of equity securities 730 - nm Interest income 508 721 (30%) Interest expense (A) 4,591 6,266 (27%) Income (Loss) before income tax expense (benefit) 4,191 (38,890) nm Income tax expense (benefit) 670 (6,412) nm Net income (loss) before earnings from equity-accounted investments 3,521 (32,478) nm Earnings from equity-accounted investments 110 50 120% Net income (loss) 3,631 (32,428) nm (Less) Add net income (loss) attributable to non-controlling interest (14) 28 nm Net income (loss) attributable to us 3,645 (32,456) nm (A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Cost of goods sold, IT processing, servicing and support increased by $0.17 million, Selling, general and administration expense increased by $0.06 million, Operating income decreased by $0.23 million, Interest expense increased by $0.09 million, and the subtotal captions from Income (Loss) before income tax expense (benefit) to Net income (loss) attributable to Lesaka decreased by $0.32 million for the three months ended December 31, 2024. (1) Selling, general and administration includes allowance for credit losses. 55 Table 4 In South African Rand Three months ended December 31, 2025 2024 % ZAR ’000 ZAR ’000 change Revenue 3,058,191 3,155,758 (3%) Cost of goods sold, IT processing, servicing and support (A) 2,099,058 2,343,713 (10%) Selling, general and administration (A)(1) 689,116 650,864 6% Depreciation and amortization 232,173 147,086 58% Transaction costs related to Adumo, Recharger and Bank Zero acquisitions 805 3,957 (80%) Operating income 37,039 10,138 265% Change in fair value of equity securities 50,000 (614,710) nm Other income 65,353 - nm Loss on disposal of equity-accounted investment - 2,886 nm Loss on disposal of equity securities 12,286 - nm Interest income 8,696 12,886 (33%) Interest expense (A) 78,564 112,244 (30%) Income (Loss) before income tax expense (benefit) 70,238 (706,816) nm Income tax expense (benefit) 11,506 (116,954) nm Net income (loss) before earnings from equity-accounted investments 58,732 (589,862) nm Earnings from equity-accounted investments 1,851 891 108% Net income (loss) 60,583 (588,971) nm (Less) Add net income (loss) attributable to non-controlling interest (242) 496 nm Net income (loss) attributable to us 60,825 (589,467) nm (A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Cost of goods sold, IT processing, servicing and support increased by ZAR 3.0 million, Selling, general and administration expense increased by ZAR 1.1 million, Operating income decreased by ZAR 4.1 million, Interest expense increased by ZAR 1.7 million, and the subtotal captions from Income (Loss) before income tax expense (benefit) to Net income (loss) attributable to Lesaka decreased by ZAR 5.8 million for the three months ended December 31, 2024. (1) Selling, general and administration includes allowance for credit losses. Revenue increased by $2.5 million, or 1.4% in U.S. dollars, and decreased by ZAR 97.6 million, or 3.1% in ZAR. The decrease in ZAR was primarily due to the decrease in the volume of prepaid airtime sold, which was partially offset by the inclusion of 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. 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 $8.2 million (ZAR 244.7 million) or 6.2% (in ZAR 10.4%), primarily due to the decrease in the prepaid airtime costs, which was partially offset by an increase in lending related expenditures (including interest expense) and higher insurance-related claims and third-party transaction fees. Selling, general and administration expenses increased by $3.9 million (ZAR 38.3 million), or 10.8% (in ZAR 5.9%). The increase was primarily due to the inclusion of 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 Merchant, 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 $5.3 million (ZAR 85.1 million), or 65.0% (57.8%). The increase was due to the change to a shorter useful life for certain of our brand and trademark intangible assets (refer to Note 7), the inclusion of acquisition-related intangible asset amortization related to intangible assets identified pursuant to the Recharger acquisition and an increase in depreciation expense related to additional POS devices deployed . Transaction costs related to Adumo, Recharger and Bank Zero acquisitions during the second quarter of fiscal 2025 included costs incurred related to the Recharger and Bank Zero acquisitions. We did not incur significant transaction costs during the second quarter of fiscal 2026. Refer to Note 2 to our unaudited condensed consolidation financial statements for additional information. Our operating income margin for the second quarter of fiscal 2026 and 2025 was 1.2% and 0.3%, respectively. We discuss the components of operating income margin under “—Results of operations by operating segment.” 