Lesaka Technologies Aktie

Welcome to Lesaka Technologies results webcast for the fourth quarter and full year of fiscal 2026. [Operator Instructions] Our press release and investor presentation are available on our Investor Relations website at ir.Lesakatech.com.

During this call, we will be making forward-looking statements, and I ask you to look at the cautionary language contained in our press release, presentation and Form 10-K available on our website.

As a domestic filer in the United States, we report results in U.S. dollars under U.S. GAAP. However, it is important to note that our operational currency is South African rand and as such, we analyze our performance in South African rand, which is non-GAAP. This assist investors in understanding the underlying trends in our business.

I will now turn the webcast over to Ali.

Good morning, good afternoon, and thank you for joining us for Lesaka's results for the fourth quarter and full year of fiscal 2026. FY '26 was another excellent year for Lesaka, delivering on all our guidance measures, which we will come to shortly. But before reviewing the year, I want to briefly reflect on Lesaka's evolution.

Lesaka was launched in May 2022 following the merger with the Connect Group. We had set out on a journey through organic and inorganic growth to build the leading independent fintech platform in Southern Africa. As I sit here today, I'm extremely proud to reflect on what we have built, the platform, the people and the performance, challenges set and challenges met, fostering a culture of accomplishment and belief, a team whose depth, breadth, diversity, resilience and ability are fitting representatives of the extraordinary country in which they live.

Yet, until a few months ago, that team was spread across a disparate office network, operating under multiple brands, the name Lesaka was barely heard or known by our most important stakeholders, our customers. While the financial milestones we will turn to later are significant achievements, one of the biggest reasons for celebration this year is in the coming together of one Lesaka. The coming together in our wonderful new Johannesburg office in July 2026, which will be followed in the coming couple of months with our new offices in Cape Town and Durban creates the environment to foster the cross-pollination between teams that will be 1 of our core competitive advantages. We are Lesaka. We are a [indiscernible]. It is very difficult to be so when not together.

This change from where we work has been accompanied by the change in the brand unveiled in Q2 FY '26, and a month ago, the public launch of that brand. Today, I'm delighted to say that our customers now say our name, and I'm delighted that they are embracing our brand as enthusiastically as our circa 4,000 employees. It is difficult to convey the palpable energy and enthusiasm that has come with the brand launch. The Street parades, the music, the crystallization of an identity, this is a new commitment we make, a commitment to show up where our customers are, whether they be mothers or pensioners, spare shop owners or companies, whether they be in the city centers of the high [indiscernible] or the rural villages of the interior, the mountains of the Drakensberg or by the beaches and valleys of the Cape, where you are, we are, a pledge to be present with empathy, with commitment, to serve with dignity, with humility and with authenticity. Those are the silent subtle terms now ringing loudly across our country with a voice that is gathering momentum every week defining Lesaka where you are. And so to where we are as of June 2026.

For the year, net revenue grew 20% to ZAR 6.33 billion. Group adjusted EBITDA grew 41% to ZAR 1.27 billion, and adjusted earnings per share grew 210% to ZAR 6.51. It's a performance that reflects delivery on our promises.

On the right of the guidance measures we gave for FY '26, across net revenue, group adjusted EBITDA, adjusted EPS and positive GAAP net income, I'm pleased to say we delivered across all 4 measures, including turning GAAP net income positive for the full year for the first time since 2022. In addition, our net debt to group adjusted EBITDA fell to 1.9x, below the 2x we have set as our goal.

Underneath the group numbers, our 3 divisions had different years, reflecting their different stages of evolution. And I want to spend a few minutes on the revenue drivers of each. Merchant had a challenging year, as various businesses were brought together. It grew net revenue by 3% to ZAR 3.1 billion and core net revenue, which strips out hardware sales and residual products by 6% to ZAR 2.8 billion. Significantly, no single 1 of the 5 products that constitute the core of the business dominates contribution. Over the course of FY 2026, acquiring grew by 21% and to ZAR 77 million, and software grew by 34% to ZAR 391 million, while ADP, cash and lending each declined by single-digit percentages.

At the primary level of revenue drivers, we grew our average active merchant base by 12% to 132,000 while our weighted average ARPU declined by 5%.

Across our 3 largest products, we saw volume growth. Acquiring TPV grew 27% to ZAR 44 billion. ADP TPV grew 31% to ZAR 55 billion and cash TPV grew 4% to ZAR 119 billion. Merchants are transacting more with us. But on individual products, there has been a decline in take rate. ADP take rate declined 25%, mainly due to the reset and commissions for Airtime set by the mobile networks over the year. We also experienced a mix effect were our fastest-growing volumes are in lower-margin supply payments. A combination of mix effects and competitive pressure also led to the cash and acquiring take rate decline. In lending, where we feel we have a great opportunity, we under-indexed on our expectations during the year with a 3% decline in core net revenue.

The demand from our merchants is there, and they are overwhelmingly underserved, but we are still evolving the offering, which will allow us to scale the product with the appropriate capability, risk appetite and controls.

Consumer has had an outstanding year. Net revenue grew by 38% to ZAR 2.4 billion, with all 3 products growing well. Transactional accounts grew by 24% to ZAR 855 million on strong customer acquisition. Lending grew 49% and insurance grew 42%, both driven by cross-selling into our account base.

Our blended transactional fees rose by just 3%, so growth came primarily from customer acquisition, not pricing. In a largely flat market with many competitors, we grew our customer base by 19% more than any competitor. This demonstrates the best-in-class proposition, build to serve customers with technology and humanity where they are.

Enterprise had a strong year as well, growing net revenue to ZAR 913 million, with core net revenue growing 45%. Pleasingly, the growth was across both volumes and take rates for both the 2 main products, ADP and utilities.

A year ago, we told you FY '25 was a year of build for enterprise and that it will become a meaningful contributor in FY '26, it has done exactly that. We now have 3 meaningful divisions in which to build our future, combining into a unique South African fintech platform. Dan will now take you through the broader financial performance, focusing on the quarter.

Thank you, Ali. Good morning and good afternoon to everyone joining us today. Ali has described the platform we have built and the performance drivers of each division. I will explain what that progress means financially before taking you through the fourth quarter results.

FY '26 was a year of financial inflection for Lesaka. We delivered group adjusted EBITDA within our latest guidance, exceeded the top end of our adjusted earnings per share range and achieved positive full year GAAP profitability of approximately ZAR 40 million. We are clearly seeing the improvement in our financial performance translate into stronger cash generation, with net cash from operating activities at ZAR 864 million for the year.

After capital expenditure of ZAR 421 million, this leaves ZAR 443 million of positive cash generation. This is a significant improvement over the prior year and reflects the growing cash generating capacity of our business.

Our balance sheet has also strengthened. As a reminder, our medium-term leverage target has been 2x or lower. We closed the year at 1.9x compared with 2.9x a year ago and reduced gross debt by approximately ZAR 200 million. We have achieved this ahead of the Bank Vera acquisition.

Pleasingly, we have seen a significant reduction in our nonoperational and one-off charges. As shown on the slide, nonoperational charges reduced from approximately ZAR 1.7 billion to ZAR 35 million. During the course of FY '26, we made good progress in exiting our remaining noncore investments and businesses, the overall financial impact of which was quite limited compared to the previous year. In addition, one-off charges reduced from ZAR 322 million to ZAR 91 million. Taken together, these milestones reflect improved cash generation and quality of earnings as we continue to scale our platform. A significant amount of the noise and complexity has been eliminated in our numbers going forward.

Turning to the fourth quarter's performance. Net revenue increased 8% to ZAR 1.62 billion, with group adjusted EBITDA increasing 22% to ZAR 367 million, demonstrating increased operating leverage. Our adjusted earnings, which we regard as a key measure of our underlying performance, increased to ZAR 199 million.

On a per share basis, adjusted earnings increased from ZAR 0.90 to ZAR 2.40.

Our leverage ratio closed at 1.9x.

Our Consumer division delivered another strong quarter with net revenue increasing 31% to ZAR 669 million. This reflects growth in our active customer base and the continued success of our cross-sell initiatives. Enterprise net revenue increased 34% to ZAR 255 million, reflecting the contribution from recharger and growth across ADP and utilities. We are pleased to see the division making a growing contribution as its platform scale.

Merchant net revenue declined 10% to ZAR 729 million. As Ali outlined, the division faces pressure on revenue compression despite growth in transaction volumes. It is a key area of focus for us. Lincoln will take you through the operational drivers.

At a group level, adjusted EBITDA of ZAR 367 million was an all-time quarterly high for Lesaka, representing growth of 22%. Our margin increased to nearly 23% compared with 20% a year ago.

Consumer segment adjusted EBITDA increased 56% to ZAR 253 million, while Enterprise delivered ZAR 54 million, an increase of [ 155% ]. These are positive contributions and reflect the growing scale of both divisions.

Merchant segment adjusted EBITDA declined 33% to ZAR 122 million. This reflects the soft operational performance and the ongoing integration and rationalization of the division.

Group costs were ZAR 63 million for the quarter and ZAR 238 million for the year. The quarterly figure is broadly in line with the run rate discussed at our third quarter results.

Looking ahead, as we're prepared to bring Bank Zero into our platform and further scale operations, we expect a reset in our annual group cost run rate to approximately ZAR 350 million in FY '27. This increase represents an investment in group enabling functions, including data and information systems, people and risk and compliance capabilities.

We remain focused on ensuring that it supports growth and improves efficiencies across the business and expect the spend to stabilize at this level in the medium term with positive operating leverage emerging.

Turning to cash flow and our balance sheet. Cash generated from business operations was ZAR 384 million for the quarter compared with ZAR 379 million a year ago. As a reminder, these measures before working capital movements, loan book funding, bulk NPV purchases, tax and interest. After these movements, net cash generated from operating activities was ZAR 179 million compared to cash utilization of ZAR 113 million a year ago.

For the full year, net operating cash flow was ZAR 864 million. Working capital releases contributed to this result. We also continue to reinvest cash in growing our lending books with the funding requirements vary through the year, particularly on the December festive season.

Our earnings growth and cash generation have supported the reduction in our net debt to group adjusted EBITDA ratio to 1.9x. This reflects both higher EBITDA and a reduction in gross debt from approximately ZAR 4 billion to ZAR 3.8 billion.

We have also experienced the benefit of reduced leverage with a decrease in effective borrowing rates from our lenders.

As mentioned earlier, we have achieved our leverage target before the acquisition of Bank Zero. Subject to completion and the planned migration of lending book funding, we anticipate further benefits to our funding costs and external debt requirements.

Steve will unpack the timing and assumptions in more detail. Capital expenditure was ZAR 171 million in the fourth quarter, above our recent run rate, taking our full year spend to ZAR 421 million. This is above the ZAR 400 million annual guidance previously communicated and partially due to timing of operational investments and fit-out costs relating to our one Lesaka office consolidation program.

In the fourth quarter, approximately 42% or ZAR 72 million relates to point-of-sale devices and cash vaults, supporting the growth of our merchant base. A further 30% related to nonoperational CapEx for the fit-out of our new offices.

Looking ahead to FY '27, we expect total operational CapEx to be around ZAR 450 million, as we invest in the growth of our business, particularly Merchant. We also expect nonrecurring leasehold improvement CapEx of approximately ZAR 100 million as we consolidate our offices in Cape Town and Durban. We remain focused on capital discipline and the returns on investments.

In recent quarters, the benefits of the platform we are holding have become increasingly evident. Our group adjusted EBITDA margin increased to 22.6% this quarter compared with 20.1% a year ago, reflecting improved operational leverage at a group level. On the last 12 months basis, CapEx as a percentage of group adjusted EBITDA reduced from 42% to 33%.

Given the investment plan for FY '27, the near-term ratio will be elevated by trend down to below 30% in the medium term.

Combined with an improved quality of earnings, these trends highlight the strengthening financial fundamentals of Lesaka. We remain focused on improving merchant performance and generating improved returns as we continue to evolve and scale our platform.

Thank you. I will now hand over to Lincoln to take you through our divisional performance.

Thank you, Dan. Good morning and good afternoon. Four years ago, we set out to build a single platform that could serve a merchant of any size from [indiscernible] shop through a national franchise. Financial year 2026 has been a year of building that machine rather than running it.

Turning to our quarterly results. Our active merchants grew 3% to 132,000. Within that, community merchants grew 6% to 107,000 and corporate merchants declined 7% to 25,000. On our community channel, we are seeing positive traction in market product banking. As we digitize cash, merchants are enabled to transact digitally through our complementary ADP and acquiring products.

The corporate channel has been more challenging. Attrition in the base is a combination of expected patterns and market dynamics. Firstly, we exited the ATM business in the second half of financial year 2026, and we've been sunsetting legacy noncore acquiring products, representing the decline we expected. And what matters is the evolving mix of merchants we can build a full relationship with as we are demonstrating within community.

Within corporate, we are deliberately focusing on integrated acquiring with software rather than stand-alone. Blended metric ARPU declined 8% to ZAR [ 1,700 ], largely a mixed effect of gaining more community than corporate measures. Corporate stand-alone ARPU was flat at just under ZAR 6,000, confirming the merchants will reduce with noncore. Community stand-alone ARPU came down 8% from ZAR 824 to ZAR 755 due to declining take rates in ADP.

Community merchants represent more than 80% of our active base and are growing the fastest. A stable corporate ARPU, coupled with the software community ARPU produces a downward branded figure, and that will remain true for as long as community growth faster than corporate.

On product penetration, merchants using 3 or more products came down from around 10% to around 7%. That is [indiscernible] as communities where the base is growing and the new merchants often come on in a single product. We're also taken community lending criteria during the year.

Acquiring TPV grew 6% to ZAR 10.6 billion in the quarter, with active acquiring merchants up from 70,300 to 73,700. That growth came from community. In corporate, our large merchants have generally stayed with us.

[indiscernible] grew 5% to ZAR 29.8 billion across 4,900 vaults. Corporate cash continues its structural decline, down around 2%, while community cash grew by roughly ZAR 3 billion. That aligns with the expectations. Formal economic case acceptance is declining, while accounting on raw cash is not.

Cash taken into our vaults flow into ADP. ADP TPV grew 34% to ZAR 14.6 billion. Prepaid solutions grew 6% to ZAR 5.7 billion in return to growth. And supplier-enabled payments grew 62% from ZAR 5.5 billion to ZAR 8.9 billion. Supplier payment tied merchants into our ecosystem by taking cash handling risk out of their business and creating cross-sell opportunities. We have more than doubled that network in 2 years, and [indiscernible] adding on suppliers.

We are pursuing various monetization strategies given the increasing TPB, particularly within ADP.

Merchant lending originations improved sequentially throughout the year, with the fourth quarter up 20% to ZAR 249 million and the book closing 15% higher at ZAR 463 million. This has been supported by disciplined lending back into merchants we already know and whose transaction data we can see.

Software sites were flat for the year. The development that matters is Unity. Our cloud-native hospitality platform that enables acquiring at scale and essential to our long-term merchant strategy. 16% of our software base has now migrated to Unity, up from 10% a year ago. And our nearer-term opportunity lies within the sites we already manage.

On the left is our base, split by how many products each merchant uses. Merchants using a single product grew from 69,000 to 71,000, 2 products grew from 46,000 to 52,000, 3 or more products fell from 12,000 to 9,000 for the reason I gave. On the right is what wear is worth. In corporate, a second product leaves ARPU by nearly 60%. In community, it serves doubles it.

The economics of layering is not [indiscernible]. It is visible in our base today. More than 5,000 [indiscernible] merchants took a second product from us this year. As we focus on integrating the business within merchant, our expectation is to drive that market product growth.

I will now move to Consumer. Financial year 2026 has been another record year for Consumer across every metric we track. Active consumers grew 11% to 2.1 million. Our share of the ground beneficiary market rose from 13.6% to 14.9% and from 10.8% 2 years ago. I want to put that in context because in this [indiscernible], the numbers understate what our teams achieved.

In the 6 months to June, the grand beneficiary market contracted as SASSA reviewed the [indiscernible] and removed recipients who no longer qualify. We grew our base in the shrinking market, and we added more customers in absolute terms than anyone else in this segment. That is the clearest evidence of the strength of our proposition and distribution.

On economics, Consumer ARPU grew 15% to ZAR 98 per month from ZAR 85 last year and ZAR 762 years ago, a compounding effect of cross-sell. Our product penetration continued to improve. 51% of active consumers now hold 2 or more products. The first time we've been above half of our base, and [indiscernible] hold all 3, up from 16% last year and 14% 2 years ago.

We are showing the composition of consumer ARPU for the first time and intend to show it annually. Our transactional account products has remained relatively stable over the last 2 years in ARPU contribution while lending and insurance creating the ramp. We have been routinely talent on where the competition will erode our core transactional relationship. The evidence is that it has not. It has held while our base grew by more than 0.5 million, and that stability is the foundation of Lesaka.

Effectively, all our ARPU expansion has come from lending and increasingly insurance layered on to a transactional relationships [indiscernible]. On the right is the core reason that strategy works, our debt competition. We have grown our brand footprint with an emphasis of world communities where our customers live and our competitors [indiscernible]. Our model is a deleverage hybrid. We acquire customers face-to-face through people who live in the communities that they serve and transact with them digitally. The 2 are in the time.

Our lending business had another very strong year. Fourth quarter originations were ZAR 937 million, up 20% year-on-year with the outstanding portfolio growing 40% to ZAR 1.4 billion. The product mix shows how the book is evolving. Our 9-month product introduced in financial year 2025 now accounts for 63% of our portfolio. Our shorter 6-month product represents 35% of the portfolio with the balance attributed to [indiscernible] and 3 months.

The quality of the book remains strong. We only learn to consumers who are active Lesaka customers with most originations going to repeat [indiscernible]. We are growing by driving relationships with consumers we understand well, not by taking an unfamiliar risk. We have recently introduced a ZAR 5,000 range loan on the same 9 month term priced for the slightly higher risk of a larger advance, a direct response to customer demand.

Insurance continues to scale well. Gross written premiums grew 36% to ZAR 155 million for the quarter, and the in-force policies grew 34% to 753,000. Our collection ratio moved from 96% to 94%. As flagged in recent quarters, we expect this to moderate towards 90% over time as the book broadened beyond customers who onboard and account opening. This year's movement also reflects the SASSA registered [indiscernible]. Policyholders whose grants are terminated, often do not pay the next premium. At 94%, this remains an exceptionally high collection rate for this end of the market.

Financial year 2026 has been a phenomenal year for consumer.

I will now move to Enterprise. ADP TPV grew 18% to ZAR 12.2 billion for the quarter, with bill payment up 12% to ZAR 9.3 billion. We now settled on behalf of consumers and businesses with more than 650 [indiscernible], including municipalities, telcos and retailers. For bill payments, we earn a fixed [indiscernible]. For prepaid, we earn a commission on [indiscernible]. We have not raised prices. What has changed is the mix as prepaid growth partner and a larger share of revenues earned at [indiscernible].

Our [indiscernible] relationship spend banking, retail, fintech and telco, whose end consumers access ADP through the enterprise to 1 seamless integration.

Utility TPV grew 16% to ZAR 502 million for the quarter, and our active Lesaka base grew 11% to 382,000 meters. This is a different model from ADP, lower volume, higher margins, largely annuity based. We sell [indiscernible] once through retailers such as [indiscernible], and they earn on every retire for longer that [indiscernible] is used. TPV growth reflects both organic volume and the pass-through of electricity price increases. As Ali said, this was a year where the Enterprise division began to make a significant financial and operating impact on the group.

That concludes the operational review. I will now hand over to Steve.

Thank you, Lincoln. I'd like to spend the next few minutes providing an update on our acquisition of Bank Zero, which we announced late June 2025. To date, we have said very little while the regulatory process has been running. This is a key strategic milestone for us. And today, we will provide some clarity as to why and what this acquisition does for the Lesaka Group. Lesaka is a fintech, and we intend to remain true to this domain. We acquired Bank Zero because the banking license is a key enabler to our fintech strategy and our core activities.