56 We recorded an increase in the fair value of Cell C of $3.0 million (ZAR 50 million) during the second quarter of fiscal 2026 (refer to Note 5 for additional information). We disposed of our entire investment in Cell C in December 2025 for $3.0 million (ZAR 50 million) in cash. There were no changes in the fair value of Cell C during the second quarter of fiscal 2025. We recorded a non- cash change in fair value of equity securities of $33.7 million during the second quarter of fiscal 2025 related to a fair value adjustment loss related to MobiKwik. In December 2025, we determined that the liquidation of CPS is at an advanced stage and released an accrual raised at the time of deconsolidation of $3.9 million (ZAR 65.4 million) to Other income . Interest on surplus cash was $0.5 million (ZAR 8.7 million) compared with $0.7 million (ZAR 12.9 million) during the second quarter of fiscal 2025, and decrease due to lower interest rates. Interest expense decreased to $4.6 million (ZAR 78.6 million) from $6.3 million (ZAR 112.2 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 second quarter of fiscal 2026 compared with 2025. On a comparable basis the equivalent interest expense related to the Consumer lending book for the second quarter of fiscal 2025 was included in interest expense. Second quarter of fiscal 2026 income tax expense was $0.7 million (ZAR 11.5 million) compared to income tax benefit of $(6.4) million (ZAR (117.0) million) in fiscal 2025. Our effective tax rate for fiscal 2026 was impacted by the tax expense recorded by our profitable South African operations, non-taxable income (primarily related to the disposal of Cell C and other income) and non- deductible expenses (including transaction-related expenditures). The income tax expense was also 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 December 31, 2025. Our effective tax rate for fiscal 2025 was impacted by deferred tax impact related to the fair value adjustment to our equity securities, 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. 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 December 31, 2025 2024 $ ’000 % of total $ ’000 % of total % change Operating Segment Consolidated revenue: Merchant 131,919 74% 145,209 82% (9%) Consumer 33,118 19% 22,929 13% 44% Enterprise 14,796 8% 8,933 5% 66% Subtotal: Operating segments 179,833 101% 177,071 100% 2% Eliminations (1,099) (1%) (855) - 29% Total consolidated revenue 178,734 100% 176,216 100% 1% Group Adjusted EBITDA: Merchant (A)(1) 9,940 56% 10,089 87% (1%) Consumer (1) 9,310 52% 4,342 37% 114% Enterprise (1) 1,423 8% (31) - nm Group costs (2,896) (16%) (2,820) (24%) 3% Group Adjusted EBITDA (non-GAAP) (A)(2) 17,777 100% 11,580 100% 54% (A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Merchant Segment Adjusted EBITDA and Group Adjusted EBITDA decreased by $0.32 million for the three months ended December 31, 2024. (1) Segment Adjusted EBITDA for the three months ended December 31, 2025, includes retrenchment costs of $0.2 million for Merchant for the second quarter of fiscal 2026. Segment Adjusted EBITDA for the three months ended December 31, 2024, includes retrenchments costs for Consumer of $0.01 million. (2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non- G AAP Measures”. 57 Table 6 In South African Rand Three months ended December 31, 2025 2024 Operating Segment ZAR ’000 % of total ZAR ’000 % of total % change Consolidated revenue: Merchant 2,257,003 74% 2,600,561 82% (13%) Consumer 566,735 19% 410,687 13% 38% Enterprise 253,227 8% 159,846 5% 58% Subtotal: Operating segments 3,076,965 101% 3,171,094 100% (3%) Eliminations (18,774) (1%) (15,336) - 22% Total consolidated revenue 3,058,191 100% 3,155,758 100% (3%) Group Adjusted EBITDA: Merchant (A)(1) 170,340 56% 180,999 87% (6%) Consumer (1) 159,442 52% 77,488 37% 106% Enterprise (1) 24,316 8% (537) - nm Group costs (49,647) (16%) (50,265) (24%) (1%) Group Adjusted EBITDA (non-GAAP) (A)(2) 304,451 100% 207,685 100% 47% (A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Merchant Segment Adjusted EBITDA and Group Adjusted EBITDA decreased by ZAR 5.8 million for the three months ended December 31, 2024. (1) Segment Adjusted EBITDA for the three months ended December 31, 2025, includes retrenchment costs of ZAR 3.7 million for Merchant for the second quarter of fiscal 2026. Segment Adjusted EBITDA Merchant and Segment Adjusted EBITDA Consumer include retrenchment costs of ZAR 0.1 million, respectively, for the second 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”. Merchant Segment revenue decreased primarily due to reduced ADP revenue, driven by lower prepaid airtime volumes and margin compression from lower per-transaction fees, despite overall growth in processed volumes. 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. We record a significant proportion of our airtime sales in revenue and cost of sales, while only earning a relatively small margin. The decrease in Segment Adjusted EBITDA primarily related to a higher allowance for credit losses following an increase in default experience on our Merchant lending book and an increase in inventory written off, which was partially offset by lower IT processing, servicing and support and employment-related expenditures. Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for the second quarter of fiscal 2026 and 2025 was 7.5% and 6.9%, 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. 