There are things we want to do for our merchants and consumers that we can do much better with a licensed bank in the group. It should also be said that this was a natural fit in that we have an alignment on vision and ambition and have a tremendous amount of respect what your team, Michael and the team have built. There is a strong international president for fintechs going down this path. Acquiring a bank takes time, substantial capital and requires a high regulatory watermark. That difficulty is exactly what makes it valuable. And after completion, we will be on the right side of that equation.

As the owner of a licensed bank, we have a seat at the industry table. We become a member of all key payment streams and have our own clearing capability. This gives us representation in our own right, less reliance on sponsors and more freedom to execute our strategy.

This slide sets out the current status of the transaction. We announced the transaction in June 2025 when Bank Zero held a deposit base of approximately ZAR 400 million. We received unconditional approval from the Competition Tribunal in November 2025. And in April 2026, Bank Zero onboarded its first alliance banking partner, Paymentology. The 2 conditions that remain outstanding before this transaction becomes unconditional, our approval from the prudential authority and exchange control. We anticipate, given the good progress and feedback received to date that the transaction will close before the end of the calendar year.

An observation to be made on timing, we signed in June 2025, and as you will appreciate, a change in control of the South African bank routinely takes up to 18 months or longer.

This slide points to the progress made by Bank Zero during the interim period. At the time, the SPA was signed in June 2025, Bank Zero was in a loss-making position of just over ZAR 3 million per month with just under ZAR 400 million of deposits and around 40,000 customers. It was an extremely well engineered neobank, but lacked scale. Since then, it has built its alliance banking unit, deposits have passed ZAR 700 million by April and we expect a deposit base in excess of ZAR 1 billion by December 2026.

We told the market at the time of announcing the deal that we expected the bank to be at or near breakeven by completion. On our current forecast, Bank Zero is budgeted to achieve breakeven on a stand-alone basis by December 2026, before any contribution from Lesaka.

This slide sets up the compelling rationale of acquiring Bank Zero and highlights 4 primary benefits for Lesaka. The first is product. We will be able to offer a more complete set of banking services to the consumers and merchants that we already serve and move into select product arenas, expanding our customer offering, an example of which is foreign exchange and cross-border payments.

Bank Zero is a key enabler. It enhances our product offering, makes us more complete and earns a larger share of our customer wallet.

The second is the deposit-taking license itself. Our consumer float does not sit on our balance sheet today. Bank Zero will enable this and allow us to earn interest on deposits and fund our lending activities.

The third is infrastructure and what Bank Zero does in reducing our cost to serve. We depend on third parties for parts of our proposition today. The dependency of that kind carries a cost and their strategic exposure. Owning a modern and well-engineered banking platform reduces both our strategic and economic leakage. The economic leakage is what we pay others to do that which we can do ourselves. Strategic leakage results from being in a position we think that matter most to our customers are run by competitors and also [indiscernible].

The fourth is funding, and it is the one with the most significant financial benefit attached to it. Our lending books today are funded with bank debt. Once these books sit inside the bank, they can be funded with customer deposits. This materially reduces our cost of funding and group leverage. We will show you the effect of this shortly.

The banking license also widens what we are able to do in each of our 3 divisions. In Consumer, we are positioned today around the roughly 12 million South Africans who receive a social grant. Owning a bank gives us the ability to serve a materially broader market including the further 14 million or so South Africans who earn a taxable income from which we will choose the segments where we believe we can compete.

In Merchant, the bank allows us to add business banking, business savings and remittances alongside the payments, software and lending that we already provide. It enables us to give a merchant more reason to consolidate their financial activities on our platform, which is at the heart of our merchant strategy.

And in Enterprise, the bank opened a vertical that was previously closed to us, alliance banking, which provides account hosting, card programs and compliance support to fintechs, marketplaces and retailers. This is a business we could not have entered without a banking license, and it is where Bank Zero has grown substantially over the past year.

It is important to address the expected deposit base evolution. There are 3 sources. The first is the initiation of alliance banking. Following the onboarding of Paymentology as the first alliance banking partner in April, we have seen a material increase in deposits. The second is our consumer accounts. We anticipate these deposits migrating in Q1 FY '28. The third is organic growth of Bank Zero's deposits into the South African retail market. Combined, and subject to completion, we expect a deposit base in excess of ZAR 1 billion by December 2026, growing to above ZAR 4 billion by June 2029, representing a compound growth rate of roughly 60%.

At 30 June 2026, our gross debt stood at ZAR 3.8 billion, and our net debt to group adjusted EBITDA was 1.9x. Close to half of that debt is not funding the operating business, it is funding our lending books. Once Bank Zero is part of Lesaka, we will migrate these books into the bank and fund them with customer deposits. We are targeting the transfer of the Consumer book first, followed by the Merchant book, with both being transferred to the bank by the end of the fourth quarter financial year ended 2027.

On the assumption that this is achieved, gross debt falls to approximately ZAR 2.3 billion, and we estimate our leverage ratio to be less than 1x by the year ended June 2027. This does 2 critical things. One, it significantly reduces the interest cost to the group; and two, it provides us with greater flexibility with respect to capital allocation. We can reduce bank debt, buy back shares or pursue acquisitions that enhance our growth prospects. We will make these choices on the merits at the time.

Assuming our choice were to be debt reduction, given our forecasted free cash flow generation, we would anticipate close to 0 gross debt by our financial year ended June 2028. Dan spoke earlier about reaching our medium-term leverage target of 2x during this year. This slide shows the balance sheet story travels well. I will hand back to Ali, who will take you through our guidance and medium-term ambitions.

Thank you.

Thank you, Steve. Turning to guidance. For the first quarter of FY '27, we are guiding to net revenue of ZAR 1.58 billion to ZAR 1.66 billion. Group adjusted EBITDA of ZAR 200 million to ZAR 240 million, and adjusted EPS of ZAR 0.40 to ZAR 0.60.

Q1 reflects both seasonality and expected one-off and restructuring costs in the Merchant business. For the full year FY '27, we are guiding to net revenue of ZAR 7 billion to ZAR 7.7 billion, group adjusted EBITDA of ZAR 1.45 billion to ZAR 1.6 billion and adjusted EPS of ZAR 7.50 to ZAR 8.50.

This is inclusive of Bank Zero, which, as Steve said, we expect to complete by December of this year. We do not expect this to have a meaningful impact on net revenue and group adjusted EBITDA in FY '27 as the company is close to breakeven, and most of the synergy benefits are expected to accrue during FY '28.

Partly as a consequence of this, we expect our net revenue, group adjusted EBITDA and adjusted EPS to accelerate their growth in FY '28 relative to FY '27. This is represented in our medium-term ambition, where we are looking 3 years ahead. These are management's operational and financial ambitions to FY '29 inclusive of Bank Zero, but excluding any future unannounced acquisitions.

We regard them as a floor, the level we are setting ourselves to deliver better than. They're ambitions rather than guidance. They can, of course, change the business and the environment evolve, but they represent the direction and the shape we are building towards and we believe is achievable.

Operationally, by June 2029, in Consumer, we intend to reach 3 million active consumers with a meaningful contribution from non-grant recipients. In Merchant, 200,000 active merchants, with growth driven by the community segment, both in South Africa and neighboring countries. And in Enterprise, a total TPV of ZAR 80 billion.

We expect the ARPU in Consumer to marginally increase and Merchant to decline slightly due to the mix effect of community growing faster than corporate and having a lower ARPU, but for the ARPU of each segment to be maintained through product cross-sell.

In Enterprise, we are expecting a modest increase in take rate, again, largely reflective of product mix.

The consequence of achieving this would be net revenue growth of more than 20% CAGR to circa ZAR 11 billion for the year ending June 2029.

As we continue to experience operational leverage, we expect to have a group adjusted EBITDA CAGR of more than 30%, resulting in a group adjusted EBITDA margin of more than 25%. This should translate into an adjusted EPS CAGR of more than 40%, resulting in adjusted EPS of greater than ZAR 18. At current exchange rates, this implies more than $1 in adjusted EPS for the year ending June 2029.

We are grateful from where we have come and excited about where we are going. Thank you for your time, and we will now take questions.

Thank you. Operator, can you open the questions to the first person on the line?

The first question we have from Ross Krige of Investec.

I have quite a few questions. I'm going to break it up so I can get other people a chance. Just first the question was on [indiscernible]. So the first 2 parts would be, firstly, on the Q4 performance. So relative to your expectations in May, it looks like a bit worse than you expected. So just wondering what deteriorated beyond that expectation?

And then in Q1, the restructuring that you referred to Merchant for Q1, just wondering what specifically will this entail? And how confident are you that this won't continue beyond Q1.

Okay. Thanks, Ross. So the line was a bit weak, but just to repeat what I understood you were talking about the Q4 performance of Merchant and how that linked to our expectations? And the second one was around the restructuring in Q1 of next year and how confident we are that is a once off. So I'd say that -- a few things. I mean the first thing around the Q4 performance, and it's not just the Q4 performance, I think it's across FY '26.

As we said in the presentation, it is weaker than we had expected. The process of putting the businesses together requires quite a lot of energy and effort and focus, but I think we're making good headway against that. And I think that the issues are more issues of timing relative to anything else. There was some softness as a consequence of the margins, especially in the ADP business, which we also alluded to in the presentation.

The Q1 evolution is not really though an evolution that's underpinned by a change in the core net revenue. It is a cost issue. Whether that cost issue will have consequences into the beginning part of Q2 or not, I can't be sure. But what I would say is that we certainly don't expect it to go beyond that. And our guidance for the year reflects that as well.

That's really helpful. If I can just follow-up with - just a follow up on that, and that's helpful. Just in terms of the -- I guess, the 1 with the Lesaka rebranding and some of the sort of timing issues that you referred to. I mean if I look at the operational ambitions to FY '29 again in merchant, clearly, a very strong acceleration in run rates of active merchant growth relative to circa 3% in Q4 year-on-year. Just wondering, so at what point would you expect that acceleration is ready to take hold?

I think that acceleration candidly is already beginning. I think that when you are looking at the Q2 numbers of next year, you will see that acceleration within our merchant count. So obviously, Q1 is July, August and September, and it's really over the course of September that we've started to implement that strategy.

We have a question from James Labatt from Standard Bank Securities. We have a couple of questions. The first, congratulations on a great quarter and year. Appreciating that you can't give too much detail around Bank Zero, are you able to give an indication of how you intend to grow Bank Zero's deposit base, excluding the EasyPay deposits?

Steven?

Sure. As we pointed out in the presentation, we -- there are 3 sources of deposits within Bank. The first is the alliance banking -- the Alliance banking source. The second is our own consumer deposits. And the third is an organic retail treasury strategy, which we will embrace within the bank. As we pointed out, we expect that deposit base to be in excess of ZAR 1 billion by December '26. When we first signed the SPA, we had ZAR 400 million or just under ZAR 400 million of deposits and significant progress has been made in that regard.

We -- in April of this year, we were already at ZAR 700 and you can see that we're forecasting to June 29, ZAR 4 billion. And as I said, 3 pools, the alliance banking, which is scaling substantially, the organic strategy within Bank Zero and we will be moving our consumer business, the sponsorship will be moving from the African bank to Bank Zero over time, and all of those customer deposits will sit on our own balance sheet.

So I think we'll actually surprise on the upside in relation to the deposit base. And we've seen very good evolution to date.

Great. One more follow-on from James as well from Standard Bank, probably related to you, Steve. Given that the group currently has numerous fintech verticals in the table, is there the intention to continue with M&A? And if so, which areas do you think you currently are lacking, and therefore, seek to acquire in the space?

So thanks, James. Yes, there is an intention to carry on. I think we have our eye on 2 or 3 specific transactions, which could be quite transformative for us. I'm not at liberty to disclose what those would be. But I think I would want to point out that we are committed to doing acquisitions that are accretive. And I guess we would argue that we are substantially undervalued at this point. If you look at the presentation, so dilution is not something that we're prepared to do on a nonaccretive basis. But if you look at the presentation that we put forward, you will see that by June, December -- sorry, by June '27, our leverage ratio comes down under 1. and so we will have, again, an ability to use debt substantially. And given that we expect our share price to rerate, we think we'll be in a position to focus on some of these transformative opportunities.

Separately to that, as we speak today, we are doing smaller bolt-on transactions with a key focus on the SADC region in some of the jurisdictions outside of South Africa, where we are adding -- we are deepening our customer sets and augmenting our products, and those transactions will be announced in due course.

Thank you, Steve. Operator, could we open the line to the next person in queue.

We have a question from Theodore O'Neill of Litchfield Hills Research.

Question for Lincoln, discussing the merchant business. I just want to clarify exiting the ATM business had some marginal negative impact on the merchant business. Is that what you were saying?

This is a business that we've highlighted before that it was not part of the core strategy going forward. So we made the decision to exit that business. And so there was a small impact in our number that relates to that. And those costs are not costs that will occur in the future. So we've been able to exit that business responsibly.

Yes. And do you expect there will be some rebound after the acquisition is completed of the bank?

I think Ali has alluded to the transformation and changes that need to take place in the merchant business and that we want to see that growth coming through in the second half of the financial year. It's not really linked to the Bank Zero acquisition, but there are benefits when the Bank Zero acquisition comes through. So there are prospects that are good on a stand-alone basis of the merchant business because of the actions that we're going to take. But then there's an added layer that comes from what Steve has outlined about the benefits of Bank Zero for all the different divisions of the group.

Okay. And my last question, following up on the bank acquisition is, is it too early to say how you expect to promote the new business to your existing customers and the rest of the -- new customers? And will it result in any kind of meaningfully higher OpEx in 2027?

So I think the -- we spoke about in the presentation the fact that we will have a strong foray into the alliance banking space, which we think is -- from a societal perspective, is pivotal to financial inclusion, which is part of our core strategy. Separately to that, the bank is a key enabler. It's going to enable us to do a lot more for our merchants in the form of business banking, business savings, ForEx, and we will broaden that product arena to satisfy the needs of our merchants. And the important thing is that this allows our merchants to consolidate their financial activities onto our platform and gives us a much bigger share of wallet.

Likewise, from a consumer perspective, this -- owning a banking business broadens the opportunity within the consumer space. And we spoke about the fact that we will step outside of the grant niche, and we will choose areas where we can compete in both technology and product. And then in our Enterprise business, which is really under which the alliance banking business fits, this gives us an opportunity to substantially develop that business.

I think the market was looking for a new entrant, and we are very happy with the progress that has been made to date.

So on a broader -- at a broader level, I think what the bank does is it allows us to do from an economic perspective, it creates a lot of value. And from a strategic perspective, it enables our offering to broaden across all the segments that we play in.

The next question we have is from Reno Kumar of Oppenheimer & Co.

This is Guru on for [indiscernible]. Just more broadly, given incumbent banks larger size and scale like with Capitec entering into the merchant market and with some localized fintechs starting to gain some momentum. Just curious as to how these dynamics play out for Lesaka? And what are some potential implications we should be thinking about in the [indiscernible]?

Thanks very much for the question. I mean I believe that we have 3 fundamental, I suppose, strategic benefits to the incumbents. And those are sort of centered around being technology, the capacity to build technology in the modern environment for a specific purpose rather than the legacy that a number of incumbents are constrained by. And I think that, that advantage, if anything, is more pointed today with the evolution of AI than it was 5 years ago. So we definitely see that technological opportunity. And I think that, that's partly reflected in our cost to serve. It's also reflected, obviously, in the fact that Bank Zero's relative cost to service is very low.

So we need to be the most efficient provider. The second structural opportunity we have is the disruption of distribution, and that's embedded in that where you are a tagline. An enormous proportion of our business is in frontline, in sales and support that go to our customers, that go to their villages, that go to their shops and serve them where they are rather than relying on them coming to a bank branch or a retail outlet that may cost the material amount and then to get to. And that is technology-enabled, but human distribution strategy. And we think that it is what separates us and creates a material competitive moat vis-a-vis others.

And you can see the consequences of that cleanly in the consumer business's performance. The third one I would say is that we can iterate our business on the basis of what the future should look like because we are not held captive by an existing profit pool based on legacy structures. It's very challenging when you have a big profit pool and you are not free to evolve solutions necessarily based on what's the best for the society or best for the customer because of the danger of cannibalization.

We are largely free from those challenges. So when we build solutions, we always build them with the efficiency at the forefront. We can candidly disrupt a banking market that we don't currently generate enormous profit from. I think that, that sort of -- that feature out of 3 things is common for all fintech insurgents, not just in South Africa, but really across the world. And it is why, over the long run, they tend to win against the traditional incumbents.

Thank you, operator. We'll take a couple of questions from the webcast. Two questions in a row from Jamie Friedman at Sesquena International Group. Thanks for the call. Within Merchant, what would you say are the KPIs investors should watch to measure the trajectory within this segment? And tidying along, can you talk more about the distribution within Merchant? Is it direct? Or do you utilize indirect channels in the region?

So good questions. Thank you. So I think the key things to watch are the 2 primary drivers that we are communicating on a quarterly basis of the number of merchants and the ARPU per merchant. Those are the drivers of what we are calling our core net revenue, and ultimately, I think they are obviously very relevant for the underlying health of the business. And on a second degree level, obviously, we're providing now annually the product drivers where the main components are the TPV and the take rate associated with our biggest products, which are acquiring ADP and cash.

The third thing, I think, which is obviously linked to the ARPU and the product rate is the number of products that our customers are engaging with. So our capacity to cross-sell within that segment. I think that's what I would primarily focus on as drivers for the sustainable health of the business.

In terms of the distribution model, it is today primarily direct. We do have a material sales and service operation. However, it's not exclusively so. We would engage with third-party agents and create strategic alignment as well, but the dominant acquisition channel is direct.

Thank you. We have a question again from James Labatt at Standard Bank Securities. How do you think about your debt picture? Of course, there are contractual obligations, but do you have the ability to retire these early from cash generation?

Lincoln, Dan?

Yes, Thanks, James. We do have significant flexibility with our lenders. They have been long-standing supporters of our business and continue to be within that overall construct, they are an important enabler in us moving our lending books out of our existing business into Bank Zero.

Thank you. Operator, could we open the line for any questions that are still in queue?

We have a follow-up question from Ross Krige of Investec.

So just moving to the other segments of the very strong performances in Consumer and Enterprise, just firstly on Consumer. I guess the intention is just to understand the sort of medium- to longer-term margin outlook, I can see on the -- on your ambitions that it looks like revenue CAGR is aimed to be at around 20% beyond '26 in Consumer. So I'm just wondering what sort of OpEx growth, and therefore, operating leverage might we see in that segment?

And then on Enterprise, yes, very strong sequential and year-on-year performance. And I guess we're substantially above the sort of level -- EBITDA level you talked to a few quarters ago. So just wondering, again, around sustainability of that. It sounds like from your commentary that momentum is still very positive. And it sounds like, if anything, there's opportunity for higher margins. Is that a fair conclusion?

So I'll take the Enterprise and then I'll let Lincoln and if, Dan, you want to add anything on the consumer side. So yes, Ross, I think people materially underestimating the growth potential of what we're building in the enterprise business. So I do expect that of our 3 segments that will be the fastest-growing segment over the course of this year, albeit for a lower base. And I do believe that, that growth rate is sustainable for a reasonable period of time at least. And there will be the opportunity for our margin increase associated with that. I think it's telling but across both of the core products, we were able to increase volumes while we were also able to increase take rates, which is, I think, representative of the product market fit there and representative, I guess, of the dynamic which we achieved in the consumer business.

For me, 2 years ago, the consumer business's evolution is clear. I think this is the year where the enterprise business is evolution is clear. And I'm hoping that the same is true for merchant over over the subsequent year.

On consumer and the margin evolution, I don't know if...

So we're -- for the last quarter, our consumer margin was ended up with being 58%. I'm a little bit elevated compared to previous quarters. We've consistently guided the market on average 35% there or thereabouts. We do see a significant operational leverage within the consumer business, particularly as we scale it with more customers and grow our lending and our insurance businesses. So I would expect in time, our consumer margin to trend upwards from the 35%. Do just note it won't be sequential quarter-on-quarter given obviously some of the seasonality in that business particularly our lending business, but we do see opportunity for margin growth in the medium term in our consumer business.