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 22.1 million; Q2 2025: ZAR 13.1 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 second quarter of fiscal 2026 and 2025 was 28.1% and 18.9%, respectively. Enterprise Segment revenue and Segment Adjusted EBITDA increased primarily due to the inclusion of Recharger. Our Segment Adjusted (loss) EBITDA margin for the second quarter of fiscal 2026 and 2025 was 9.6% and (0.3)%, 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 second quarter of fiscal 2026 were moderately lower compared with the prior period due to lower travel expenses and legal fees, which was partially offset by higher consulting fees. 58 First half of fiscal 2026 compared to first half of fiscal 2025 The following factors had a significant impact on our results of operations during the first half of fiscal 2026 as compared with the same period in the prior year: ● Higher revenue: Our revenues increased by 6.2% in U.S. dollars and increased by 2.9% in ZAR, primarily due to the inclusion of Adumo and Recharger, an increase in value-added services activity in Merchant, as well as higher transaction, insurance and lending revenues in Consumer, which was partially offset by lower prepaid airtime revenue; ● Operating income increase: Operating income increased primarily due to a strong performance by Consumer, the contribution from Adumo for the entire period in fiscal 2026 compared with three months in fiscal 2025 and from the contribution from Recharger, which was partially offset by an increase in amortization of acquisition-related intangible assets related to change of useful lives of certain brand intangibles assets. ● Non-cash fair value adjustment related to equity securities in fiscal 2025: We recorded a non-cash fair value loss of $33.7 million during the first half of fiscal 2025 related to MobiKwik; ● Lower net interest charge: Net interest charge decreased to $8.6 million (ZAR 148.8 million) from $10.1 million (ZAR 180.7 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 half of fiscal 2026 compared with 2025. On a comparable basis the equivalent interest expense related to the Consumer lending book for the first half of fiscal 2025 was included in interest expense; and ● Foreign exchange movements: The U.S. dollar was 2% weaker against the ZAR during the first half of fiscal 2026 compared to the prior period, which positively impacted our U.S. dollar reported results. 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 7 In United States Dollars Six months ended December 31, 2025 2024 % $ ’000 $ ’000 change Revenue 350,182 329,784 6% Cost of goods sold, IT processing, servicing and support (A) 241,314 249,941 (3%) Selling, general and administration (A)(1) 79,978 63,114 27% Depreciation and amortization 26,462 14,499 83% Transaction costs related to Adumo, Recharger and Bank Zero acquisitions 141 1,952 (93%) Operating income 2,287 278 723% Change in fair value of equity securities 2,971 (33,731) nm Other income 3,883 - nm Loss on impairment or disposal of equity-accounted investment 584 161 263% Loss on disposal of equity securities 730 - nm Interest income 1,047 1,307 (20%) Interest expense (A) 9,604 11,382 (16%) Loss before income tax expense (benefit) (730) (43,689) (98%) Income tax expense (benefit) 524 (6,334) nm Net loss before earnings from equity-accounted investments (1,254) (37,355) (97%) Earnings from equity-accounted investments 110 77 43% Net loss (1,144) (37,278) (97%) (Less) Add net income (loss) attributable to non-controlling interest (131) 28 nm Net loss attributable to us (1,013) (37,306) (97%) (A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Cost of goods sold, IT processing, servicing and support increased by $0.34 million, Selling, general and administration expense increased by $0.12 million, Operating income decreased by $0.45 million, Interest expense increased by $0.18 million, and the subtotal captions from Income (Loss) before income tax expense (benefit) to Net income (loss) attributable to Lesaka decreased by $0.63 million for the six months ended December 31, 2024. Cost of goods sold, IT processing, servicing and support increased by $0.18 million, Selling, general and administration expense increased by $0.06 million, Operating income decreased by $0.25 million, Interest expense increased by $0.12 million, and the subtotal captions from Income (Loss) before income tax expense (benefit) to Net income (loss) attributable to Lesaka decreased by $0.36 million for the six months ended December 31, 2025, to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations as a result of the correction to amounts reported for the three months ended September 30, 2025. ( 1) Selling, general and administration includes allowance for credit losses. 59 Table 8 In South African Rand Six months ended December 31, 2025 2024 % ZAR ’000 ZAR ’000 change Revenue 6,081,737 5,912,635 3% Cost of goods sold, IT processing, servicing and support (A) 4,191,300 4,481,512 (6%) Selling, general and administration (A)(1) 1,388,919 1,131,087 23% Depreciation and amortization 459,539 259,746 77% Transaction costs related to Adumo, Recharger and Bank Zero acquisitions 2,567 34,448 (93%) Operating income 39,412 5,842 575% Change in fair value of equity securities 50,000 (614,710) nm Other income 65,353 - nm Loss on impairment or disposal of equity-accounted investment 10,342 2,886 258% Loss on disposal of equity securities 12,286 - nm Interest income 18,192 23,403 (22%) Interest expense (A) 166,986 204,081 (18%) Loss before income tax expense (benefit) (16,657) (792,432) (98%) Income tax expense (benefit) 8,934 (115,552) nm Net loss before earnings from equity-accounted investments (25,591) (676,880) (96%) Earnings from equity-accounted investments 1,851 1,366 36% Net loss (23,740) (675,514) (96%) (Less) Add net income (loss) attributable to non-controlling interest (2,300) 496 nm Net loss attributable to us (21,440) (676,010) (97%) (A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Cost of goods sold, IT processing, servicing and support increased by ZAR 6.0 million, Selling, general and administration expense increased by ZAR 2.1 million, Operating income decreased by ZAR 8.1 million, Interest expense increased by ZAR 3.2 million, and the subtotal captions from Income (Loss) before income tax expense (benefit) to Net income (loss) attributable to Lesaka decreased by ZAR 11.3 million for the three months ended December 31, 2024. (A) Cost of goods sold, IT processing, servicing and support increased by ZAR 3.2 million, Selling, general and administration expense increased by ZAR 1.1 million, Operating income decreased by ZAR 4.4 million, Interest expense increased by ZAR 2.0 million, and the subtotal captions from Income (Loss) before income tax expense (benefit) to Net income (loss) attributable to Lesaka decreased by ZAR 6.4 million for the six months ended December 31, 2025, to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations as a result of the correction to amounts reported for the three months ended September 30, 2025. (1) Selling, general and administration includes allowance for credit losses. Revenue increased by $20.4 million (ZAR 169.1 million), or 6.2% (in ZAR, 2.9%), primarily due to the inclusion of Adumo, an increase in the volume of value-added services provided (primarily Pinless Airtime), an increase in certain issuing fee base prices and transaction activity in our issuing business, and an increase in insurance premiums collected and lending revenues following higher loan originations, which was partially offset by fewer Pinned Airtime sales. Cost of goods sold, IT processing, servicing and support decreased by $8.6 million (or 3.5%) and, in ZAR, decreased by ZAR 290.2 million (or 6.5%), primarily due to the decrease in Pinned Airtime sales, which was partially offset by the inclusion of Adumo, higher commissions paid related to ADP revenue generated, and higher insurance-related claims and third-party transaction fees. Selling, general and administration expenses increased by $16.9 million (ZAR 257.8 million), or 26.7% (in ZAR 22.8%). The increase was primarily due to the inclusion of Adumo; higher employee-related expenses (including annual bonuses and annual salary increases);, consulting fees, audit fees, and travel expenses; 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 $12.0 million (ZAR 199.8 million), or 82.5% (76.9%). The increase was due to the change to a shorter useful life for certain of our brand and trademark intangible assets (refer to Note 7), 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. 60 Transaction costs related to Adumo, Recharger and Bank Zero acquisitions includes fees paid to external service providers associated with legal and advisory services procured to close the Adumo transaction on October 1, 2024, the Recharger transaction in March 2025, and ongoing transaction fees related to our proposed acquisition of Bank Zero. Refer to Note 2 to our unaudited condensed consolidation financial statements for additional information. Our operating income margin for the first half of fiscal 2026 and 2025 was 0.7% and 0.1%, respectively. We discuss the components of operating loss margin under “—Results of operations by operating segment.” We recorded an increase in the fair value of Cell C of $3.0 million (ZAR 50 million) during the first half of fiscal 2026 (refer to Note 5 for additional information). There were no changes in the fair value of Cell C during the first half of fiscal 2025. We recorded a non-cash change in fair value of equity securities of $33.7 million during the first half of fiscal 2025 related to a fair value adjustment loss related to MobiKwik. In December 2025, we determined that the liquidation of CPS is at an advanced stage and released an accrual raised at the time of deconsolidation of $3.9 million (ZAR 65.4 million) to Other income. Interest on surplus cash decreased to $1.0 million (ZAR 18.2 million) from $1.3 million (ZAR 23.4 million), due to lower interest rates, which was partially offset by the inclusion of Adumo. Interest expense decreased to $9.6 million (ZAR 167.0 million) from $11.4 million (ZAR 204.1 million). 