If I may, I have 2 other questions if I can go ahead. Just on working capital. And just wondering, any guidance at all you can give on, I guess, general working capital and then the loan flows over time for FY '27 and whether there's anything to call out that should occur? How we should think about that evolving over the course of the year?

And then on Bank Zero, I understand you might not be in a position to talk about this yet, but I was wondering if you have any -- if you are able to comment on capital requirements at Bank at this point?

So I think Dan on the loan capital and maybe Steve on the Bank Zero.

Yes, Ross, is this way to think about overall cash generation is our EBITDA is largely cash and so it translates on a quarterly basis very much into cash. Our broader working capital and loan book growth is cyclical, and there's some real seasonality in there, particularly around quarter 2 and quarter 3. So I'd guide you towards looking at it on an annual basis rather than a specific quarterly basis because of that cyclicality.

Working capital guidance [indiscernible] can give is between 1% and 2% of net revenue on an annual basis. And growth in loan books, we do have an ambition set in our consumer side in the short term to continue to growing that book. It's really performing well. Our growth in -- over the last year and in the short term on our merchant lending book has been fairly constrained. That's been intentional. So over the course of the next 12 months, we would expect some significant growth coming through in our consumer lending book. Until we do Bank Zero, that will be funded through free cash flow. And obviously, then that only changes significantly our funding model once the Bank Zero transaction and funding model has been implemented.

So Ross, as you mentioned, and I'm sure you can understand it's difficult for us to talk at this point. We are waiting still for the licensing panel and for the guidance from the regulator in relation to our capital adequacy ratios. What I will say that in all of our models, we've been probably excessively conservative. So in our forecast, we probably provided more capital than we believe is ultimately justified. And clearly, as we travel with the bank over time, we would be looking to justify a CAR ratio that over time diminishes right.

Thanks, Steve and Dan.

Thank you, everyone. That now concludes our webcast.

Welcome to Lesaka Technologies' results webcast for the third quarter of fiscal 2026. As a reminder, this webcast is being recorded. Management will address any questions you have at the end of the presentation. [Operator Instructions] Our press release and investor presentation are available on our Investor Relations website at ir.lesakatech.com.

During this call, we will be making forward-looking statements, and I ask you to look at the cautionary language contained in our press release, presentation and Form 10-Q available on our website.

As a domestic filer in the United States, we report results in U.S. dollars under U.S. GAAP. However, it is important to note that our operational currency is South African rand, and as such, we analyze our performance in South African rand, which is non-GAAP. This assists investors in understanding the underlying trends in our business.

I will now turn the webcast over to Ali.

Good morning and good afternoon. Thank you for joining us for Lesaka's Q3 results presentation. I'm pleased to report Lesaka has delivered a strong set of results for Q3 FY 2026. It's also worth noting that this is substantially on a like-for-like basis. Net revenue was up 16% to ZAR 1.58 billion, short of our guidance of ZAR 1.65 billion due to slightly softer-than-expected performance in Merchant, as the division focused on the integration of the business units and closures of noncore business lines. We remain confident in the profile and trajectory of the Merchant division, as Lincoln will talk you through in more detail shortly.

From a profitability perspective, group adjusted EBITDA came in at ZAR 337 million, at the top end of our guidance and a 45% increase over last year. Adjusted earnings was up 246% from ZAR 43 million to ZAR 148 million. Similarly, adjusted earnings per share increased from ZAR 0.52 to ZAR 1.80 for the quarter. Net debt to group adjusted EBITDA of 2.1x is a significant improvement over last year and is close to our target of 2x. Dan will unpack the divisional numbers in more detail shortly.

From the last quarter, we have simplified how we present our business, emphasizing its core structural revenue drivers. We present a single total view for active consumers and active merchants and aggregated ARPU for each. Consumer ARPU is a function of our transactional bank account and the penetration of our lending and insurance products within our account base, while Merchant ARPU is a function of our 5 products: acquiring, Alternative Digital Products (ADP), lending, software and cash. Over time, we may continue to further refine our definitions of ARPU to better reflect the business strategy. We have 750 Enterprise clients. So rather than representing the drivers in Enterprise on an ARPU basis, we do so on a take rate and total process volume for ADP and utilities. These 6 variables across the group together explain more than 90% of our net revenue. We will use this framework as the key drivers of the net revenue of our businesses each quarter to thread the operational performance of each division, along with the financial results. In full year results, we will provide more granular information on the underlying drivers of each of our core products by division.

For now, I will hand you over to Dan to take you through our financial performance in more detail.

Thank you, Ali. Good morning and good afternoon to everyone joining us today. Before turning to our operating and financial performance and the components of our business, I would like to focus on the excellent progress we've made this quarter in addressing some of our legacy and noncore activities, as well as creating One Lesaka. These initiatives have resulted in a few nonrecurring items that have had a mixed impact on our results this quarter.

In our Merchant division, we made the decision to exit the ATM business, reflecting our disciplined focus on profitability and capital allocation. The business was structurally loss-making and immaterial in scale. Its wind down removes an ongoing group adjusted EBITDA drag and allows us to redeploy capital towards higher-return, digitally-led growth opportunities as part of our broader portfolio optimization. This resulted in a total impairment charge of approximately ZAR 27 million, split between our impairment entries and once-off items. Also within the Merchant division, Switchpay, a legacy buy now, pay later product, has been sunset, resulting in an impairment charge of ZAR 6.5 million recognized in the quarter.

At a group level, we focused on the collection of monies owed to us from a legacy investment and reversed the receivables allowance of ZAR 25 million. Similarly, we also deregistered a legacy offshore entity, being Masterpayment, resulting in a gain of ZAR 14 million.

As highlighted last quarter, we are progressing with our major rebrand to One Lesaka. The rebrand has been launched with an activation campaign, with the external customer rollout planned over the coming months. Rebrand-related costs of ZAR 16 million were incurred during the quarter, and we maintain our guided total rebrand costs in the range of ZAR 50 million to ZAR 75 million. Given our transformation as One Lesaka and our office consolidation, we also recognized an impairment charge of ZAR 26 million on lease premises due to lower utilization rates.

Finally, the accelerated write-down of our intangible assets relating to our legacy brands has tapered off with the purchase price amortization of intangible assets now at ZAR 98 million, which reflects a more normalized run rate.

Looking at our divisional performance, Lesaka delivered nearly ZAR 1.6 billion net revenue, a growth of 16% for the quarter. Merchant net revenue declined 4% to ZAR 751 million, as previously explained by Ali. We expect Merchant net revenue to be flat next quarter. However, as you will see on the next slide, segment adjusted EBITDA for Merchant increased this quarter.

In contrast, the Consumer division delivered another record performance with net revenue increasing 41% to ZAR 627 million, an all-time quarterly high. The Enterprise division also performed strongly, delivering net revenue growth of 51% to ZAR 220 million. This growth includes 3 months of contribution from Recharger compared to 1 month in the prior period. However, it also reflects meaningful organic growth, as the division's refreshed strategy and operating structure continue to gain traction in the channels they serve.

At a group level, adjusted EBITDA of ZAR 337 million was an all-time quarterly high for Lesaka and represents a 45% year-on-year increase. The Merchant division recorded a 3% increase to ZAR 151 million. We are pleased to see evidence of the efficiencies implemented over the past 6 months, translating to an increased margin to above 20%. Our medium-term expectations remain that the Merchant margin will continue to increase to above 30%.

Consumer segment adjusted EBITDA increased by 81% to a record ZAR 213 million, reflecting strong operating leverage and disciplined execution. Last quarter, we saw over ZAR 1 billion of origination volume for our lending products, and we are starting to see the positive impact flow through to our financial performance. The Enterprise division delivered a segment adjusted EBITDA contribution of ZAR 35 million as the business scales.

Group costs were ZAR 62 million, slightly elevated due to an investment made in improving finance, risk and compliance frameworks and strategic hires at a head office level. This is a more accurate reflection of our group costs run rate going forward.

Adjusted earnings per share continued its strong upward trajectory, increasing 247% to ZAR 1.80 per share, underscoring our ability to effectively integrate and extract synergies from our inorganic growth activity and our ability to scale organically once the integration and transformation phases are complete.

Our strong cash generation continued this quarter with cash generated from business operations of ZAR 365 million, closely tracking our group adjusted EBITDA. Given the short duration of our credit cycle and seasonality effects, we only required an additional ZAR 10 million of funding for our lending books, reflecting the efficiency and scale of our operations.

We paid ZAR 98 million in cash interest. And while not presented on the slide but reflected in the annexes to this presentation is a release of ZAR 320 million of seasonal working capital compared to the prior quarter. In aggregate, the group generated a pleasing ZAR 608 million in operating cash flow.

We continue to manage our CapEx carefully with ZAR 76 million of investment this quarter. Our CapEx was relatively evenly split between cash vaults, POS devices, and software and platform development.

The strong earnings growth and cash generation, combined with prudent capital allocation, resulted in our net debt to group adjusted EBITDA improving to 2.1x this quarter and bringing us closer to our medium-term target of 2x.

In recent quarters, the benefits of the platform we are building have become increasingly evident. Continued growth across our distribution footprint, combined with ongoing product innovation, has further improved operating leverage with operating margin rising from 17.2% a year ago to 21.4% this quarter. As the transformation of our Merchant division progresses and following the completion of the Bank Zero acquisition, we continue to expect operating margins to trend towards over 30% over the medium term at a group level.

A similar positive trajectory is evident in our capital investment profile. Consistent with prior guidance, we expect CapEx to remain below ZAR 400 million per annum. On the last 12 months basis, CapEx as a percentage of EBITDA has reduced from approximately 46% a year ago to 29% this quarter. Together, these trends highlight the strengthening fundamentals of the business as we continue to evolve and scale our platform.

Thank you. I will now hand over to Lincoln to take you through our divisional performance.

Thank you, Dan. Good morning and afternoon, everyone. As Dan has alluded to, we're in the middle of building an integrated merchant business from 5 historical components. We are modernizing our core systems into a unified backbone, enabling our servicing staff to provide a more efficient and effective customer service. We are centralizing data, creating a 360-degree view of each merchant, and implementing AI to strengthen our risk capabilities and reduce customer friction. This enables better credit decisions and reduce fraud. Furthermore, we are leveraging these assets to drive smarter customer engagement. For an example, AI-enabled WhatsApp support and targeted cross-sell engines will simultaneously enhance the client experience, and we believe will drive higher ARPU.

At an overall level, active merchants increased by 6% year-on-year. Looking at the mix of our active merchants, our community merchants grew 8% year-on-year. Last year, we restructured our community merchant sales force to allow for a more targeted distribution strategy, and we are pleased to see our community merchant portfolio increase. The number of active corporate merchants fell 4% year-on-year, primarily due to increased competition in monoline products, for an example, merchant acquiring.

At the aggregate, Merchant ARPU was 7% lower than last year and driven primarily by an increase in the number of community merchants as a percentage of the total. Community merchants are growing faster than corporate merchants, and this has a predictable impact on blended economics as they generate materially lower ARPU than corporate merchants, as shown in the slide.

As the community segment becomes a larger proportion of the overall base, aggregate Merchant ARPU naturally decreases even while engagement levels, transaction volumes and profitability increase. Secondly, as mentioned last quarter, the community ARPU reduction was impacted by a network-driven reduction in airtime commission rates. Since that reset, ARPU has been relatively stable quarter-on-quarter.

Within the corporate space, we saw flat performance in ARPU. Our current aggregation of ARPU includes network fees that is [ interchange ] and from our corporate segment, but excludes network fees from our community ARPU. We expect to review the definition of corporate ARPU in the new fiscal year to align the treatment of network fees to community ARPU.

Product penetration in Merchant was flat at 46% for 2 or more products. The merchants with 3 or more products reduced to 7%. The primary driver for this decline is due to the increase in our community merchant base who typically engage with ADP and acquiring. The total number of merchants with 3 or more products declined as we refined our lending criteria to the community merchant base.

While penetration rates for multiproduct accounts have shifted over the period, we are in the early stages of our ecosystem journey. Our current performance is intentionally driven by a land and expand strategy. As seen on the left-hand chart, we have a broad base of merchants through hero products and a set of highly valued ancillary products that tie merchants into the Lesaka ecosystem.

The core of our thesis remains unchanged. As product density increases, so does the value of the merchant. Within our community merchants, we can see that moving from a stand-alone solution to a [ C+ ] product proposition drives a 94% uplift in ARPU. Increasing our product penetration in community relies on Merchant's strategy to expand lending and cash to our existing community base.

In the corporate segment, Lesaka experienced a 60% uplift in ARPU when our customers shift from 1 product to 2 product. We currently have no corporate clients with 3 or more products. Our industry-specific strategy in Merchant is focused on increasing our product penetration in Merchant. For example, in the restaurant and hospitality segment, we're adapting our product and sales force to be able to serve our clients with a combination of software, acquiring, lending and cash. In the fuel industry, we're developing our acquiring and software capabilities to augment our current cash and lending offerings. We believe this ecosystem product approach, coupled by a single distribution and servicing capability, will grow percentage of corporate merchants with 3 or more products in the medium term.

Looking at our Merchant volumes for the quarter. Card TPV increased by 7% to ZAR 10.6 billion, with active acquiring merchants up 9% to 74,000. On the cash side, volume grew 2% with a slight increase in wallet for the quarter of 4,900. Within the base, as with previous quarters, we have seen net reduction in the corporate merchant base and good growth in the community base. The growth of our cash offering in the community merchant space has supported the strong growth in the TPV of our Alternative Digital Products, or ADP for short.

As community merchants immediately digitize their cash taking in their own wallets or in the nearby merchants, they have more value in their wallets to use for airtime, electricity and voucher purchases for resale and supplier payments. ADP TPV is up 30%, reflecting traction for our offering. Following the margin compression seen within our prepaid solutions in financial year 2025, particularly airtime, we are pleased to see a normalization and return to growth in these volumes with 11% increase in prepaid solution products and a 47% increase in supplier-enabled payments.

Turning to Merchant lending. Originations in quarter 3 were 22% lower year-on-year at ZAR 227 million. The comparative period in quarter 3 of financial year 2025 included unusually high spike in originations from our corporate channel, driven by fuel-related lending push and the rollout of preapproved lending offers late in the year 2024, which then originated in the quarter 3 financial year 2025. While January and February were muted, we did experience a very strong March, much of which was driven by demand in the fuel sector ahead of anticipated price increases.

Our lending portfolio closed 4% up at ZAR 427 million. We are comfortable with this lending activity, and it reflects a deliberate decision to be conservative in merchant credit, whilst we refine our Merchant lending offering as part of our broader Merchant ecosystem. This is not about a lack of opportunity. It's about exercising capital discipline and protecting the long-term quality of the book. Software, particularly through our Unity platform in the hospitality space, is central to our long-term Merchant strategy. Unity is not about site growth alone. It is a cloud-native platform that enables the Merchant ecosystem and sets the platform for multiproduct penetration at scale. Approximately 50% of all Unity clients are fully integrated into our acquiring proposition with 80% of all new software clients on board utilizing Unity.

In conclusion, we are laying the foundation for a stronger, scalable business through platform consolidation, data and AI investment, and integrated product strategy.

Consumer had another excellent quarter with an 81% increase in segment adjusted EBITDA. As expected, our KPIs have all shown impressive increases with active consumers up 19%, ARPU also up 19% and cross-sell success continuing its upward trend. Active consumers now stand at over 2 million with a permanent grant recipients of 1.7 million, representing a 14.6% market share. Looking forward, our medium- to long-term expectation is that we could reach a 25% market share, based on our current growth trajectory and distribution plan.

Encouragingly, in quarter 3, only 3 players showed growth during the quarter, of which Lesaka grew the largest. Net additions in quarter 3 were almost 26,000, more than double our nearest competitor, demonstrating the strong brand and product fit we have developed in this segment. Importantly, growth is not dependent on competitor dislocation alone. There are approximately 150,000 new grant entrants every month, and our expanding distribution footprint positions us strongly to capture a disproportionate share of these new customers. By June, we expect to have increased our footprint to a further 30 community sites and a further 15 new branches. This expansion materially strengthens our access to both urban and rural grant recipients and support sustainable organic growth.

Our ARPU has increased by 19% year-on-year to ZAR 99 per month, driven by continued engagement and cross-sell success. At the end of quarter 3, 20% of our active consumer base was utilizing our full product suite, up from 17% last year, with 50% of our base having 2 or more products. This consistent increase in our product penetration rate is a clear demonstration of the power of our value proposition and superior distribution capabilities within the segment and is a clear indication of our ability to continue to grow.

Our lending product has been the key driver of our Consumer division's financial performance. In the third quarter, we originated approximately ZAR 856 million, representing a 33% year-on-year increase, with the outstanding book growing 73% to around ZAR 1.4 billion. This momentum reflects the successful rollout of our 9 months loan product, which now represents nearly 50% of all new lending originations. We expect this to continue increasing, supporting growth in both book size and average tenure. We are also evaluating a modest increase in maximum loan values and repayment terms to meet customer demand, while maintaining our disciplined risk framework.

We have a deep understanding of our lending base with a high proportion of originations to repeat and long tenured customers. This supports effective credit scoring, provisioning and product development. The portfolio continues to perform within normal parameters, and our 6.5% provision level remains above the observed risk experience with any refinement to be communicated transparently at the end of the year.

Turning to our funeral and pension plan insurance business. We delivered another very strong quarter. Gross premiums written grew by 38% to ZAR 146 million, while in-force policies increased by 34% to 704,000. We have recently started rolling out insurance policy sales to non-Lesaka consumers within Lesaka ecosystem. This represents a significant opportunity with an estimated 3 million grant recipients currently uninsured. We are leveraging our existing distribution network and sales force to access this market efficiently. While the initiative is not yet financially material, it is strategically important and directly aligned with our purpose of extending affordable financial protection to underserved communities.

Our insurance product is a key driver for compounding our product penetration in the short to medium term. As we increase our attachment rates of insurance at the time of client onboarding and we increase our stand-alone insurance sales, we do expect the collection rate to moderate to circa 90% over time. Importantly, we believe this will still result in a net positive gross written premiums for Lesaka. We believe the overall quality of our insurance book will continue to remain high and compare favorably against the wider insurance market.

The Consumer division continues to demonstrate strong momentum with resilient growth drivers, effective last-mile distribution and clear product relevance. By leveraging our technology and distribution network in tandem, we are confident that Consumer will remain a core engine of value creation for Lesaka, delivering both financial performance and meaningful impact for the communities we serve.

I will now move on to the performance of our Enterprise division. The Enterprise division continued to make solid progress this quarter, contributing ZAR 35 million or about 10% to group adjusted EBITDA. Strategic progress is evident in ADP TPV for the quarter, which increased 19% year-on-year. Bill payments were up 12.5% to ZAR 9 billion. And prepaid solutions grew by more than 50% to ZAR 2.8 billion as we continue to expand our collector and receiver ecosystem. As highlighted in previous quarters, we've also partnered with several key players, increasing our distribution and collection footprint. We are now seeing the growth from our channel partners, driven by targeted marketing campaigns.

Our ADP take rate improved by 22% to 1.3%. As a reminder, we earn a fixed fee per bill payment transaction. However, we earn a commission on TPV for facilitating buying and selling of prepaid solutions. As the business scales the prepaid solution offering, we will see a product blend leaning towards an ad valorem revenue model.

In Utilities, TPV increased 18% to ZAR 477 million on a like-for-like basis with active meters rising to 368,000. Excitingly, in quarter 4, we will launch an electricity advance product to our utilities customers. This product will allow Lesaka utilities customers with active meters to load electricity when they are short of funds by an interest-free facility. The business model is simple as we will charge a flat fee for the service and recover the advance from future purchases. We look forward to sharing more information as the product rolls out through the base.

Thank you. That concludes our operational review. I will hand back to Ali now for the outlook.

Thank you, Lincoln. Innovation is at the heart of who we are. We don't just want to win the game. We want to change the game. So we thought to provide examples of 3 strategic initiatives that demonstrate that across our businesses and which set the foundation for our continued competitive advantage.