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 half of fiscal 2026 compared with 2025. On a comparable basis the equivalent interest expense related to the Consumer lending book for the first half of fiscal 2025 was included in interest expense. Fiscal 2026 income tax expense was $0.5 million (ZAR 8.9 million) compared to an income tax benefit of $(6.3) million (ZAR (115.6) million) in fiscal 2024. Our effective tax rate for fiscal 2026 was impacted by the tax expense recorded by our profitable South African operations, non-taxable income (primarily related to the disposal of Cell C and other income) and non-deductible expenses (including transaction-related expenditures). The income tax expense was also 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 fiscal 2026. Our effective tax rate for fiscal 2025 was impacted by deferred tax impact related to the fair value adjustment to our equity securities, 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. 61 Results of operations by operating segment The composition of revenue and the contributions of our business activities to operating loss are illustrated below: Table 9 In United States Dollars Six months ended December 31, 2025 2024 Operating Segment $ ’000 % of total $ ’000 % of total % change Consolidated revenue: Merchant 258,869 74% 268,860 82% (4%) Consumer 63,694 18% 44,001 13% 45% Enterprise 29,649 8% 20,816 6% 42% Subtotal: Operating segments 352,212 100% 333,677 101% 6% Eliminations (2,030) - (3,893) (1%) (48%) Total consolidated revenue 350,182 100% 329,784 100% 6% Group Adjusted EBITDA: Merchant (A)(1) 18,884 57% 17,419 84% 8% Consumer (1) 17,803 54% 8,738 42% 104% Enterprise (1) 2,692 8% 331 2% 713% Group costs (6,507) (19%) (5,769) (28%) 13% Group Adjusted EBITDA (non- GAAP) (A)(2) 32,872 100% 20,719 100% 59% (A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Merchant Segment Adjusted EBITDA and Group Adjusted EBITDA decreased by $0.63 million for the six months ended December 31, 2024. Merchant Segment Adjusted EBITDA and Group Adjusted EBITDA decreased by $0.36 million for the three months ended December 31, 2025, to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations as a result of the correction to amounts reported for the three months ended September 30, 2025. (1) Segment Adjusted EBITDA for the six months ended December 31, 2025, includes retrenchment costs for Merchant of $0.4 million, and Consumer of $0.1 million. Segment Adjusted EBITDA for the first half of fiscal 2025, includes retrenchments costs for Consumer of $0.1 million and for Enterprise of $0.01 million. (2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non- GAAP Measures”. Table 10 In South African Rand Six months ended December 31, 2025 2024 Operating Segment ZAR ’000 % of total ZAR ’000 % of total % change Consolidated revenue: Merchant 4,496,038 74% 4,820,583 82% (7%) Consumer 1,105,741 18% 788,750 13% 40% Enterprise 515,131 8% 373,843 6% 38% Subtotal: Operating segments 6,116,910 100% 5,983,176 101% 2% Eliminations (35,173) - (70,541) (1%) (50%) Total consolidated revenue 6,081,737 100% 5,912,635 100% 3% Group Adjusted EBITDA: Merchant (A)(1) 328,053 57% 312,498 84% 5% Consumer (1) 309,152 54% 156,169 42% 98% Enterprise (1) 46,723 8% 6,031 2% 675% Group costs (113,266) (19%) (102,919) (28%) 10% Group Adjusted EBITDA (non- GAAP) (A)(2) 570,662 100% 371,779 100% 53% (A) In order to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations, Merchant Segment Adjusted EBITDA and Group Adjusted EBITDA decreased by ZAR 11.3 million for the six months ended December 31, 2024. (A) Merchant Segment Adjusted EBITDA and Group Adjusted EBITDA decreased by ZAR 6.4 million for the six months ended December 31, 2024, to correct the error discussed in Note 1 to the unaudited condensed consolidated statement of operations as a result of the correction to amounts reported for the three months ended September 30, 2025. 62 (1) Segment Adjusted EBITDA for the six months ended December 31, 2025, includes retrenchment costs for Merchant of ZAR 7.4 million, and Consumer of ZAR 2.6 million. Segment Adjusted EBITDA for the first half of fiscal 2025, includes retrenchments costs for Consumer of ZAR 0.1 million and for Enterprise of ZAR 0.01 million. (2) Group Adjusted EBITDA is a non-GAAP measure, refer to reconciliation below at “—Results of Operations—Use of Non- GAAP Measures”. Merchant Segment revenue primarily decreased due to fewer prepaid airtime sales which was partially offset by the inclusion of Adumo, and a higher volume of ADP provided (primarily Pinless Airtime). In ZAR, the increase in Segment Adjusted EBITDA is primarily due to the inclusion of Adumo for the entire period compared with the prior period, which was partially offset by higher operating expenses incurred. Our Segment Adjusted EBITDA margin (calculated as Segment Adjusted EBITDA divided by revenue) for the first half of fiscal 2026 and 2024 was 7.3% and 6.5%, respectively. 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 a higher allowance for credit losses following an increase in loan originations in December 2025, higher insurance- related claims, interest expense (of approximately ZAR 41.0 million; F2025: ZAR 28.5 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 half of fiscal 2026 and 2024 was 28.0% and 19.9%, respectively. Enterprise Segment revenue increased primarily due to the inclusion of Recharger. In ZAR, the significant increase in Segment Adjusted EBITDA is primarily due to the inclusion of Recharger . Our Segment Adjusted EBITDA margin for the first half of fiscal 2026 and 2024 was 9.1% and 1.6%, respectively. Group costs Our group costs for fiscal 2026 increased compared with the prior period due to higher consulting fees. 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 and six months ended December 31, 2024. Once-off items represents non-recurring income and expense items, including costs related to acquisitions and transactions consummated or ultimately not pursued. 63 The table below presents the reconciliation between U.S. GAAP net income (loss) attributable to Lesaka to Group Adjusted EBITDA: Table 11 Three months ended December 31, Six months ended December 31, 2025 2024 2025 2024 $ ’000 $ ’000 $ ’000 $ ’000 Income (Loss) attributable to Lesaka - GAAP 3,645 (32,456) (1,013) (37,306) (Less) Add net income (loss) attributable to non-controlling interest 14 (28) 131 (28) Net income (loss) 3,631 (32,428) (1,144) (37,278) Earnings from equity accounted investments (110) (50) (110) (77) Net income (loss) before earnings from equity-accounted investments 3,521 (32,478) (1,254) (37,355) Income tax expense (benefit) 670 (6,412) 524 (6,334) Income (Loss) before income tax expense 4,191 (38,890) (730) (43,689) Interest expense (A) 4,591 6,266 9,604 11,382 Interest income (508) (721) (1,047) (1,307) Loss on disposal of equity securities 730 - 730 - Other income (3,883) - (3,883) - Net loss on impairment/ disposal of equity-accounted investment - 161 584 161 Change in fair value of equity securities (2,971) 33,731 (2,971) 33,731 Operating income 2,150 547 2,287 278 PPA amortization (amortization of acquired intangible assets) 9,481 4,867 18,615 8,614 Depreciation and amortization 4,087 3,356 7,847 5,885 Stock-based compensation charges 1,945 2,644 3,806 5,021 Interest adjustment - (757) - (1,588) Once-off items (1) 247 488 514 2,293 Unrealized gain (loss) FV for currency adjustments (133) 435 (197) 216 Group Adjusted EBITDA - Non-GAAP (A) 17,777 11,580 32,872 20,719 (A) Income (Loss) attributable to Lesaka – GAAP and all subtotal captions to Income (Loss) before income tax expense for the three and six months ended December 31, 2024 have been decreased by $0.32 million and $0.63 million, respectively, as a result of the correction discussed in Note 1. Interest expense for the three and six months ended December 31, 2024 has been increased by $0.09 million and $0.18 million, respectively, as a result of the correction discussed in Note 1. Operating income and Group Adjusted EBITDA - Non-GAAP for the three and six months ended December 31, 2024 have been decreased by $0.23 million and $0.45 million, respectively, as a result of the correction discussed in Note 1. Income (Loss) attributable to Lesaka – GAAP and all subtotal captions to Income (Loss) before income tax expense for the six months ended December 31, 2025 have been decreased by $0.36 million and, as a result of the correction, as discussed in Note 1, to the amount included in the caption Interest expense for the three months ended September 30, 2025. Interest expense for the six months ended December 31, 2025 has been increased by $0.12 million as a result of the correction, as discussed in Note 1, to the amount included in the caption Interest expense for the three months ended September 30, 2025. Operating income and Group Adjusted EBITDA - Non-GAAP for the six months ended December 31, 2025 have been decreased by $0.25 million, as a result of the correction, as discussed in Note 1, to the amount included in the caption Interest expense for the three months ended September 30, 2025. (1) The table below presents the components of once-off items for the periods presented: Table 12 Three months ended December 31, Six months ended December 31, 2025 2024 2025 2024 $ ’000 $ ’000 $ ’000 $ ’000 Transaction costs 200 462 373 537 Transaction costs related to Adumo, Recharger and Bank Zero acquisitions 47 222 141 1,952 Indirect taxes provision release - (196) - (196) Total once-off items 247 488 514 2,293 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. Indirect tax provision release relates to the reversal of a non-recurring indirect tax provision created in fiscal 2023 which was resolved in fiscal 2025 following settlement of the matter with the tax authority. 64 Liquidity and Capital Resources As of December 31, 2025, our cash and cash equivalents were $69.5 million and comprised of U.S. dollar-denominated balances of $2.1 million, ZAR-denominated balances of ZAR 1.1 billion ($65.6 million), and other currency deposits, primarily Botswana pula, of $1.8 million, all amounts translated at exchange rates applicable as of December 31, 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 reduce our general banking facilities utilized, the utilization of cash reserves to fund certain scheduled repayments of our borrowings, the increase in our Consumer lending book, which was partially offset by the positive contribution from our operating segments, utilization of our general banking facilities to partially fund the growth in our Consumer lending book and the proceeds received on disposal of Cell C. 