Firstly, we believe payment rails globally will increasingly move to blockchain as a superior underpin from a resilience, availability and cost of settlement perspective. We also believe that in the South African context, a ZAR-denominated stablecoin will form the foundation of this. As a founding partner of ZARU, we intend to pioneer use cases across our ecosystem to allow consumers and merchants to settle securely and at low cost, eliminating the friction of traditional banking hours and fees. We will provide more updates on what we are doing and what this should mean at our end-of-year investor presentation.

Secondly, the scarcity of credit, provided in a frictionless, fair and sustainable manner across the continent is a major opportunity for us. We choose to focus on making that credit available to underserviced consumers and merchants where traditional banks don't have the capability, competency or desire to compete. One focus for us in this respect is in short-term credit advances against utility products like airtime, data and electricity. You will see increased activity from us in this space, leveraging either touch points to our existing banking customers through an app or USSD channels or utility customers in homes where we provide the electricity meter. In both instances, we would expect to have an advantage in repayments vis-a-vis others.

Thirdly, the explosion in AI tools offers a wonderful opportunity for a pioneering technology company with digital enablement and efficiency of operations at the heart of our values and competitive advantage to further this advantage relative to traditional incumbents with legacy platforms. We are actively embedding AI tools across our group from engineering teams' code development to new product launches, to fraud management and operational efficiencies that allow us to better provide services more securely and more sustainably, complementing our human engagements. Again, we will be providing in due course more details on some specific initiatives and the impact thereof.

Turning to guidance. We are tightening our guidance forecasts for the rest of this financial year. We are updating our net revenue guidance to ZAR 6.2 billion to ZAR 6.5 billion for FY '26, the midpoint of which implies 20% year-on-year growth. We are on track to deliver our group adjusted EBITDA guidance for the year as we did for this quarter, but also tightening the guidance range to ZAR 1.25 billion to ZAR 1.35 billion, implying we expect to come in at the bottom end of the previous range. The midpoint of our updated group adjusted EBITDA guidance implies 43% year-on-year growth for FY '26.

We are also updating our adjusted earnings per share guidance for the year. We previously provided guidance of at least ZAR 4.60 per share, and we are now raising this to a range of ZAR 5.50 to ZAR 6.00 per share, the midpoint of which implies a growth greater than 150% on a year-on-year basis. We will increasingly reference our adjusted EPS as the primary measure of our profitability. We are also reaffirming from a net income perspective, without exclusions, we expect to be profitable for FY '26, the first year this will be the case since the creation of Lesaka 4 years ago in May 2022.

In our end-of-year presentation in September, we will be providing our guidance for FY '27 and also our medium-term outlook for the next 3 years. Given that we expect the Bank Zero acquisition to be completed in the coming months, that being so, we will be providing guidance for FY '27 and the medium-term outlook inclusive of Bank Zero.

Thank you for attending our earnings presentation. We will now address any questions you have for the team.

Chorus Call, please, can you open the line for Ross Krige from Investec?

Three questions for me. Just firstly, on the Consumer, just with regard to the very strong margin accretion that we're seeing consistently over time and the jump up in Q3, if I look ahead at some of the opportunities there, so you're talking about the volume growth prospects, the size of the market that you're addressing there, and you've talked about the cross-selling prospects and you've executed on that. And then, you've alluded to that comment on risk performance being better than what your provisioning suggests, which you'll give more detail on. But if I put all of that together and think about operating leverage ahead, am I correct in saying that, that points to significantly higher EBITDA margins even off this base? That's the first question. I can carry on, if you like.

We can address that one, if it's helpful, Ross, first. I mean, the short answer is, we do see the ability to continue to expand those margins. I mean, year-on-year, those margins have gone from 26% to 34% in the Consumer business. And yes, we do believe there's more room for growth as we scale that platform.

Great. Okay. Moving on to Merchants. So just 2 parts to this question. One on the ARPU dynamics. So Lincoln explained a lot of this. But maybe just in terms of the outlook, if I look at active merchants by type, so across corporate and community, should we expect to see stable ARPU going forward or some pressure as the mix changes within each of those segments? Or -- yes, just any comment on the next 6 to 12 months?

And then, on profitability, clearly, the margin improved there as well, as you talked about. I'm just trying to understand what the sort of runway if we look at the next, I guess, 6 months, 12 months, whether or not some of the, I guess, cost-saving activities that you've embarked on will still come through and how long that runway is.

So the -- I mean, I think I'm not sure, Ross, it was you at the last call or somebody else who asked the question around how we see the evolution of the margin. And our perspective is that we see a continuation of the evolution in the next quarter. However, from FY '27, we do expect to see a different trajectory there. And giving you a little bit more granularity around that. Obviously, we have a smaller ARPU in the community space than in the corporate space, but the community space is growing faster. However, within community ARPU, we expect in the coming year to see an increase, both because of the scale and quality of customers that we onboard, as well as because we expect to have an increase in the product penetration within that base in a similar way as we experienced that in the Consumer business.

What I would also say is that the ARPU, while the number of merchants and the ARPU is a good representation of the net revenue, and that's why we're focusing the net revenue drivers on that, it doesn't obviously speak to margin, and that margin is both the gross margin and the EBITDA margin. And we believe that we have room in both capacities.

From an EBITDA margin perspective in the Merchant business, this quarter last year, we had an 18.7% margin. And obviously, in this quarter, it's north of 20%, and that's despite the fact that, obviously, the revenue performance was not where we expect it to be going forward. We do see that margin having substantive room for growth. I think we have previously communicated that we think the Merchant business should be targeting EBITDA margins of closer to 30% and execution will define how quickly we get there. But like the Consumer business is evolving EBITDA margin, the Merchant business should follow a similar trajectory.

I just -- from a Lesaka perspective as a whole, I think it's probably also worth observing that we see operational leverage there as well. While we have made some investments in group costs, we don't expect that to be growing at the same rate as our EBITDA margin. So group EBITDA margins, which have gone from 17% to 21%, we expect to also be increasing substantively.

The question on the sort of the margins within the businesses, you always have to look at a few different components on the ARPU -- from the ARPU perspective. So the first one is the mix between corporate and community, where there are differential components. The second one is the cross-sell, how effective we are in basically layering the product because obviously, you make much more ARPU around them. The third is, there is, because ARPU is just a revenue number, some aspects of seasonality associated with it. So if you were to have looked, say, for example, back to last quarter because it was during the festive season, you would expect that to be larger volumes or throughput. So you'd expect that to be larger ARPU as well.

And the final thing to consider in that respect is, obviously, the margins per product. And you will get, going forward, better understanding of those underlying drivers because we will be providing, at the end-of-year presentation, some of the second derivatives of that. But in essence, the focus in the Merchant business over this year has been about trying to improve the quality, trying to improve the unit economics as we signposted because we want to be scaling into something that has an excellent return profile around it. And we are still in the process of doing that. I think that the strategic intent is ahead of the operational reality there, whereas in the Consumer business, I think we are fully in the slipstream of where we wanted to be.

One thing I would just emphasize within that Consumer business is, there remains, within our core product offering for the SASSA grant recipients, material room, but that is not where we are circumscribing our aspiration. Clearly, we have an aspiration, obviously, to extend that as well. So there's sort of the existing market share within the existing segment. And then, there's the opportunity to move into adjacent segments.

On Enterprise and utilities, just wondering if -- on Enterprise and utilities, just wondering if you could guide on what the net financial impact could be from migrating the other [indiscernible] of ADP volumes to Merchant?

Sorry, Ross, I don't think I heard that properly.

Sorry, I'll repeat. So, on Enterprise, specifically within utilities, I think there was a comment on migrating some of the subproducts of ADP volumes, the prepaid volume to Merchant, I think specifically. And then, on the -- I think there was a comment that they'll be migrating the rest of those products, the rest of the subproducts of ADP volume from [indiscernible] to Enterprise.

I understand. I understand. So basically, think of the Enterprise division in addition to having external customers, 750 corporate clients, it's also servicing ourselves. And there is operational efficiencies that can be released as a consequence of that, which should speak again to margin improvement across the group, part of which would be represented in the segment that it services. Both consumer and merchant would ultimately be consumers of Enterprise services, but would also then be represented in the Enterprise business' margin. So it would be distributed. Exactly the quantity of it, it's, I'd say, probably less about the scale of the operational cost saving and more about the control and the quality that we can provide as a consequence of bringing it in-house and not having third-party dependencies on our ecosystem that affects our product delivery. And that ultimately will speak to our promise to our customers.

There is also -- there is some economies of scale, however, in being able to aggregate our purchasing capacity, right? We will clearly be a very material player as a consequence of that aggregation. So we do expect to see margin improvement on what we can buy as a consequence.

I'm going to move now to Frank Geng from Briarwood Capital.

Just had 2 quick ones on Consumer. One is, I guess, what's driving the greater ARPU numbers year-over-year and sequentially? Is that mostly kind of the loan and the insurance book or any other initiatives? And then, secondly, on the margin, yes, it seemed a bit higher versus the past and especially kind of on an incremental basis. So curious what's driving that. Is that mostly kind of lending, or there's a provisioning kind of step-down? Just any color on that?

Lincoln, do you want to have a go?

Yes. So thanks, Frank. I think, as we've highlighted before, our ability to cross-sell is a key, key part of our success. The distribution model that we have enables us to be where the customer is and cross-sell the loan and cross-sell the insurance. And I think that you're starting to see that growth, and that momentum will continue. The other things that Ali is mentioning will be adding to that. But for now, there's still room within that consumer base to be able to cross-sell the loans and be able to cross-sell the insurance.

Already when you look at some of the numbers, you're starting to see that over 50% of our clients have got 2 or more products with us and that more than 20% of our clients have got 2 products with us. So you're starting to see that we've got that ability to cross-sell even more into that base, and that will improve the business substantially.

Yes. I think the overall outlook on our provision has been very conservative. We have tried to remain in line with the risk that we see, but we have signaled that there are opportunities to make some changes. And when we do make those changes, we'll be transparent about what those changes are looking like. But for now, even all the new changes that we've made in the loan product, both in terms of the duration of the loan and the size of the loan, has not seen any material change in the quality of the book. The quality of the book remains very, very good.

We are going to move to questions from the webcast now. And we have a few questions from [ James Labbert from SBG Securities ]. Question one, since the start of the Middle East conflict, are there any particular developments you have observed in Consumer and Merchant? Talk about collectability of premiums and loan repayments, but also credit quality. Any commentary on the resilience of clients would be appreciated.

I mean, I think the -- in substantial terms, the answer is, not really in terms of issues relating to credit quality or -- there's obviously a consequence of the Middle Eastern events in terms of the cost of fuel, and so disposable income from the market as a whole. But I would just emphasize that we are really not a proxy on the market. Our opportunity is in effectively growing substantively our share in the market by having a superior proposition. And so, our expected growth rates are more around our capacity to either take market share or alternatively by growing a market that is currently not digitized.

I don't know, Lincoln, if you have anything specific you want to add to that?

Yes, I would say the same thing to -- that Ali said. In the actual core business, we have not seen any material changes that are there. Of course, there are long-term impacts that are there in the broader society. But in our business, there is no material impact that we see, either in our ability to collect or in the credit quality or in any of the performances of the underlying business.

And then, Dan, if you have anything?

The only thing I'd add to that is, when there's dislocation in the market, it creates an opportunity for us to respond to our customers' and our clients' needs as well. We successfully did that in our Merchant business in March, which was, let's call it, the starting point in the Middle East conflict with fuel prices increasing, gave us an opportunity to support our fuel merchants. And in our Consumer business, should this lead to elevated inflation, it might create an opportunity there for us to support our clients, of course, within appropriate credit measures.

I think, in general, as a business, we do have pretty good resilience, but there will always be specific areas or specific things. I think what we're trying to message is, it's not anything that is very material in terms of the P&L performance. But I could also point out that clearly, as a business, we also roll out point of sales. Those point of sales, overwhelmingly they are -- they come from Asia. And so, you do have to be cognizant of not just the availability, but also the exchange rate. And if the exchange rate improves vis-a-vis, then we will have a benefit. And if it declines, it will have a cost.

Question number two. The revenue increasing at a group level -- with revenue increasing at a group level, how do we square the decrease in cost of sales? Is there some favorable pricing from suppliers or any other dynamic at play that has allowed you to manage cost of sales as well?

There is a lot of dynamics in that. So the first one is, we are consciously exiting business lines that are not core, that have lower margin, and so you have a mix effect around that. We are growing, in revenue terms, higher-margin businesses faster. And we are also benefiting from scale and operational efficiencies across the business. So it's not one single thing. It's a number of things coming together. And the rather pleasing thing is, I don't think we are nearly through that journey. We have quite a lot of operational efficiencies that we can extract in the business over time to continue to improve that. And there are tools that are also being made available to us increasingly as a consequence of AI innovation that will allow us to do more -- even more than we might have thought was possible before.

Question number three. How should we think about our working capital cycle in terms of collecting receivables, extending debtors and selling inventory? Are there periods in the year that are typically more favorable than others?

Dan?

There is a cyclicality in our working capital cycle. So quarter 2, let's call it, the December period, is peak volumes for us. So therefore, our inventory naturally spikes in that period of time. Quarter 3 compared to quarter 2 is a -- results in a de-gearing in our inventory. And you would have seen in this period, inventory clawed back about ZAR 120 million quarter-on-quarter. So, that drove a large portion of the cash inflow, working capital cash inflow.

Similarly, our receivables also has a similar cyclicality. Our payables are roughly flat, so that unwinds a little bit less. So comparing things quarter-on-quarter, quarter 3 sees an unwind, quarter 4 normalization and slight increase, and in quarter 1 of the next financial year similarly.

And the last question from James. To what extent does Bank Zero integration enable you to up those 3-plus cross-sell metrics in Merchants, particularly in the corporate space?

So I think that Bank Zero transaction has multiple benefits for the business. But specifically, in the merchant space, clearly, Bank Zero has had a historical focus on SMEs as being a digital bank provider for them. The consequence of the transaction should allow us to effectively be able to offer a banking product through our existing sales force, our existing relationships, which should be accretive -- augmentative in terms of the ARPU that we would be able to generate, especially because we should be able to also generate benefit from float, as well as from other sources.

The next question is from Jamie Friedman from Susquehanna International Group. CapEx as a percentage of revenue seems to be declining and helping free cash flow, in Page 11. Is that a function of mix? How should we think about it?

Dan, go ahead.

On an aggregate basis, we have guided the market, on an annual basis, roughly ZAR 400 million of CapEx is the right quantum of CapEx to support the group, both from the maintenance and from our growth ambitions. There's a little bit of seasonality around that in terms of timing of delivery of POS devices, for example, similarly, timing of when we bring on board capitalized software development costs at the appropriate stage. So quarter-on-quarter, some variability. But I'd look at it in the whole, on an annual basis, our CapEx shouldn't exceed ZAR 400 million. So, of course, therefore, as our EBITDA is growing, we get the benefit of that capital efficiency in our group.

There is -- I mean, just to augment, Dan, there is obviously an element of mix effect associated with that in that the product lines that are growing faster are typically ones that have lower CapEx requirements. And I think that, that general trend, as you move towards greater digitization, should continue because if you think about where, as Dan said, the CapEx is spent, a nontrivial part will be on cash vaults and on point of sale. And even in the context of that being on point of sale, there are -- there is evolution in customer uses of feature form that we would expect going forward. So I'm quite confident around the long-run resilience of the cash conversion of the business and expect to see a continued expansion of that capability, albeit there will be -- it's not necessarily going to be a straight line every quarter. There's going to be instances in which investments will be needed to be made, but substantively, expect a declining percentage.

The next question is from Charles Boles from Titanium Capital. Buy now, pay later seems to very much be involved in SA. You have exited Switchpay. Does this suggest you have a negative view of the BNPL market? Or was the exit due to factors specific to Switchpay?

I think it was more specific. I don't have a specifically negative view of the buy now, pay later market. I think that as a business in the merchant space, I think we are at a build moment within our credit proposition, as Lincoln was alluding to within the conversation. And it doesn't represent our lack of willingness to participate in that market. It was a legacy product that was not fit for purpose in terms of the scalability that we needed to achieve and the unit economics and [ hygiene ] we wanted.

The next question is from Tim Olls from Laurium Capital. Within the Merchant segment, please, could you share some color on the competitive dynamics resulting in the decline in the corporate merchant numbers? And what more can be done to defend this? And are you able to share current 2 and 3 product penetration rates for community and corporate customers separately?

On the product penetration rates, do we not -- I mean, I think we can share. I think that, as I said before, going forward, in the next investor presentation, we are going to provide greater granularity. So you can expect that clarity there.

In terms of what's going on in that -- in the corporate space, so there are -- where we have a strong resilience of our offering is where we have multiple products and specifically 2 products in the corporate space. So if you have a point of sale software with attached acquiring like in the hospitality space with Unity, you will have lower churn. If you have stand-alone point of sale single product, you should expect there to be less defensibility. And I think the reduction in the customer base is a combination of some legacy that we inherited that we didn't feel was sort of core to where we were going. But I don't have an expectation that, that trajectory is going to continue. I do have an expectation that we will be -- in the coming year, be investing in growth in our merchant count, as well as -- in the corporate space as well as in the community space, albeit the growth within the corporate space, I expect to be lower than the community space. But it's not representative to us of the medium-term growth path.

The next question is from Jarred from All Weather. Please provide more color on the level of provisions for the loan book and how that changes under the current macro environment.

I don't know if you want to go at that, Dan.

Jarred, I'd split it between different types of provisioning in the Merchant loan book and in the Consumer loan book. So in the Consumer loan book, we provided 6.5% at the moment. We run obviously a variety of different models. Our experience indicates something more favorable than 6.5%. And as I signaled in the previous quarter results, we are revisiting the appropriate levels of provisioning. We think that at year-end would be the right time to either confirm our current levels of provisioning or change them, based on obviously what the models and our experience is at that point in time. But they are well within our overall risk appetite. And as I said, our experience there is better than 6.5%.

On our Merchant loan book, which is far smaller, but obviously, the average value of loans is significantly higher, there we provide according to the typical expected credit loss models. Our experience there, previous quarter, you would have noted, we did have some specific impairments, which affected our overall level of Merchant earnings, specifically on the lending side. That has normalized, those handful of specific instances, and there was nothing unusual or out of the ordinary course in terms of our credit experience in this quarter.

The next question is from Christos from Avior. Will the ZARU settlement on the merchant side be in ZAR or ZARU?

I'm not sure I understand the question, to be honest. So ultimately, there's a difference between whether the settlement is in fiat currency, ZAR or ZARU versus what is the infrastructure through which that is converted. So the question as to whether a merchant wishes to accept a stablecoin as opposed to ZAR would ultimately, I think, be the prerogative of that merchant. The thing that I think is more relevant is what rails is that settlement occurring through. And just to reiterate, the fundamental difference is blockchain is 24/7. You don't have to wait for banking hours. Speed of settlement is a core differentiator, and the cost associated with utilizing that blockchain ecosystem should be far favorable than legacy banking rails. So it's not a -- the utilization of blockchain as plumbing for merchant accounts is separate to whether the merchant has actually been settled in the fiat currency or in a stablecoin.

We are going to move back into the Chorus Call now for our last call questions from Theodore O'Neill from Litchfield Hills Research.

Congratulations for beating the estimates in the quarter. My first question is, are you seeing any impact from the conflict in the Middle East?

So there, I mean, not really and not especially, as we mentioned earlier, some residual impact. There's a consequence in terms of, obviously, the cost of fuel, but that's not really translating into negative impact. In some ways, we've had a beneficial consequence in that it created an opportunity for us to do advances to [ fuel ] companies ahead of price changes. There is obviously some other consequences in terms of consumer disposable income and things. But fundamentally, we're not really an index on the economy, and we don't view it as being a critical factor in our performance, at least for the moment.

Okay. And exiting the exiting the ATM network, was there a buyer for that? And by exiting it, was part of that -- thought behind that, that it would align better with Bank Zero?

So, I mean, there wasn't -- we didn't feel that there would be a benefit in selling it. It was going to be more costly, I think, than potentially winding it down. Otherwise, that would have been what we would have done. In terms of strategically, it was purely based on the fact that we want to be a business that delivers exceptional results. It was not a core part of the offering. It was not a business line that is indexed to digitization or one that we consider to be necessary to support the ecosystem, and it was providing a negative drag on earnings. And we would rather spend our time on things like the digitization of the society and blockchain enablement and AI enablement than on a legacy piece of infrastructure.

Right. Finally, can you give us an update on the status of the move-in to the new headquarters?

Yes. I think the time that we are doing this investor presentation in the next quarter, we should be doing so from our new headquarters, and we are very excited. And it's not just about having a nice refreshed office environment. It's also -- I think it will have a profound impact on the way we work and then the efficiency of the business because currently, as we are trying to coordinate across different aspects, sitting in the same office with all the components, I think, will be hugely beneficial. So we are expecting to see good positive ways of work develop as a consequence of that. And it also will dovetail nicely with the more visible launch of our brand. So it's actually a very exciting season coming up for us in that respect.

Yes. I mean, if I could just add that what it also coincides with is us launching our values and bringing our teams together across all the different provinces, getting people to really fully understand what One Lesaka means because there's going to now be one brand, and both consumers and merchants and enterprise customers will relate to one brand, so getting our staff across the country to understand what this is about. So it's not only the new offices. It's also those offices that will start to build in the months to come in the different provinces, but also people starting to work across the divisions and across the functional areas in head office, as Ali was saying, is the way we want the new culture to emerge from this. And that, again, drives this thinking about cross-selling, doing more for our customers and giving them more solutions. The more people get to know about those solutions, the better it will be for them to be able to sell those solutions to customers, be they merchants or consumers or enterprise clients.

[ Also Theo, just to add, it's not just Johannesburg. We're moving into one office in Cape Town as well in a few months. Subsequently, we expect to be doing the same in Durban. And across our footprint in the provinces, there is a rationalization process associated with that. So our office footprint will shrink across the country. And it is a very powerful thing for the business.

Thank you, Ali, Dan and Lincoln, and thank you, everyone, for joining the Chorus Call and through the chat and for engaging today. We are going to wrap it up here. As a reminder, there will be a replay of the webcast on the Lesaka investor website. Thank you, everyone, for your participation.

Welcome to Lesaka Technologies' results webcast for the second quarter of fiscal 2026. As a reminder, this webcast is being recorded. [Operator Instructions] Our press release and investor presentation are available on our Investor Relations website at ir.lesakatech.com.

During this call, we will be making forward-looking statements. And I ask you to look at the cautionary language contained in our press release, presentation, and Form 10-Q available on our website. As a domestic filer in the United States, we report results in U.S. dollars and under U.S. GAAP. However, it is important to note that our operational currency is South African rand, and as such, we analyze our performance in South African rand, which is a non-GAAP measure. This assists investors in understanding the underlying trends in our business.

I will now turn the webcast over to Ali.

Good morning and good afternoon. Thank you for joining us for Lesaka's Q2 and half year results presentation. The first half of the year represents meaningful progress in executing our strategy in building the leading independent fintech in Southern Africa. Dan will address our financial performance shortly. In addition to the numbers, 2 strategic milestones during Q2 are worth calling out.

First, we received Competition Tribunal approval for the combination with Bank Zero. This is a significant step forward. We continue to engage with South Africa's Prudential Authority regarding their approval process.

Second, we announced and commenced the consolidation of all our operating brands under a single One Lesaka. Lesaka is a fintech business, but human connection is at the center of what we do. We operate where our customers work, live and trade. We design solutions alongside them, not at a distance. That philosophy is captured in our promise, where you are, we are.

The launch of One Lesaka marks a new chapter for the group. It moves us beyond the collection of individual brands to a single strong challenger brand, combining digital capabilities with physical presence by reaching consumers and merchants where others do not.

Our new visual identity reflects this. It embodies the essence of a company built on connection, movement and progress. The logo is inspired by a footprint, symbolizing presence, partnership and purpose. It represents a business that is human, grounded, African and leading its mark. This is a material evolution in how we position, operate and scale the business. And I'd like to show a new brand video that represents this.

[Presentation]

Our purpose is clear: to provide financial services and software to underserved consumers and merchants across Southern Africa. This is more than a rebrand and is embodied in a representative set of values we launched to our employees last month, integrity, collective wisdom, entrepreneurial drive, ownership, bias to action, resilience, empathy, customer first, efficiency and meritocracy.

One Lesaka is a commitment, one platform, one brand and one shared mission, expanding financial access through technology delivered with a human touch. Aligned with our One Lesaka strategy, in June, we will consolidate multiple Gauteng offices into a single location in Johannesburg. This will deliver cost efficiencies over time, but more importantly, cultural efficiencies, enabling closer collaboration, faster decision-making and stronger integration across teams. We are also making progress consolidating our offices in Cape Town and Durban.

Lesaka employs approximately 3,750 people across Southern Africa. Technology underpins our platform. Within the markets we serve, distribution is a key differentiator. Close to half our workforce are focused on growing Lesaka's footprint through sales and marketing. A further 23% focused on servicing and operations, engaging directly with customers and merchants every day.

Last mile reach matters. And our teams operate daily at our clients' workplaces in townships and rural communities, delivering financial services on the ground to the underserved. At the same time, continued innovation is essential. Around 20% of our employees are in technical roles, building platforms, developing products and supporting our frontline teams.

We also benefit from a young, energetic workforce with roughly 60% under the age of 40 with a demographic and gender mix reflective of our society. We continue to simplify the group and ensure capital is deployed where it delivers the greatest return.

During the period, we exited our Cell C stake, receiving ZAR 50 million. We also successfully concluded what we believe to be the final outstanding matter relating to the legacy CPS contract, resulting in the release of ZAR 65 million of accrual. Both items contributed positively to our Q2 results on a once-off basis, but more importantly, they represent the progress towards a simplified One Lesaka going forward.

It's pleasing to note that group adjusted EBITDA grew 47% year-on-year, which represents a largely organic growth rate as Adumo transactions contribution is represented in both periods. Additionally, our adjusted earnings per share, which excludes the one-off profit contributions mentioned earlier, has increased by more than 6x.

As previously communicated, we have also simplified how we represent the business to focus on the structural drivers of revenue. Lesaka operates through 3 complementary divisions: Merchant, Consumer, Enterprise. The growth in our number of engaged customers is a function of our product value proposition and effectiveness of our distribution, whilst ARPU is a function of the level of product penetration per customer and pricing dynamics. 95% of consumers' revenue and 88% of merchants' revenue, respectively, can be explained by these core drivers for this quarter.

As a reminder, the consumer ARPU is a function of 3 products: transactional banking, lending and insurance, while the merchant ARPU is a function of 5 products: acquiring, ADP, lending, software and cash. Enterprise follows a different core driver model, predominantly based on TPV and take rates. These core drivers are a function of corporate billers on the platform and individual commercial arrangements with different channel partners.

The Enterprise division has 3 main product offerings: ADP, Utilities and Payments. We hope that this gives you as investors a clearer view on how to view the business and how the group generates sustainable value. We will continue to disclose these drivers going forward in an effort to simplify our story and show how we are tracking against our objectives.

I will now hand over to Dan to take us through the financials for the period.

Thank you, Ali. Good morning, and good afternoon to everyone joining us today. I'm pleased to report that we have delivered on our guidance for the 14th consecutive quarter, underscoring the consistency of our operational execution and the resilience of our diversified business model.

Net revenue for Q2 was within our guidance range, reaching ZAR 1.6 billion, a 16% year-on-year increase. Group adjusted EBITDA came in at ZAR 304 million, landing at just above the midpoint of our guidance and reflecting a robust 47% year-on-year increase.

Our earnings profile is now approaching like-for-like comparability with the contribution from our Recharger acquisition being the only item not reflected in last year's base.

Adjusted earnings, which we regard as the most appropriate indicator of our underlying performance, grew more than sixfold to ZAR 111 million for the quarter. Similarly, on a per share basis, our adjusted earnings has grown from ZAR 0.21 to ZAR 1.34, a very pleasing result that demonstrates the accretive impact of our acquisitions over time and ability to integrate and improve operational performance.

Our leverage ratio stands at 2.5x, flat on last quarter and significantly down from the 2.9x at year-end. As a reminder, our medium-term target remains 2x or lower, which we believe is appropriate given our current structure. You will also see that we have received Competition Tribunal approval for the Bank Zero transaction, which will deliver meaningful funding and balance sheet benefits once integrated into the group.

Net revenue as a whole came in at ZAR 1.6 billion, up 16% on the previous year. Our Merchant division net revenue pulled back 2%, primarily due to our refocusing of the merchant distribution force on clients with a high potential for cross-sell and integration as well as ongoing pricing pressure in the market. As mentioned in previous quarters, Merchant is on a transformative journey.

Consumer delivered another standout quarter with net revenue rising 38% year-on-year to ZAR 567 million, marking another record performance for the division. Enterprise continues to show solid progress, delivering ZAR 217 million in net revenue, a 67% year-on-year improvement. This reflects the business' post restructure base and includes inorganic benefits from the Recharger acquisition. Lincoln will unpack the drivers behind each division in his operational review.

Group adjusted EBITDA grew 47% year-on-year to ZAR 304 million, slightly above the midpoint of our guidance. Merchant segment adjusted EBITDA was ZAR 170 million, a decrease of 6% from last year. The current fiscal year is transformative for Merchant.

As outlined in our Q1 investor presentation, we are building the foundations for future growth with a focus on 3 aspects in particular: bringing several businesses together, unifying our Merchant brand and investing in new product offerings to clients and rationalizing our infrastructure in order to capture efficiencies.

Successfully combining Merchant's numerous products and companies into a cohesive go-to-market strategy requires thoughtful planning and disciplined implementation. Our new management team is making good progress. And we look forward to driving growth in an industry that is ripe for disruption. Given the transformation, we expect the growth profile of Merchant to be flat for the rest of the fiscal year with a return to growth in FY '27.

Consumer achieved yet another excellent performance with segment adjusted EBITDA more than doubling to ZAR 159 million. With ongoing improvements in distribution and strong cross-sell momentum driving ARPU, we believe Consumer remains well positioned for continued growth. In particular, following the strong performance of our lending activities, we expect strong earnings growth in Q3 and Q4.

Enterprise delivered ZAR 24 million in segment adjusted EBITDA. We continue to invest in our platform. And we expect stronger earnings contributions later this year and into FY '27 as new product platforms come online and we internalize merchant acquiring volumes. A quarterly run rate of approximately ZAR 40 million to ZAR 50 million remains our short-term expectation.

Our group costs were ZAR 50 million this quarter, a pleasing reduction over the previous few quarters and closer to our anticipated long-term run rate. Adjusted earnings per share continued their upward trajectory, rising more than sixfold to ZAR 1.34, reflecting the success of our combined organic and inorganic growth strategy.

Cash flows from business operations continue to be healthy, totaling ZAR 419 million for the quarter and in line with the EBITDA evolution. ZAR 385 million of that cash flow was reinvested into our lending operations and ZAR 101 million to fund our interest costs.

Capital expenditure for the quarter was ZAR 84 million, of which ZAR 48 million was spent investing in growth. This consists primarily of the continued expansion of our Smart Safe product, capitalization of software development costs and funding additional merchant acquiring devices.

Our leverage ratio came in at 2.5x, in line with Q1 despite funding required to grow our lending book. We anticipate our leverage ratio to trend lower through FY '26. As mentioned earlier, the Bank Zero transaction will allow us to fund expansionary cash flows from our lending activities with customer deposits, further deleveraging our balance sheet. This will materially increase our cash conversion rate relative to our current funding structure.

Over the last 5 quarters, we are beginning to see the emergence and impact of the platform business we are building. As our business continues to grow through our wide distribution footprint and product innovation, we see a pleasing increase in operating margin from approximately 15% a year ago to 19% this quarter. Post the transformation of Merchant and the acquisition of Bank Zero, we anticipate that our operating margin will trend towards 30%.

Reflecting on our CapEx, we are seeing a similar trend. As stated in previous presentations, we expect our CapEx to be below ZAR 400 million a year. On an LTM basis, we see CapEx as a percentage of EBITDA decrease from approximately 46% a year ago to 33% this quarter. These metrics give a clear indication of our improving fundamentals as we scale our platform.

I will hand over to Lincoln, who will take you through the revenue drivers and KPIs for Merchant, Consumer and Enterprise. Lincoln?

Thank you, Dan. Good morning, and good afternoon, everyone, on the call. I'll begin with the Merchant division. As Dan mentioned, the division is in the midst of a significant transformation. We are integrating our businesses, unifying our brand and offering, streamlining cost and infrastructure and operating under a new leadership team.

While this is a period of meaningful change, I'm encouraged by the energy across our teams and by the early benefits we're seeing from the restructure. Before turning to performance, there are 2 terminology updates to note. What we previously referred to as micro merchants, largely serviced through Kazang in the informal market are now called Community Merchants.

In the future, Community Merchants will also include sole proprietors and micro merchants such as hairdressers, food vans and other owner-operated establishments.

The formal sector historically serviced by Adumo, GAAP, and Connect is now referred to as corporate merchants and will be geared to serving medium and large businesses with a focus on hospitality, fuel and retail. This more closely aligns to customer needs in terms of product and distribution focus.

This quarter also marks the first like-for-like comparison for the Merchant division in several quarters. As Ali mentioned, we have standardized how we present merchants. We now show a single overall active merchant base, a single aggregated ARPU and a single product penetration metric. This reflects how the division is managed operationally, particularly as we evolve into One Lesaka, as Ali referred to in his opening remarks.

Active merchants increased 8% year-on-year to just over 130,000 merchants. We have moved away from reporting points of presence and now focus on active merchants, which better reflect revenue generation engagements and our monetization strategy. For clarity, an active merchant is defined as a merchant who has made at least one customer-initiated transaction in the past 90 days. Merchant ARPU is down 10% to ZAR 1,835. This was primarily driven by lower airtime volumes and continued margin compression with the ADP product.

We also saw some margin pressure in acquiring, driven primarily by our strategic push into the target market and simultaneously upgrading our terminal estate for community merchants. These hardware upgrades are an investment in our customer experience, improving reliability and strengthening our competitiveness over time.

Similar to Consumer, we are now showing our penetration rate for our multiproduct merchant offering, which we use to measure our product layering success. At the end of quarter 2, we had 46% of our merchants using more than one of our products.

Turning to our volumes processed. Card acquiring TPV grew 7% year-on-year, reaching ZAR 12.1 billion for the quarter. Active acquiring merchants increased 8% to 73,500. We are actively focusing on our on-platform acquiring merchants and actively moving away from non-acquiring corporate base.

Our go-to-market focus remains on expanding and deepening ISV partnerships as we see a compelling opportunity through this distribution channel. Following the launch of a proprietary switch by our Enterprise division, over 40% of this quarter's card TPV were processed in-house.

While this will lead to improved profitability and greater retention of value in the group over time, it has already significantly reduced our reliance on outside parties, materially improving our ability to innovate and to more effectively service our clients.

Cash TPV reflects a continued contraction in the corporate market and growth in the community market, resulting in an overall TPV growth of 5% with device numbers broadly flat. Community bond TPV increased materially year-on-year, underscoring the momentum in this segment.

While cash deposits are typically smaller and more frequent and therefore, have lower margins on a stand-alone basis, they play a critical strategic role in delivering an ecosystem of products.

Cash deposited into vaults immediately funds merchant's digital wallets, enabling prepaid purchases, supplier payments and EFTs and directly supports growth across our broader ecosystem. This cash-led strategy is clearly reflected in ADP's performance, where we have seen the knock-on effects. ADP's TPV grew 27% year-on-year with active merchants up 8% to 102,000.

Supplier payments within ADP continued to perform strongly, growing 48% year-on-year, supported by traction from the cash solutions and targeted vault placements by our sales teams. We now have more than 1,900 suppliers on the platform, materially reducing cash handling risk and improving administrative efficiency for both merchants and suppliers.

Within prepaid solutions, TPV increased by 2%, with ongoing pressure on airtime volumes, offset by sustained demand for electricity and vouchers consistent with the trends seen in quarter 1. Corporate lending originations reached ZAR 205 million for the quarter, representing 35% growth year-on-year.

While our credit scoring criteria remains unchanged, the reduction in the minimum loan sizes has expanded our addressable market. The loan book grew 28% year-on-year to ZAR 389 million. And although penetration remains modest, the growth opportunity is encouraging.

In our software businesses, which include GAAP and Masterfuel business, active merchants increased 5% to just over 10,000. We continue to drive the adoption of our cloud-based Unity platform in the hospitality vertical. While Unity may result in lower initial subscription fees, it significantly improves customer lifetime value, supports long-term growth and enables the merchant acquiring and software cross-sell. This strategy positions us as the partner of choice for restaurants seeking to modernize and scale.

We would like to give slightly more color into the corporate versus community split and how we categorize our merchant base. In our Corporate segment, we have the historic Connect and Adumo businesses, which comprise approximately 25,000 merchants with an ARPU of circa ZAR 5,900 per month. The distribution model is largely driven through corporate channels at a franchise level and through ISV partnerships. The sales cycles generally take longer as the product offering is more complex.

On the community side, we have approximately 105,000 merchants using our services. The sales process is driven by our boots on the ground sales force with our teams going into townships and rural markets and engaging directly with merchants. The sales cycle is much shorter and the implementation is simpler. However, ARPUs are lower at circa ZAR 800 per month.

We have spoken a lot recently about layering our products and services as we deepen our merchant relationships. From a financial perspective, the impact is profound when we get this right. For an example, in corporate, when we add an acquiring solution to a typical software client, we can see an ARPU uplift from ZAR 3,000 to ZAR 5,000.

In the Community segment, adding acquiring to a typical ADP merchant can see an uplift from ZAR 550 to ZAR 950. With our comprehensive merchant offering, layering and cross-selling solutions to deeper relationships supported by continuous product innovation is the core pillar of our strategy going forward.

I will now move on to the Consumer division. I am pleased to report another record quarter with improvements across all our primary KPIs. We achieved a significant milestone in quarter 2 with our active base exceeding 2 million customers, representing a 21% increase over last year. In another first, for quarter 2, Lesaka recorded the highest net new additions in the grant beneficiary market, surpassing Capitec and other competitors for the first time.

As I mentioned in the last quarter, we believe these results are due to our focus on delivering relevant products with an appropriate value proposition through convenient distribution channels for our consumer. The core drivers of this significant growth include continued research and development in our proprietary technology platform, Bonngwe, which enables our frontline staff to efficiently onboard and provide full-fledged operational account in under 5 minutes.

Our ARPU has increased by 15% year-on-year to ZAR 91 per month, driven by continued engagement and cross-sell success for our lending and insurance products. Our penetration rates have improved consistently as account holders recognized the value propositions our products offer relative to our competitors and the ease of access with which we provide.

At the end of quarter 2, 19% of our active consumer base has a transactional account, a loan product and an insurance policy, up from 14% at this point last year. Combining our base of consumers beyond just a transactional account, we have circa 50% of our base engaged. We believe that this is a clear demonstration of our product market fit within this segment, but also leaving room for continued growth.

Our lending product has been a key driver of the Consumer division's recent success. And quarter 2 performance has continued and accelerated this trend with record originations and book size.

During quarter 2, we originated circa ZAR 1.2 billion in loans, an 88% increase over last year, with the outstanding book up 106% at circa ZAR 1.5 billion at quarter end. This is a milestone achievement as we've disbursed more than ZAR 1 billion in the quarter for the first time.

These growth rates have been supported by the new loan product launched last year, which increased the loan size from ZAR 2,000 to ZAR 4,000 and the maximum tenure from 6 months to 9 months. The new lending product with the increased tenure of 9 months represents 40% of our originations during this quarter.

Our investments in distribution, technology and training has also supported this growth. We are seeing increased use of our low-cost digital USSD channel, which allows customers to originate loans digitally with immediate disbursements. This not only improves customer convenience, but also our unit economics.