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 ($10.6 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 ($9.0 million) in February 2026. We expect to pay ZAR 100 million ($6.0 million) payment on closing of the Bank Zero transaction. All amounts translated at exchange rates as of December 31, 2025. Available short-term borrowings Summarized below are our short-term facilities available and utilized as of December 31, 2025: Table 13 RMB GBF RMB Other Nedbank $ ’000 ZAR ’000 $ ’000 ZAR ’000 $ ’000 ZAR ’000 Total short-term facilities available, comprising: Total overdraft 42,267 700,901 - - - - Indirect and derivative facilities (1) - - 6,073 100,718 9,441 156,554 Total short-term facilities available 42,267 700,901 6,073 100,718 9,441 156,554 Utilized short-term facilities: Overdraft 21,333 353,761 - - - - Indirect and derivative facilities (1) - - 1,917 31,782 127 2,103 Total short-term facilities utilized 21,333 353,761 1,917 31,782 127 2,103 Interest rate, based on South African prime rate 9.75% 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 borrowings outstanding of ZAR 3.6 billion ($217.1 million translated at exchange rates as of December 31, 2025) as described in Note 12. These borrowings include outstanding long-term borrowings obtained by Lesaka SA of ZAR 3.1 billion, which were used to refinance our previous long-term borrowings. We have utilized all of these long-term borrowings. As of December 31, 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. 65 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 December 31, 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 Second quarter Net cash utilized in operating activities during the second quarter of fiscal 2026 was $10.9 million (ZAR 185.1 million) compared to net cash utilized of $9.2 million (ZAR 163.6 million) during the second quarter of fiscal 2025. Excluding the impact of income taxes, our cash utilized in operating activities during the second quarter of fiscal 2026 was adversely impacted by cash utilized for the significant net growth in our Consumer finance loans receivable book, which was partially offset by the positive contribution from our operating segments. During the second quarter of fiscal 2026, we paid second provisional South African tax payments of $4.2 million (ZAR 71.2 million). We also paid taxes related to prior tax years in South Africa of $0.2 million (ZAR 2.7 million). We paid taxes totaling $0.1 million in other tax jurisdictions, primarily in Botswana during the second quarter of fiscal 2026. During the second quarter of fiscal 2025, we paid first provisional South African tax payments of $3.1 million (ZAR 56.3 million) related to our fiscal 2025 tax year. During the second quarter of fiscal 2025, we paid taxes totaling $0.1 million in other tax jurisdictions, primarily in Botswana. Taxes paid (refunded) during the second quarter of fiscal 2026 and 2025 were as follows: Table 14 Three months ended December 31, 2025 2024 2025 2024 $ $ ZAR ZAR ’000 ’000 ’000 ’000 First provisional payments 4,232 3,088 71,219 56,264 Taxation paid related to prior years 154 93 2,663 1,660 Tax refund received (32) - (560) - Total South African taxes paid 4,354 3,181 73,322 57,924 Foreign taxes paid 74 72 1,264 1,332 Total tax paid 4,428 3,253 74,586 59,256 First half Net cash used in operating activities during the first half of fiscal 2026 was $2.0 million (ZAR 34.6 million) compared to net cash used in operating activities of $13.3 million (ZAR 236.7 million) during the fiscal half of fiscal 2024. Excluding the impact of income taxes, our cash used in operating activities during the first half of fiscal 2026 was adversely impacted by cash utilized for the significant net growth in our Consumer finance loans receivable book, which was partially offset by the positive contribution from our operating segments. During the first half of fiscal 2026, we paid first provisional South African tax payments of $4.3 million (ZAR 72.0 million) related to our 2026 tax year. We also 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 $0.5 million (ZAR 8.4 million). We paid taxes totaling $0.1 million in other tax jurisdictions, primarily in Namibia and Botswana during the first half of fiscal 2026. During the first half of fiscal 2025, we paid first provisional South African tax payments of $3.1 million (ZAR 56.3 million) related to our 2025 tax year. We also paid taxes totaling $0.1 million in other tax jurisdictions, primarily in Botswana during the first half of fiscal 2025. 