8% of new loans originated in the last quarter came through USSD channels and we are seeing steady increase in this trend. Encouragingly, our borrowers' profile reflects deepening relationships with our consumer clients with 78% of originations being to repeat borrowers and 80% being to clients of over 2 years.

This is important from a credit risk perspective as we gain a deeper understanding and gather richer data sets on our customers' borrowings and repayment behavior. This facilitates improved credit scoring, provisioning and product development.

As a reminder, we provide for default at 6.5%. We continue to actively manage the credit risk of our portfolios and we will adjust our provisioning methodology as required.

Turning to our insurance business. We delivered another very successful quarter. We have tailored our insurance offering to provide funeral and pension insurance policies customized and priced for the grant beneficiary market. Gross premiums written increased by 38% to ZAR 134 million. And the number of in-force policies increased by 29% to 641,000. Promisingly, our collections ratio remains unchanged at a very high 96% for this end of the market.

As mentioned in the last quarter, given the success of our insurance products, we are now piloting selling insurance policies in the open market and beyond the Lesaka consumer base from quarter 3 onwards.

We are currently focused on a number of exciting strategic initiatives, which should continue this trend, including the migration to Bank Zero, the One Lesaka rebranding, growth of our digital capabilities and channels and our expansions beyond our traditional grant beneficiary base.

Turning to our Enterprise division. As a reminder, this segment comprises 3 core businesses: Alternative Digital Products, Utilities and Payments. Starting with ADP, this business provides the integration technology that enables customers across South Africa to purchase prepaid solutions such as airtime and electricity and to make bill payments through multiple channels, including major retail networks.

We are one of the largest aggregators in the country. The ADP ecosystem brings together collectors and receivers. Collectors are the enterprises that act as sales and payment channels, allowing consumers, merchants and businesses to access our platform, whether through a banking app or at a large retailer.

On the receiving side, our partners includes all major mobile network operators, electricity providers, insurers as well as gaming and money transfer services companies. Lesaka sits at the center of this ecosystem, efficiently processing bill payments for a fixed fee per transaction and facilitating the buying and selling of these prepaid solutions for a commission on volume.

In quarter 2, total ADP TPV reached ZAR 11.9 billion, representing 18% year-on-year growth. Bill payments account for over 75% of ADP volumes.

Turning to Utilities. This business sells prepaid electricity meters and prepaid electricity vouchers. Meters are distributed primarily through large national retailers such as Builders Warehouse, Leroy, Merlin and Buco, while prepaid vouchers are sold across retail outlets, apps and online platforms.

Utilities total payment volume increased 15% year-on-year to ZAR 465 million in quarter 2, continuing our positive growth of both inflationary pass-through of electricity pricing and organic volume growth. We now have over 500,000 registered meters with 357,000 active meters, up 6% year-on-year.

We define active meters as those that have recorded a top-up within the last 90 days, akin to our definition of active consumers and merchants. We recently launched our proprietary payment switch and moved from the pilot phase to full migration of internal acquiring transactions.

As mentioned earlier in the merchant overview, 40% of our merchant card acquiring volumes were switched in-house this quarter through the Enterprise division. This will retain more value within the group, but more importantly, reduces reliance on third parties, which greatly improves our flexibility and responsiveness in servicing clients and product innovation.

More broadly, the Enterprise division has made significant progress over the past year in reshaping its operations to focus on core capability. This included the exit of several legacy businesses, while at the same time, accelerating expansion of our collectors and receivers network.

Growth on the collector side is particularly powerful through a forced multiplier effect with a single partnership unlocking thousands of distribution points. We've been successful in a number of key partners over the past few months. These include airtime products through Shoprite stores, which add over 2,500 distribution points to our network as well as Investec's clients through its native app and website.

On bill payments, we've partnered with Spar, adding another 850 sites to our network. That concludes the operational overview for quarter 2.

I will now hand over back to Ali to take you through our guidance.

Thank you, Lincoln. Turning to our third quarter guidance. For net revenue, we are providing a range of ZAR 1.65 billion to ZAR 1.8 billion, the midpoint implying a growth rate of circa 27%.

Group adjusted EBITDA is expected to be between ZAR 300 million and ZAR 340 million, with the midpoint implying growth of circa 37%. For the full year guidance, we are pleased to reaffirm our net revenue range of ZAR 6.4 billion to ZAR 6.9 billion and ZAR 1.25 billion to ZAR 1.45 billion for group adjusted EBITDA. As a reminder, these exclude any impact from Bank Zero should the acquisition complete in this financial year.

Group adjusted EBITDA includes all costs associated with office moves, but excludes potential once-off marketing costs associated with the new brand launch. These imply growth rates of 21% to 30% in net revenue and 36% to 57% in group adjusted EBITDA. We are excited about the second half of the year and the earnings momentum we expect to take into FY 2027.

Thank you for attending our earnings presentation. We will now address any questions you have for the team.

Thank you, Ali, Dan and Lincoln. Chorus Call, please could you open the line for Theodore O'Neill from Litchfield Hills Research.

Theodore O'Neill's line is now open.

I have a question about the Consumer segment. In the 10-Q, you cited an increase in transaction fees, insurance premiums and lending revenue for the year-over-year growth. Is the increase in transaction fees an annual event? And on the insurance and lending, I want to understand the growth there. Is this an underserved market or do you have to take share from competitors?

I think Lincoln, I'll let you answer that.

Thanks, Theo. Yes, we do review our transaction fees on an annual basis and some of those increases are there given on an annual basis. But I think what's important to understand is that on the transaction side, we are taking market share from an existing competitor, largely the PostBank and from other banks. We are growing net additions customers more than our competitors, and that gives us the edge.

When it comes to loans and insurance, these customers are underserved. Many of them do not have any formal institutions that are able to provide them with loans or provide them with insurance. On the loan side, many of these customers are being given loans by unscrupulous and unregulated micro lenders. We are able then to give them loans that are fair, transparent and they're able to afford and hence, the growth in that loan portfolio.

Insurance, there are other competitors, but I think that they are not as penetrated in this market as we've got now.

Chorus Call, please, can you open the line for Ross Krige from Investec.

Ross, your line is now open.

I have 5 questions. I'll just ask the 3 on Merchant first and then pause for you to answer. So just on Merchant, the decline in ARPU, if you could just -- I think Lincoln mentioned a few of the drivers. Just in terms of the run rate going forward, how much of the impact is still going to come through there? Like how do you see ARPU trending, I guess, over the next 6 to 12 months?

Then, in terms of the cross-sell in Merchant and the decline over the last year in product penetration. Just wondering, is that a timing issue? When do you expect that to start moving the other direction?

And then thirdly, on Merchant, just the acquiring cross-sell, which pretty show the impact on ARPU. Just wondering, is that sort of a key opportunity in the short term? And I wonder if you would comment on where you see that penetration going across the different parts of the business.

Thanks a lot, Ross. Okay. So firstly, on the ARPU, the principal driver is ADP, and as Lincoln said, airtime within that dynamic. How do we see it? I think that we expect that ARPU to stabilize and then ultimately increase over the coming 12 months. And the driver of that increase is not individual product's ARPU, because remember, that ARPU is a composite of the 5. It's effectively as a consequence of the collective.

In terms of cross-sell. So the product penetration rate is a percentage. So the number of customers who have more than one product or more than 2 products has not declined year-on-year. It's increased marginally. But the main driver of active merchant growth has been through the ADP product in the community segment. And there, the strategy is a land and expand one.

We hope to ultimately be cross-selling additional products into that base, notably, as you mentioned, acquiring. And yes, acquiring is a core cross-sell offering in both the community and the corporate segment. The most common attachment rate is ADP and acquiring in community and software and acquiring in the corporate segment. It's one of the sort of principal areas of focus in that respect and one where we believe we have a moat that enables the ARPU to be sustained.

Does that answer those questions?

On the -- sorry, 2 more, just one on Consumer, one on general. On Consumer, the lending growth or originations is obviously picking up quite a bit. If you could just maybe talk to some of the drivers behind that. And then again, if we think about the outlook over the next year, is that a lever that you expect to continue or an opportunity that you expect to continue to execute on? Like what sort of growth rates and originations should we think of going forward?

And then on the marketing costs related to one brand that you mentioned would be excluded from adjusted EBITDA. I don't know if you could talk -- give us an idea on the level of that.

Sure. So on Consumer lending, I'll go to Lincoln.

I think one of the important things that we highlighted a couple of quarters back was we had made a change in the loan sizes that we were given to our clients based on the certain engagements with the clients. So we increased the loan size from ZAR 2,000 to ZAR 4,000. And we also increased the tenure from 6 months to 9 months. That we call the medium-term loan.

That has been so well received by the market to a point where 40% of the originations that we've got in this quarter come from this medium-term loan. And we see opportunities for more growth in this medium-term loan.

The second thing that is also interesting is the investment we made in our digital channel, the USSD channels that enables people not to come to a branch, but be able in the comfort of their home or workplace to make a loan application. 8% of our new loans in this quarter are originated from that USSD channel. We see that as another potential for growth.

When we look at the quality of the book and the quality of the lending that we're doing, we must remember that 78% of the originations are to repeat borrowers. These are customers that we know and understand. And 80% of those clients have been with us for over 2 years. And that gives us a very good insight from a credit risk perspective and also gives us better understanding of the repayment capabilities and behavior of the clients.

So we do see opportunities for these clients to grow with us and then new clients that we are taking on board as we grow our customer base on the EPE side to also take on lending with us.

And then maybe on the marketing question, Dan, do you want to go first?

Yes. So specifically rebrand costs, we estimate them for the next 2 quarters, somewhere between ZAR 50 million and ZAR 75 million.

Lincoln, thanks for that explanation. Just if I can follow up on the rate of growth going forward, what should we expect?

I think that I would see the same level of growth because we are still at an early stage of the evolution of this loan product. As I say, 40% are taking up this. We think that the larger group will take that in the near term. So there's more upside going forward.

And as the book also is well managed and the book is behaving well, we think that there's good prospects for more lending in this market in the future.

I'm going to move to the questions from the webcast now.

What is the rand amount of deposits estimated to be transferred to Bank Zero in terms of current Lesaka customers once the merger is complete?

Thanks. I'm not sure where the question was from...

From [ Johan Baes ].

Okay. Thanks, Johan, for your question. So we stated that we expect as a consequence of the Bank Zero acquisition that we would be reducing the gross debt of the business by north of ZAR 1 billion. I would say that, that is the lower bound of that.

As a consequence of that, you should expect, obviously, that the deposit base in the business would be substantively more. I wouldn't wish to provide a specific number at this stage, though.

Thank you, Ali, Lincoln and Dan. Thank you, everyone. We are going to wrap it up here.

As a reminder, there will be a replay of the webcast on the Lesaka investor website. The IR team will reach out to anyone with unanswered questions. Thank you, everyone, for your participation.

Welcome to Lesaka Technologies Results Webcast for the First Quarter of fiscal 2026. As a reminder, this webcast is being recorded. Management will address any questions you have at the end of the presentation. [Operator Instructions] Press release and investor presentation are available on our Investor Relations website at ir.lesakatech.com.

During this call, we will be making forward-looking statements. Please note the cautionary language regarding the risks and uncertainties associated with forward-looking statements as contained in our press release, presentation, and Form 10-Q. As a domestic filer in the United States, we report results in U.S. dollars under U.S. GAAP. It is important to note that our operational currency is South African rand, and as such, we analyze our performance in South African rand, which is non-GAAP. This assists investors in understanding the underlying trends in our business.

I will now turn the webcast over to Dan.

Good morning, good afternoon, and welcome to Lesaka's 2026 Quarter 1 Results Presentation. We have slightly changed our results presentation this quarter. I will begin today by addressing the financial performance for the group as well as for merchant, consumer, and enterprise. Lincoln will then take you through the key performance drivers for the divisions in more detail, and we will end with Ali taking you through the progress made against our strategy, unpacking our drivers of revenue and our quarter 2 guidance. Going forward, we intend to follow this format for quarter 1 and quarter 3 results, coupled with a more comprehensive update in quarters 2 and 4. You can find more details in our usual disclosures in our 10-Q submission to the SEC. This is available on our website.

I'm pleased to report that we have met our guidance for the 13th consecutive quarter. Net revenue came in at the lower end of the range for Q1 at ZAR 1.53 billion, a 45% increase over last year. Group adjusted EBITDA landed at around the midpoint of the guidance range at ZAR 271 million, representing a 61% year-on-year growth. I'm happy to say that this quarter reflects an improvement in the quality of our earnings with limited accounting anomalies and nonrecurring items. Our adjusted earnings, which we believe is the most appropriate measure of our overall financial performance, has grown by 150% to ZAR 87 million for the quarter. On a per share basis, our adjusted earnings has effectively doubled, up from ZAR 0.54 to ZAR 1.7.

Our net debt to adjusted EBITDA is 2.5x, an improvement from 2.6x from this time last year, but meaningfully improved from our previous quarter of 2.9x. As a reminder, we have maintained our medium-term target of 2x or less, which we deem appropriate under the current structure. We expect this to continue to trend down in FY '26.

Taking a closer look at our net revenue performance, we delivered ZAR 1.53 billion in the quarter, a 45% increase on Q1 in the previous year. Our Enterprise division underwent a significant restructuring since Q1 FY '25. We closed noncore businesses, invested significantly in our platforms, and completed the Recharge acquisition. The ZAR 222 million net revenue reflects the new base and represents a 19% year-on-year improvement.

Given the product offering, enterprise is subject to seasonality in electricity sales and ADP, but we are pleased with the quarter-on-quarter growth given this represents a relatively comparable period. Our Consumer division has continued to grow at a record pace over the past quarters, leading to a 43% year-on-year increase in net revenue. Our Merchant division net revenue is also up 43%, primarily driven by the acquisition of Adumo, which we acquired and consolidated from Q2 last year.

Turning to our earnings for the quarter. Group adjusted EBITDA increased 61% year-on-year to ZAR 271 million, approximately achieving the midpoint of our guidance. Merchant segment adjusted EBITDA was ZAR 162 million, an increase of 20% on Q1 FY '25. The majority of the year-on-year increase is due to Adumo, which is not included in the comparative quarter. As we mentioned in our previous earnings call, FY '26 will be a transformative year for Merchant. We are building the foundations for future growth with a focus on 3 aspects in particular: bringing several businesses together, unifying our merchant brand and product offerings to clients, and rationalizing our infrastructure in order to capture efficiencies.

The integration of a variety of products and businesses in one go-to-market strategy requires a great degree of planning and disciplined execution. We are confident with the new management team we have in place, led by Kakhisokowale, and are excited to drive growth in a market we believe is ripe for disruption.

Consumer again delivered a standout performance with segment-adjusted EBITDA increasing 90% to ZAR 150 million. We expect this trend to continue in the medium term, and Lincoln will discuss our growth in our active consumer base and innovations to our onboarding system continue to yield effective results in ARPU and product penetration. Enterprise delivered ZAR 22 million of segment adjusted EBITDA for the quarter, up 241% year-on-year. We continue to invest in our platform. And although we anticipate some volatility in enterprise quarterly earnings, we do expect an earnings uplift later in the year and into FY '27 as product platforms go live. A quarterly run rate of approximately ZAR 30 million continues to be a near-term target and will lead to Enterprise being a meaningful contributor to EBITDA for the group.

Our group costs were ZAR 64 million this quarter, elevated relative to prior quarters. This included some nonrecurring finance and administrative charges. We expect group costs to trend towards a quarterly run rate of ZAR 55 million. Our adjusted earnings per share showed a continued upward trend, almost doubling year-on-year to ZAR 1.07 for the quarter. This demonstrates our ability to ensure accretive growth as part of having both an organic and inorganic strategy.

Shifting our focus now to cash flow and our balance sheet health. Cash flows from business operations continue to be healthy, totaling ZAR 341 million for the quarter, closely tracking our quarterly EBITDA evolution. We reinvested ZAR 122 million of that cash flow into growing our lending books and ZAR 106 million to fund our net interest costs. Capital expenditure for the quarter was ZAR 90 million, of which ZAR 51 million was spent investing in growth. This consists primarily of continued expansion of our Smart Safe product, capitalization of software development, and funding additional merchant acquiring devices. We expect our annual capital expenditure to remain below ZAR 400 million, and we remain on track to do so.

Through positive increased EBITDA performance and careful cash management, we have seen a reduction in our net debt to adjusted EBITDA ratio from 2.9x last quarter to 2.5x. This is as planned for in the execution of our capital allocation framework, and we expect continued improvement in this ratio as adjusted EBITDA increases with no material increase in debt. We anticipate that Bank Zero will allow us to fund expansionary cash flows from our lending activities with customer deposits, further deleveraging our balance sheet. This will materially increase our cash conversion rate relative to our current funding structure.

I will now hand over to Lincoln, who will take you through the revenue drivers and KPIs for merchant, consumer, and enterprise. Lincoln?

Thank you, Dan. Good morning, and good afternoon to everyone on the call. We have changed our presentation slightly this quarter. And with Dan having taken you through the financial performance of the divisions, I will focus on the operational KPIs that drove that performance. As Dan mentioned, our Merchant division is undergoing transition, integrating businesses, unifying our brand and offering, streamlining costs and infrastructure, and operating under new leadership. The year-on-year increase in net revenue and segment adjusted EBITDA is largely due to Adumo, which wasn't included in the prior year's figures.

Looking at our card acquiring, our TPV has more than doubled, reflecting the scale the Adumo acquisition has contributed to our business. We processed ZAR 9.2 billion this quarter, up from ZAR 4.2 billion last year. The number of our devices has grown from 53,500 to almost 88,000 at the end of the quarter. We are seeing continued success across our multiproduct customers who hold more than one solution. We are still in the early stage of evolving into a one unified merchant offering, but the trajectory of travel is positive. Conversely, we experienced moderately higher churn from small to medium single-product merchants. This is primarily driven by price sensitivity for these merchants. However, we saw no impact to the overall TPV process, reinforcing our strategy to build deeper relationships with our clients and evolve from a single product provider to a multiproduct solution partner.

Moving over to cash TPV. We continue to see a declining cash usage trend in the small to medium merchant sector. Cash primacy in the micro merchant sector, however, remains. We have increased our cash vault in the micro merchant sector to 4,600. This partly offsets the reduction in cash experienced in the small to medium sector, resulting in a modest decrease of 4%. As a result of this increased footprint, cash TPV in the micro merchant segment has grown 75% year-on-year and now accounts to 18% of all cash volumes in quarter 1 financial year 2026, up 10% from last year. Cash deposits in this part of the market consists of lower values, but higher frequency. This results in lower stand-alone margins than in the small to medium sector of the market. This provides an important hook for merchants who we can then sell alternative digital products, thus creating an ecosystem.

Cash deposits into our vault top-up micro merchants digital wallets, which is then immediately available to purchase prepaid solutions, make supplier payments, or transfer to a bank account for EFTs. This is a vital part of our offering. The result of this cash-led strategy is evident in ADP, where TPV grew 21% year-on-year, while devices grew approximately 9.5% to 97,500. Our supplier payment platform continued its strong growth trend, increasing 37% year-on-year, strengthened by gaining traction from the cash solution. We now have more than 1,900 suppliers on our platform, significantly reducing cash holdings and transaction risk and improving administrative efficiency for our micro merchants and their suppliers.

Within prepaid solutions, we saw a 4% increase in TPV, driven by a shift in product mix with some pressure on airtime and data sales during the period, which was offset by growth in electricity purchases. In our merchant lending business, we originated ZAR 201 million for the quarter, a 21% increase on last year. We are spending time and effort to enhance our merchant lending offering as we believe this is a key axis of growth for the division.

As mentioned last quarter, we have reduced the turnover threshold for our merchants to qualify for credit, but maintained our credit scoring criteria. Some of the changes include redesigning our onboarding procedures to make it more efficient for merchants to access our lending products. Our overall loan book grew 72% on a year-on-year basis. However, our penetration within the merchant base remains modest. The relatively small number of merchants holding a loan confirms that we are under-indexed in this segment and is an area of strategic importance. In our software or our GAP business, the number of sites was up 3% and our ARPU up 4% to 3,184. ARPU was impacted by lower pricing at some major customers, partially offset by increased adoption of our cloud-based integrated Unity product, which enables greater customer lifetime value, prioritizes long-term growth, and enables rapid product development.

We expect the adoption of Unity to deepen market penetration at the cost of lower upfront subscription fees. This ensures we remain the preferred partner for restaurants looking to transform their success.

I will now move on to consumer KPIs. I'm pleased to report that the momentum in financial year 2025 has carried into financial 2026, with the division delivering another excellent result for the first quarter. During quarter 1, we continue to expand our share of the grant beneficiary market, ending the quarter with just over 1.9 million active consumers, which is inclusive of approximately 220,000 nonpermanent grant beneficiaries. This represents a 24% increase compared to last year. Net new additions for the quarter were 49,000 compared to 24,000 in quarter 1 2025. This indicates not only the effectiveness of our sales channel, but the quality of our product value proposition that drives engagement. Our market share for the permanent grant beneficiary base is 14.1% compared to 11.4% a year ago.

Most of this growth has come at the expense of the Postbank as its customers shift towards better value propositions. More than 20% of the Postbank migration chose Lesaka, which is disproportionate to our market share. There have been 3 core drivers to our disproportionate growth. First, innovative go-to-market tools. Our agents are able to sign up clients both in our branches and in the field using proprietary digital-first onboarding system, [ Bongwe ]. Clients can sign up with their fingerprints and have a card in under 5 minutes. Two, expanding our low-cost branch network from 223 in quarter 1 financial year 2025 to 238 in quarter 1 financial year '26, and a plan of an additional 15 during this financial year. We also plan to have over 50 servicing points that will connect us to rural communities like never before. Three, Lesaka has invested in staff training and a remuneration structure that incentivize onboarding and engage clients.

Our ARPU has increased 13% year-on-year to ZAR 89 in quarter 1. The rise in ARPU has been driven by the success of cross-selling of our lending and insurance products, aided by the rollout of Bongwe, as mentioned earlier. This results in increasing engagement in our consumer base. Those consumers using all 3 of our products has grown to 18% of the base compared to 15% at this point last year. Our lending product has been a key driver of the Consumer division's success over the past 2 years. This product is tailored to the needs and financial resources of permanent grant beneficiaries, including immediate access to funds, and has been very well received by our customers. Our readvance rate on loans is high, exceeding 75%. Originations for quarter 1 amounted to ZAR 820 million compared to ZAR 462 million last year, and our closing book almost doubled to ZAR 1.1 billion from ZAR 564 million a year ago.

We've seen excellent growth over the past year, driven by innovations in both product and distribution. The launch of a new ZAR 4,000 loan value with a 9-month term has been positively received in the market. This allows us to gain more data and continually refine our offerings. Existing clients can also originate loans digitally through our new USSD in under 5 minutes and get immediate access to funds, saving consumers' time while engaging through low-cost digital channels. Encouragingly, our credit loss ratio remains stable and is relatively consistent to what we've experienced over the past few years. Our new lending product with larger values and longer repayment terms has thus far not had a significant impact on our credit loss ratio.

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. We actively manage this to ensure we remain within our risk appetite. Our insurance product has been equally successful, with gross written premiums increasing 38% year-on-year to ZAR 120 million for the quarter, with a number of in-force policies rising 27% to approximately 589,000 policies. Similar to lending, our insurance products are customized and priced specifically for the grant beneficiary market. We offer a traditional funeral plan and a pension plan. Our customers value these insurance policies highly, and we are demonstrating continued operating leverage with collection ratios maintaining around 97%. This is exceptional for this segment of the market.

With the success of our funeral plans, in quarter 2, we begin to offer policies to non-Easy Pay Everywhere account holders. It has been another very successful quarter for our Consumer division.

Looking at the Enterprise division now. As Naim noted during our full-year results presentation in September, the Enterprise division went through a transformative year in financial year 2025, and it was only in quarter 4 that our results were a proper representation of its potential and a clear outline of its strategy. I'm pleased to report that Enterprise had a successful first quarter and is making good progress against its strategy. Enterprise is becoming an increasingly important contributor to the group, not only in terms of profitability, but also as a technology provider to the merchant and consumer divisions.

Our alternative digital products business provides the integration technology to enable any customer in South Africa to purchase a prepaid solution, for example, airtime, electricity, or facilitating a bill payment through channels such as retail distribution networks and online banking apps. We are one of the largest aggregators in South Africa. The ATB ecosystem consists of collectors and receivers. Our collectors are enterprises that act as sales and payment channels, enabling consumers, merchants, and businesses to access our platform. We are integrated with major retailers, banks, and numerous fintechs. On the receiver side, partners include all the mobile network operators, electricity providers, insurers, gaming and money transfer service companies.

Our bill payment platform enables businesses and consumers to settle accounts with over 620 billers, including municipalities, DSTV, telcos, and retailers. The extensive integration with our billing partners is a source of competitive advantage for Lesaka, as replicating this is very challenging. Bill payments represent over 75% of the ADP volumes and was a key driver of the 13% year-on-year growth in ADP TPV to ZAR 11.9 billion. As a reminder, we earn a fixed fee for bill payment, while other payment earnings are based on the value of the transaction.

Lesaka Utilities is a recharger business we acquired last year. We sell prepaid electricity meters and prepaid electricity vouchers. Utilities TPV increased by 21% year-on-year to ZAR 396 million for quarter 1. Approximately 8% reflects a pass-through of the electricity price increase in August, with the remainder representing organic growth. Recurring revenue is generated through the vending of vouchers for these meters purchased through the Lesaka Utilities platform. The electricity meters are mainly sold through large retailers such as Builders Warehouse, Leroy Merlin, and [ Buko ]. Currently, we have 500,000 registered meters and 270,000 active meters, of which are up 16% year-on-year. As a reminder, we measure active units as meters where there has been a top-up in the last month.

We've made substantial progress in the integration of the recharge business into our utilities vertical, both from a product and a people's perspective. We are beginning to realize synergies from owning more of the value chain as part of this transaction and expect to see increased incremental margin as a result from financial year 2026 quarter 2.

Thank you. That concludes the segment operational overview for quarter 1. I will hand over to Ali now to take you through the key updates and our quarterly guidance.

Good morning and good afternoon to all of those joining us. Our progression towards -- on Lesaka is not merely about brand. It is a critical step of strategic initiatives designed to simplify and organize the business to unlock bottom-line growth, as well as helping facilitate the drivers of top-line growth, which I will touch on in a minute. From a cultural and brand perspective, bringing our divisions together toward a unified Lesaka is the next necessary step of this journey. We will refresh our corporate identity to staff in November, greatly improving not just the visual representation, but also the clear articulation of what Lesaka represents. We look forward to celebrating who we are and consolidating our marketing spend to maximize the impact.

Having a single unified brand and culture will help facilitate our stated objective of building relationships with our customers rather than selling products, as well as aligning this with the representation we have to the market and to our employees. This effort extends to our physical footprint. On the office consolidation front, we have identified a new Johannesburg office. Our expectation is to have all divisions housed under one building by the fourth quarter of fiscal '26. We will also be consolidating our hubs in Cape Town and Durbin and reducing our overall lease footprint from over 40 locations to approximately 20 over the coming calendar year. Over time, this will reduce our occupancy cost, but more importantly, it will create a more efficient and integrated cross-functional organization.

On our strategic initiatives, the Bank Zero acquisition continues to progress well with positive momentum. While we remain subject to the regulatory process, we are on track to close the acquisition as planned. We have no change to our expected timeline of completion by the end of FY 2026. We are also continuing to simplify our business and balance sheet. This includes simplifying our corporate structure by selling or exiting subscale non-core business lines and closing legal entities. In addition, we have reached an agreement with TPC, a subsidiary of Blue Label Telecoms, the reference shareholder of Cell C, to monetize our equity position with an underpin of ZAR 50 million should the business list in the near term, while retaining optionality on the upside of a potential IPO. This stake is currently valued at 0 on our balance sheet. This streamlining will allow management to focus time and capital on our core mission.

As we continue to build the Lesaka platform, we are also simplifying representation to focus on the structural drivers of our revenue. Lesaka is structured into 3 distinct and complementary divisions: Consumer, Merchant, and Enterprise. This deliberate segmentation ensures each division operates with a clear strategy, targeting specific growth levers, providing Lesaka with a diversified and resilient revenue base. Our primary financial measures are aligned with this strategy. At the next investor presentation, we will reference the KPIs provided as the core drivers of our net revenue and the building blocks of our equity story. In the same way as we have been providing the number of customers and the ARPU in the consumer business, we will be providing the equivalency in the merchant and enterprise business. Our hope is that this will help simplify the explanation of how we make our money.

The ARPU for each customer is a function of the individual revenue drivers for each product and amplified by the level of cross-sell achieved for that customer within that division. For merchant ARPU, our cash card and AGP products are a function of volumes and take rates. Our lending product is a function of origination volumes and yield, and software is a function of hardware and software fees. For consumer, we will continue to disclose ARPU in terms of transaction fees and volume for our transaction banking product, lending originations, and yield for loans and premiums, and collection rates for insurance.

Enterprise ARPU is based on 3 products: ADP and utilities, which are a function of TPV and take rates; and payments, which is a function of the number of transactions and transaction fee. On the expected completion of the Bank Zero acquisition, we will have additional customers and product offerings, which will augment the existing base of consumers, merchant, and enterprise clients and augment our product offerings across all 3 business lines. Having evolved our team and products over the course of the last year, the focus for FY '26 is on maintaining discipline, focus, and execution. We are pleased to reaffirm our FY '26 annual guidance on net revenue, group adjusted EBITDA, net income profitability and our adjusted EPS measure.

Looking forward to the second quarter, on a net revenue basis, we are providing a guidance range of ZAR 1.575 billion to ZAR 1.725 billion, the midpoint of which implies a year-on-year growth of circa 20%. We are also providing a group-adjusted EBITDA range of ZAR 280 million to ZAR 320 million, the midpoint of which implies a year-on-year growth of circa 42%. Note that the Q2 FY 2025 comparable actuals incorporates the Adumo acquisition. We are excited for the year ahead and looking forward to continuing to deliver on our strategy and commitments.

I will now turn the call over for any questions.

Thank you, Dan and Lincoln. [Operator Instructions]. Operator, please, could you open for Ross Ker from Investec Securities?

So I've got 4 questions all on the Merchant segment. Maybe I'll just ask them one by one, if that's easier. Just on the sequential performance of the revenue line. So it looks like that declined quarter-on-quarter. So I'm just keen to unpack is there some seasonality in that? Is there a mix effect? Any color you could give would be useful.

All right. There is some seasonality in that. There is also some non-core business lines that we are closing out and exiting. So yes, there's both of those.

And then maybe if I can extend that to the margin as well. I mean, I suppose there's probably a similar answer, but any comments on the change in margin -- sequential change in margin?

Yes. That has an additional component, which is we did have some nonrecurring costs within the merchant business. And we made the election that we were not going to exclude these from the group adjusted EBITDA. We want to minimize any exclusions that we're providing. I think a closer representation of the run rate can be inferred from the guidance that we're providing for the next quarter. So if you -- the Adumo transaction clearly is incorporated, as I said in the presentation in the Q2 2025 numbers, and we're guiding the market to at the midpoint of the range, group adjusted EBITDA of north of 40% year-on-year. So you can get a better idea of underlying growth through that.

Then maybe I'll just ask these 2 questions in one. So firstly, just on the rationalization of infrastructure that you talked about. I mean, it might be too early to ask, but I don't know if you thought about what the impact on the cost base will be from any of those activities? And secondly, I guess, somewhat related, but in terms of the cross-sell, so clearly, there's a consolidation going on in terms of all the acquisitions done, including most recently at Adumo. So the first question is more on the cost side of that and where you end up. And secondly, then on the actual sort of cross-sell part of that, where I think you've talked in the past about being able to do that. It's still early days, but just curious if there's any milestones you think you've reached, if there's any data points that we should know about there?

Thanks. I'll start with the cross-sell question. I'll ask Dan to talk a little bit about the infrastructure rationalization. So on the cross-sell, as we sort of alluded to in the presentation, we're going to, from the next quarter, be providing the attachment rates 1, 2, 3, 4, 5 products for the merchant business as we've been doing in the consumer business, so that you can track the quarter-on-quarter evolution of that cross-sell. However, where we are today is that the vast majority of our merchants do have an attachment rate of more than one product. The largest 2 contributors of products to our EBITDA in the merchant business is merchant acquiring and ADP. And there is a high attachment rate for customers who have merchant acquiring to a second product already, the biggest one being ADP, but software is also a relevant attachment product.

From next quarter, we'll be able to talk to the specificity of those numbers, but we do expect to materially increase that cross-sell over time. In terms of the rationalization, I mean, we have already spoken about the fact that we believe that there's quite a material operating leverage associated with our business as we scale, but I'll let Dan augment.

Thanks, Ali. Ross, just around the overall costs, I mean, in effect, we're bringing together 4 businesses under the umbrella of our overall merchant division. There's a whole bunch of duplication of functions on the one hand. And there's a misalignment as the individual businesses go to market with the customer propositions. So that's the unification we speak about of our merchant business. Within those operations, there will be some reengineering of platforms as we bring them together. As I said, there will also be the removal of a whole bunch of duplications of various functions touched on a simple example around our office rationalization in our Johannesburg region, we look to be in the second half of financial year, all under one roof. And later in the year, both in our Durban and our Cape Town areas as well. That will effectively enable us to move from 40-odd offices to roughly 20 as a group as a whole. So use that as a simple example within that rationalization, of course, there's an opportunity for significant cost savings. It's probably a little bit too early to give you some specific data points as to how much, but we do expect significant savings to emerge over the next -- over the short to medium term.

And also, if I may just come back to the margin question on the merchant side. Ross, I will guide you -- we disclosed margin quarter-by-quarter. There is some seasonality, of course, and there's some mix effects around that. If one just looks through the overall margin trend within the merchant business, it oscillates anywhere from 19% to 25% across different quarters. So within each quarter, there are some different mix effects. But I do encourage you to look at it at a blended or smooth rolling basis rather than individual quarter-by-quarter.

Thank you, Dan. Ross, any additional questions? Okay. I think that means that we have answered all of Ross's questions. The next question I have is on the webcast. There are 2 questions that are similar from Prashendran at 361 and Jon at all Weather. Please can you take us through the Cell C potential IPO? Happy -- are you happy for it to list and get out? And what was the rationale to put the option in place that you have?

I'll start and then hand over to Dan as well on that. I mean, yes, I mean, I think we wish the company all the best, and we are very supportive of the planned IPO. The rationale to get out is the fact that as a business, we say we are simplifying our operations is not a core part of the Lesaka strategy. And so we'd much rather allocate that capital towards our core purpose. In terms of the specificity on the structure, Dan?

Yes. Thanks,. The only thing I'd add to that is we currently have a 5% stake in an existing Cell C business. As part of preparing it for its IPO, there's a variety of restructuring steps, both including injecting assets, airtime, and restructuring of debt, which will culminate ultimately in the conversion of a lot of that into equity to give Cell C a sustainable balance sheet. That restructuring will result in the dilution of our equity percentage stake. And so the business being listed is very different to the one currently constituted in which we have a 5% holding. To echo Ali's sentiment, we are absolutely delighted with a successful Cell C listing, and we have aligned our economics very much around that. The market will adjudicate what the appropriate fair value for Cell C is, and therefore, our implied stake. And we've got some optionality around that where we've secured a minimum value of ZAR 50 million for our stake should Cell C list this year, of course, with upside if our effective holding ends up being worth more than that.

Thank you, Dan. Thank you, Ali. The next caller on the conference line is Theo O'Neill from LHR Research.

I want to follow up on your first question about the merchant business margins. I believe you said that they range from 19% to 25%. And I'm wondering, when you think about margins for the merchant business, do you think about the overall number? Or do you think about the individual product margins, trying to stay within that range?

So it's -- thanks for the question, Theo. I mean the whole evolution of the business is around trying to build relationships with customers and having multiple products associated with those customers. So I very much think about it as a collective rather than the individual margins per product, partly because the way that a customer may be paying may not be the entirety of what they're buying. And there's different aspects of that. There's an ecosystem component to our merchant business. The way that I would think about the margins in that business, I think we have, in the past, given the reference that we believe that this business is a business in an aggregate, we should be able to trend the EBITDA margin to certainly north of 30%. And I think we are through the integration process on the way towards that evolution.

I have one more question here. On the consumer side, you've successfully grown share over the years despite increased competition. And I'm wondering how long is the runway for that?

I think that we've indicated before that we still see some runway in growing our business, taking more share from the Post Bank. As we mentioned earlier, our share is 14%, yet we're taking 20% of the customers coming out of the Post Bank. And we think that with the remaining customers, as they move, a larger percentage will come to us. Secondly, if you look at our penetization rates, it gives you an indication that there's still room for us to grow in that space, both in our lending and in our insurance. Thirdly, we've indicated that on the insurance side, we have room to sell our product to non-EPE customers. That's another opportunity to grow.

But if you think of the optionality that comes with the Bank Zero acquisition, when that has been approved and consummated, it gives us an opportunity to see customers that are beyond the ground space. So when we think of our consumer business, we think of our consumer business in terms of that future that includes Bank Zero. So there's much more optionality for this business going forward.

And just to add to Lincoln's comment, part of the rationale, obviously, of the transaction is we believe that there's material complementarity between our distribution and the Bank Zero platform in being able to provide a very competitive offering in the open market. So we certainly don't feel like we're out of run rate. In fact, we feel like we're expanding that run rate.

We also have James Stark from RMB Morgan Stanley on the line. While we wait for James, let's move to the next call on the webcast Q&A. This one is from Jon at All Weather. Could you provide a comment on the recent ramp-up in fintech interest in South Africa, for example, Ekoka Optasia, and by other large traditional financial players?

I mean I think it's representative and endorsing of the strategy that we're engaging with. I think that while there has been an increase in the interest, I'd still say that the interest and the scale of the fintech ecosystem in the country is massively underweight relative to other geographies. So I certainly consider this to be the beginning of the evolution rather than in a particular spike. I believe that it benefits both us and it benefits the society for there to be greater innovation in the country. And frankly, I'm delighted to see successful businesses emerging in the ecosystem.

Thank you, Ali. James, do you want to try and ask your question again? Operator, could you please try and unmute James? He says that he's struggling to unmute. Okay. That's fine. Let's go on to the next question on the webcast Q&A. This one is from Sven Thorson at Anchor Securities. Combining the midpoint of your Q2 guidance and reported Q1 adjusted EBITDA equates to about ZAR 570 million, leaving ZAR 780 million to be realized in the last 2 quarters to achieve the midpoint of your full year guidance. This implies ZAR 390 million per quarter, which is a considerable leap on Q2, which is a busy period for the group. Please elaborate on how this will be achieved. Does the base still include significant restructuring costs?

I mean, so I think your maths are right. I would also say that as a business, this is the 13th consecutive quarter of achieving our EBITDA guidance, and we are reiterating our full-year EBITDA guidance. So we have a lot of conviction associated with the growth evolution of our EBITDA. I think we did mention that there were some nonrecurring costs that are embedded. Our run rate EBITDA at this juncture is closer to ZAR 300 million if you excluded those nonrecurring costs. And from that base, we are expecting to grow organically through the strategies that we've outlined in both the consumer, merchant, and enterprise business. And we're excited that effectively, we have the engine room that can achieve those growth rates.

Okay. Thank you, Ali. Those are all the questions we have for today. James, apologies that we couldn't get your question, but we'll contact you afterwards. If there are any other questions, please reach out to me. Thank you for attending our webcast today. Thank you, Ali. Thank you, Lincoln. Thank you, Dan.

Welcome to Lesaka Tech's Results Webcast for the Fourth Quarter of Fiscal 2025. As a reminder, the webcast is being recorded. Management will address any questions you may have at the end of the presentation. [Operator Instructions] Our results press release and investor presentation are available on our Investor Relations website at ir.lesakatech.com.