66 Taxes paid (refunded) during the first half of fiscal 2026 and 2025 were as follows: Table 15 Six months ended December 31, 2025 2024 2025 2024 $ $ ZAR ZAR ‘000 ‘000 ‘000 ‘000 First provisional payments 4,278 3,088 72,040 56,264 Second provisional payments 284 - 4,936 - Taxation paid related to prior years 484 93 8,426 1,660 Tax refund received (52) (113) (909) (2,053) Total South African taxes paid 4,994 3,068 84,493 55,871 Foreign taxes paid 144 140 2,507 2,545 Total tax paid 5,138 3,208 87,000 58,416 Cash flows from investing activities Second quarter Cash used in investing activities for the second quarter of fiscal 2026 included capital expenditures of $3.9 million (ZAR 66.5 million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $1.0 million (ZAR 17.1 million), primarily related to the capitalization of development costs, during the second quarter of fiscal 2026. We also received $3.0 million from the disposal of Cell C. Cash used in investing activities for the second quarter of fiscal 2025 included capital expenditures of $6.3 million (ZAR 112.8 million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $0.4 million (ZAR 7.6 million), primarily related to the capitalization of development costs, during the second quarter of fiscal 2025. During the second quarter of fiscal 2025, we paid $4.0 million related to acquisition of certain businesses, including Adumo. First half Cash used in investing activities for the first half of fiscal 2026 included capital expenditures of $7.9 million (ZAR 137.4 million), primarily due to the acquisition of vaults and POS devices. We also incurred expenditures of $2.1 million (ZAR 37.3 million), primarily related to the capitalization of development costs, during the first half of fiscal 2026. We also received $3.0 million from the disposal of Cell C. Cash used in investing activities for the first half of fiscal 2025 included capital expenditures of $10.3 million (ZAR 183.0 million), primarily due to the acquisition of vaults. We also incurred expenditures of $0.6 million (ZAR 10.7 million), primarily related to the capitalization of development costs, during the first half of fiscal 2025. During the first half of fiscal 2025, we paid $4.0 million related to acquisition of certain businesses, including Adumo. Cash flows from financing activities Second quarter During the second quarter of fiscal 2026, we utilized $20.5 million from our South African general banking facilities to partially fund the growth of our Consumer lending book, and repaid $12.4 million. We utilized $1.3 million of our long-term borrowings to finance the acquisition of POS devices and vehicles to fund our Merchant lending book. We repaid $1.2 million of long-term borrowings and in accordance with our repayment schedule under our asset-based facilities. We also paid $0.3 million to repurchase shares from employees in order for the employees to settle taxes due related to the vesting of shares of restricted stock. During the second quarter of fiscal 2025, we utilized $48.9 million from our South African overdraft facilities to fund our ATMs and our cash management business through Connect, and repaid $4.5 million of those facilities. We utilized $12.9 million of our long- term borrowings to settle a portion of the Adumo purchase consideration, pay certain transaction expenses, repay Adumo’s borrowings, repurchase shares of our common stock, fund the acquisition of certain capital expenditures and for working capital requirements. We repaid $8.3 million of long-term borrowings in accordance with our repayment schedule and paid $7.2 million to settle Adumo’s borrowings. We also paid an origination fee of $0.4 million to secure additional borrowings as well as paid dividends to the non- controlling interest of $0.3 million. 67 First half During the first half of fiscal 2026, we utilized $48.5 million from our South African general banking facilities to partially fund the growth of our Consumer lending book, and repaid $53.1 million. We utilized $4.0 million of our long-term borrowings to finance the acquisition of POS devices and vehicles to fund our Merchant lending book. We repaid $2.4 million of long-term borrowings and in accordance with our repayment schedule under our asset-based facilities. We paid fees of $0.03 million related to the September 2025 refinance of our facility to fund the growth of Merchant lending book. We also paid $0.3 million to repurchase shares from employees in order for the employees to settle taxes due related to the vesting of shares of restricted stock. During the first half of fiscal 2025, we utilized $72.7 million from our South African overdraft facilities to fund our ATMs and our cash management business through Connect, and repaid $34.4 million of those facilities. We utilized $12.9 million of our borrowings to settle a portion of the Adumo purchase consideration, pay certain transaction expenses, repay Adumo’s borrowings, repurchase shares of our common stock, fund the acquisition of certain capital expenditures and for working capital requirements. We repaid $6.6 million of long-term borrowings in accordance with our repayment schedule, paid $7.2 million to settle Adumo’s borrowings, and settled a portion of our revolving credit facility utilized. We also paid an origination fee of $0.4 million to secure additional borrowings as well as paid dividends to the non-controlling interest of $0.3 million. Off-Balance Sheet Arrangements We have no off -balance sheet arrangements. Capital Expenditures We expect capital spending for the third 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 second 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 December 31, 2025, of $0.1 m illion. We expect to fund these expenditures through internally generated funds and available facilities. 68