During this call, we will be making forward-looking statements. I ask you to look at the cautionary language contained in our press release, Form 8-K and results presentation regarding the risks and uncertainties associated with forward-looking statements. As a domestic filer in the United States, we report results in U.S. dollars under U.S. GAAP.

However, it is important to note that our operational currency is South African rand, and as such, we analyze our performance in South African rand, which is non-GAAP. This assists investors in understanding the underlying trends in our business.

I will now turn the webcast over to Ali.

Welcome. FY 2025 has been a strong year for Lesaka. From a financial performance perspective, we finished the year with net revenue of ZAR 5.3 billion and EBITDA of ZAR 922 million, in line with our guidance for the year. Our adjusted earnings for the year of ZAR 186 million was up substantially from ZAR 51 million last year and resulted in adjusted earnings per share growing from ZAR 0.80 to ZAR 2.29. From a balance sheet perspective, in March 2025, we refinanced our existing debt facilities and expanded our banking relationships to include both RMB and Investec.

Our gross debt increased as we raised debt to fund acquisitions. And accordingly, our net debt to group adjusted EBITDA increased to 2.9x if we use 12-month trailing EBITDA. However, if we annualize Q4 adjusted EBITDA, this would be 2.2x, approaching our target of less than 2x leverage ratio. From an M&A perspective, in October 2024, we completed the ZAR 1.7 billion acquisition of Adumo.

In March 2025, we completed the ZAR 507 million acquisition of Recharger. In June 2025, we announced the ZAR 1.1 billion acquisition of Bank Zero, and we sold our entire stake in MobiKwik for ZAR 290 million. From a people perspective, we have augmented our executive team, launched our graduate recruitment program and implemented our employee share ownership plan. We strive to be the employer of choice for those driven by mission and purpose.

From a stakeholder engagement perspective, in January 2025, we launched the Association of South African payment providers with Lincoln Mali assuming the association's presidency to work in closer collaboration with regulators and industry stakeholders.

In March 2025, we held our first Investor Day to better explain our business and the opportunity to the investor community. Our 3 business units are at different stages of evolution. Our merchant business has grown materially this year with net revenue of ZAR 3 billion, up 46% year-on-year and EBITDA of ZAR 657 million, up 20% year-on-year, but this has been partly driven by acquisition. The businesses are still being integrated and the focus in the short term will be on completing that process and the unit economics, after which we expect to see an acceleration in organic growth.

Our Consumer business has had a standout year, growing net revenue by 35% to ZAR 1.7 billion and EBITDA by 83% to ZAR 435 million. Our Enterprise business reported net revenue declining 9% to ZAR 651 million and EBITDA declining from ZAR 55 million to ZAR 24 million as we closed down noncore business units and invested in building a leading enterprise business to form the third pillar of the Lesaka platform.

We can already see this bearing fruit in Q4, and our Enterprise business will be a material EBITDA contributor to the group and driver of growth in the year ahead. At the end of this presentation, I'll provide more color on the transformative Bank Zero acquisition, which we signed and is pending regulatory approval as well as looking ahead to FY '26 and our guidance.

I'll now hand over to Dan to give more details on our performance for the past quarter.

Thank you, Ali, and good day, everyone. As Ali has highlighted, Lesaka is going through a period of significant transformation, marked by strategic acquisitions, balance sheet optimization and internal restructuring as we continue to build out our fintech platform.

Despite it being a very busy period in Evolution, we have consistently delivered on our guidance. This quarter marks our 12th consecutive period of meeting profitability guidance, underscoring the consistency and reliability of the execution of our strategy. This quarter reflects strong financial momentum with positive contributions to both net revenue and profitability from all 3 of our divisions.

Our Consumer division delivered another excellent quarter with robust growth in both top line and bottom line performance. In our Merchant division, we accelerated the integration of our micro merchant and merchant businesses as we build an integrated multiproduct platform, serving merchants of all sizes.

This includes the unification of our brands under a single Lesaka identity. Some of these actions has resulted in reorganization costs being incurred as well as additional intangible amortization charges as we shortened the deemed useful lives of some of our brands.

In our Enterprise division, it's been a year of build. We've refreshed our strategy, refined our core product offering and realigned the business. These changes incurred once-off reorganization costs, but Q4 now reflects the fully scaled up Enterprise division aligned with a new strategic direction.

Pleasingly, the strong performance of the recently acquired recharger business has come through for a full quarter for the first time, leading to a growing overall contribution from our Enterprise division. We completed the disposal of our major noncore asset, MobiKwik, for ZAR 290 million with the proceeds received at the end of June. These funds have been included in our cash balances and used to partially offset our debt, in line with our stated intention.

We continued to optimize our balance sheet through the refinancing of the merchant blending facility, resulting in an upsize to ZAR 400 million in capacity to fund growth and a 75% basis point reduction in the overall funding cost. Turning to the numbers. Q4 has been another positive quarter with the Lesaka shape now being represented wholly for the first time through full 3-month contributions of both the Adumo and Recharger acquisitions. Net revenue was 47% higher

at ZAR 1.5 billion, with group adjusted EBITDA of ZAR 306 million, up 61% on last year. Our adjusted earnings, which we believe is the most appropriate measure of our overall performance, has grown almost threefold to ZAR 80 million this quarter. On a per share basis, adjusted earnings is up from ZAR 0.32 to ZAR 0.99, representing an increase of over 200%. Our net debt to group adjusted EBITDA ratio increased from 2.5x to 2.9x at year-end.

As mentioned by Ali, given this is the first quarter of full representation for Lesaka, annualizing our Q4 adjusted EBITDA results in a leverage ratio of 2.2x, approaching our target of 2x. Our focus is on net revenue as a top line KPI, which recognizes only the commissions earned on the sale of certain types of vouchers, thus eliminating volatility caused by changes in sales mix.

Net revenue increased 47% year-on-year, driven primarily by the inclusion of Adumo and a stellar Consumer division performance. Enterprise division net revenue reduced 17% for the year, reflecting the restructuring of the division and the closure of noncore lines of business. At an adjusted EBITDA level, we reported a 61% year-on-year growth for the quarter to ZAR 306 million.

The Merchant division's growth of 37% was primarily driven by the inclusion of Adumo this quarter compared to last year. During the quarter, we also continued to make technology investments in the micro merchant business, which are mostly recognized as operating costs and therefore, impacted our overall EBITDA growth.

In the Consumer division, we have seen standout performance with growth of 106%, reflecting the increased scale of our customer base as well as success in our insurance and lending cross-sell initiatives. We also had Adumo payouts this quarter compared to the prior year with a positive contribution.

The Enterprise division adjusted EBITDA increased 66%, reflective of being a bold year with the investment in the platform, closure of unprofitable business activities and reorganization costs of ZAR 8 million for the quarter. This was offset by the inconclusion of Recharger for the full quarter. Taken as a whole, Q4's performance with group adjusted EBITDA in excess of ZAR 300 million provides a good indication of our current quarterly earnings run rate. Before taking into account seasonality, organic growth and cost savings we expect to extract as we consolidate and scale our platforms.

Standing back, 2025 and this quarter, in particular, had multiple significant anomalies in the income statement. This shifted the strong growth in group adjusted EBITDA to a significant overall net loss position. Let me unpack this in a bit more detail.

Firstly, we recorded ZAR 239 million of transaction costs, of which ZAR 225 million arises from the post-combination compensation charges related to the recharge acquisition. Here, the deferred portion of the purchase price paid to the seller is required to be accounted for as a compensation charge given he is providing consulting services to Lesaka for a period of time post acquisition. This is nonrecurring.

Secondly, we incurred additional amortization charges related to our intangible assets, specifically brand names. As a result of the unification of our merchant division, we accelerated the amortization of the useful lives resulting in a noncash charge of ZAR 46 million for the quarter, with a further ZAR 160 million accelerated charge expected next year.

Thirdly, we recognized ZAR 335 million in noncash goodwill impairments during the quarter. It's important to note that our assessment of goodwill in aggregate, has increased across each of the acquisitions we've made relative to initial assessments at the time of each transaction.

However, under accounting standards, goodwill is assessed at the level of the individual cash-generating units required. As a result, some of the individual CGUs required impairment with there being no equivalent mechanism to raise or write-up for increases in assessed goodwill and other CGUs to offset this. This is a noncash accounting charge and does not reflect a change in our confidence of the strategic value of acquisitions nor the price paid.

Fourthly, we realized a loss of ZAR 101 million on the sale of MobiKwik.

Finally, we recognized a benefit of ZAR 210 million arising from the reversal of deferred tax valuation allowance. This adjustment reflects the improved profitability in our consumer lending entity, which has strengthened our confidence in the use of the significant assessed losses. This reversal is a noncash accounting benefit, and it highlights the positive trajectory of our consumer division's performance. We believe adjusted earnings per share is the most accurate reflection of our operating performance.

Adjusted earnings per share accounts for fully diluted shares, including those issued for acquisitions and related to stock-based compensation. In quarter 4, our adjusted earnings per share grew by 211% to ZAR 0.99, and for the full year, it increased by 187% to ZAR 229. This increase underscores the strength of our underlying business and the successful execution of both organic and inorganic growth strategies being value accretive for our shareholders.

We continue to see strong growth in cash generated from business operations with operating cash flow increasing by ZAR 101 million quarter-on-quarter, reaching ZAR 370 million in quarter 4. This is consistent with the sustained quarterly growth trajectory we have observed in prior periods. Working capital movements remain volatile, largely due to the timing of transactions around quarter ends, particularly in our merchant and enterprise divisions.

In quarter 4, we utilized ZAR 42 million in working capital. We also saw increased funding requirements of ZAR 230 million, driven by strong growth in our consumer and merchant loan books. In our micro merchant business, we took advantage of bulk discount opportunities with a net ZAR 34 million investment in inventory. We paid provisional tax of ZAR 49 million in the quarter. Interest paid for the quarter increased to ZAR 239 million, primarily due to 4 months of accrued interest payments being settled in June 2025.

As you'll recall, in quarter 3, only 2 months of interest were payable owing to the timing of the conclusion of our debt refinance at the end of February 2025. The net result for the quarter is net cash utilized in operating activities of ZAR 116 million. While our net cash flow may fluctuate quarter-to-quarter, we remain confident in the cash-generating capacity of our business.

Our net debt to adjusted EBITDA increased marginally from 2.8 to 2.9x. We received the proceeds from the sale of our MobiKwik shareholding this quarter, which boosted cash holdings. Our medium-term target is a net debt to adjusted EBITDA ratio of 2x, which is comfortably serviceable and an appropriate capital structure for Lesaka.

Our gross debt to ZAR 4 billion does not take into account any impacts of the proposed acquisition of Bank Zero, which we anticipate closing before the end of our 2026 financial year and from which we see significant opportunity to reduce both our cost of funding and overall gross debt levels. We spent ZAR 103 million on capital expenditure this quarter and ZAR 378 million for the year.

Key expenditures include the continued rollout of our new Smart Safe product, capitalized development costs and the rollout of post-acquiring devices. ZAR 33 million was spent on maintenance CapEx, primarily related to POS devices and cash vaults. Looking ahead to 2026, we expect our annual capital expenditure to remain below ZAR 400 million, in line with our disciplined investment approach. This will be roughly flat compared to 2025 despite continued growth in group adjusted EBITDA.

Looking back in the quarter, we've made significant progress in establishing a scalable fintech platform. Our platform is now almost fully represented. Looking forward, we remain focused on driving sustainable growth, maintaining capital discipline and enhancing shareholder value.

I will now hand over to Steve to address key developments and results in our Merchant division.

Thank you, Dan. When we announced the acquisition of Connect in 2022, which included offerings for small to media merchants and micro merchants under the Kazang brand, we outlined a clear vision, one that remains unchanged today. In setting this vision, the opportunity presented included the inevitable digitization of South Africa's economy driven by secular trends and solving for the pain points of under-serviced merchants in Southern Africa.

We set out to build an integrated multiproduct platform serving merchants of all sizes, ranging from micro merchants to small to media merchants. We've been in build for 3 years and during that time, we've made significant progress in executing on this vision. The division has scaled organically and through acquisitions, product integration and cross-selling.

The merchants we serve face challenges that extend well beyond accepting card payments. Our goal is to provide comprehensive solutions that help them manage their finances, operate their businesses more efficiently and ultimately succeed. We strive to build multiproduct relationships. The more services we layer, the more value we create for our merchants and the more efficient and scalable our merchant platform becomes as we integrate our tech stack.

Our growth strategy remains balanced between organic initiatives and inorganic initiatives being strategic acquisitions, each designed to deepen our customer base or expand our product set as we build a scalable fintech platform. In a competitive landscape where banks, retailers and MNOs are all buying for merchant engagement, we believe Lesaka stands apart.

Our comprehensive product suite spends both the formal and informal merchant sectors, giving us a differentiated value proposition with the ability to execute at scale. We are still in the early stages of our journey, but we've reached a pivotal point in the evolution of our merchant division.

Let me walk you through our four key developments that impact both the year under review and our focus for the year ahead. Firstly, scale and product augmentation through the Adumo acquisition. We acquired Adumo, South Africa's largest independent payments processor to significantly scale our merchant footprint and broaden our product offering.

This transaction added more than 23,000 merchants to our base. It expanded our geographical presence and opened new verticals, most notably hospitality point-of-sale software through GAP. GOP is the leading provider of integrated point-of-sale software and hardware to the hospitality sector in Southern Africa, servicing in excess of 9,600 sites with on-the-ground operations in South Africa, Botswana and Kenya.

This acquisition positions us to ultimately offer a bundled solution of software, card acquiring, cash lending and alternative digital products, creating a compelling cross-sell opportunity and reinforcing Lesaka's role as a natural consolidator in Southern African fintech. By broadening our product offering, we can put more hooks into our merchant value proposition and thereby enhance the stickiness of our relationship with each merchant. Cross-selling and bundling are central to improve our unit economics and achieving operating efficiencies which supports margin expansion in the merchant division.

Secondly, integration, optimization and brand consolidation. We have seen good organic growth over the past 3 years and have brought together Kazang and Connect and then added to Adumo and GAP. We believe we have made some early progress in integrating our merchant businesses through extracting efficiencies and executing on cross-sell opportunities, but most of this opportunity is in front of us. Naturally, we have inherited duplication across product sets management structures and distribution channels.

As Dan mentioned, we are consolidating our brands under a single Lesaka identity. This streamlining effort is essential to reduce complexity eliminate duplication and unify our go-to-market strategy. This isn't the first time Lesaka has faced the challenge of streamlining operations and unifying its go-to-market strategy. A few years ago, in our consumer division, we successfully realigned our sales force, implemented targeted sales force training and deployed a new front-end platform, Bungwe to enable a 360-degree view of the customer.

This allowed us to identify cross-sell and upsell opportunities more effectively, driving improved customer engagement and delivering better unit economics. We are now applying the same disciplined approach to our merchant division with the integration of multiple product offerings into a single and efficient platform, early but meaningful progress has been achieved. Notably, we have started to see our operating margins increase from 19% in Q3 '25 to 23% in Q4 '25.

However, we recognize there's still work to be done, particularly on extracting efficiencies and executing cross-sell initiatives across Adumo and Connect. Our integration plan is underway, and consolidating our merchant brands under the Lesaka identity is a key step towards simplifying our go-to-market strategy and unlocking the same efficiencies we achieved in our consumer division.

Key levers to enhance unit economics and support our multiproduct offering include optimizing our solution set with best-of-breed technologies, unifying our digital distribution channels to maximize reach and enhance cross-sell potential and maximizing platform efficiencies. Ultimately, it's about delivering more and better products to more merchants or from a single unified platform.

Thirdly, cross-sell momentum. We are seeing early signs of success in cross-selling across our merchant ecosystem with two key facets emerging. Firstly, we are driving cross-sell of cash and lending solutions into our merchant acquiring base and vice versa. This is early stage, but we have already seen positive results as merchants increasingly adopt bundled offerings that help them manage their business.

Secondly, we are cross-selling merchant acquiring into our GAP software base. Although still in its early stages, the potential is considerable. Currently, only about 10% of our software customers utilize our point-of-sale acquiring solutions, compared to global benchmarks of over 50% on the front book and 100% on the back book. This creates a clear opportunity to increase product penetration and boost merchant value. We are seeing a compelling opportunity to take this even further.

Once merchant software and card acquiring are integrated, we plan to layer in lending and cash solutions. Over the medium term, we also intend to introduce an integrated banking offering, enabled by the completion of our recently announced Bank Zero transaction, further expanding the appeal of our merchant value proposition. This strategy positions Lesaka to deliver more products to more merchants, more efficiently while driving stronger unit economics and long-term growth.

Globally, the most successful fintechs have distinguished themselves not by offering the lowest price per product, but by delivering comprehensive end-to-end solutions with a clear and compelling value proposition for merchants. Hence, our focus is on solving real business problems, integrating payments, software, lending and financial services into a unified platform that drives efficiency, growth and stickiness.

And lastly, expansion into the licensed tavern market. Following on from our topsize acquisition, we have furthered our push into the licensed tavern market a vibrant and underserviced segment of the micro merchant economy. The tavern base is now fully integrated into our micro merchant business, allowing for a shift in management's focus to selling more product to taverns specifically focusing on merchant acquiring through Kazang Pay, supplier payments through our wallet ecosystem and credit opportunities as these merchants manage their working capital cycles. We are seeing encouraging results as we layer additional products into the space, further deepening our reach and relevance in the tavern vertical.

Turning to our KPIs for the quarter and the year under review. Our merchant acquiring footprint expanded to 84,541 points of presence by the end of FY '25, up from 51,880 a year ago, and includes devices from the Adumo acquisition. Most recently, our Q3 to Q4 '25, total points of presence grew by 4%, indicative of a 16% annualized growth.

Kazang Pay devices grew 10% organically for FY '25. We expect mid-teens growth going forward driven by expansion in the licensed tavern vertical and conversion of ADP merchants to our acquiring plant. Throughput for the year reached ZAR 35.5 billion, including 9 months of Adumo with a 15% year-on-year growth attributable to Kazang Pay.

Looking ahead, we anticipate stronger throughput growth in our micro merchant offering supported by deeper device penetration and cross-sell initiatives. In the small to medium merchant market, our focus is on increasing volumes per device through enhanced merchant engagement. GAP sites in the field increased 5% year-on-year, exhibiting steady growth, reflecting on our GAAP revenue performance and 8% year-on-year increase in subscription or rental revenue across both Q4 and the full fiscal year represents the strength of our recurring revenue base.

These streams form the backbone of our annuity model and provide a consistent, scalable foundation for long-term growth. Our sales team is proactively moving to push unity, a more feature-rich cloud-based software solution that is priced to attract a wider customer base. This approach enables greater customer lifetime value prioritizes long-term growth and market penetration, ensuring we remain the go-to partner for restaurants looking to transform their success.

GAP Pay card processing volumes grew 26% year-on-year with only 10% of GAP sites currently using our integrated payment solution. This is well below the global benchmark of approximately 50%. Given this cross-sell opportunity is still nascent, we are excited about the prospects related to increasing ARPU as we scale our cross-sell efforts. Our cash business reflects a tale of two cities.

In the small to medium merchant sector, cash usage continues to decline with flat bold growth consistent with macro trends. In the micro-merchant market, cash remains prevalent, driving strong growth with our bolts digitizing cash by enabling merchants to deposit funds locally, avoiding bank fees and enabling instant wallet availability for stock purchases supplier payments or transfers.

Micro-merchant volt deposits grew 92% year-on-year from ZAR 7.2 billion to ZAR 13.8 billion. Now representing more than 10% of total bulk throughput for the year compared to over 5% a year ago. This result is becoming a meaningful contributor to our business and a key differentiator in informal markets. Our push into this segment has opened a new growth vector, allowing us to expand in a space often seen as declining.

Additionally, the Dumo and Connect integrated sales teams unlocking revenue synergies, especially among large merchants with both cash and card needs, supporting our strategy of pricing the relationship, not the product. Our lending portfolio includes Connect offering and Adumo's JV with retail capital. After a challenging macro environment, lending has returned to growth driven by an investment into a direct sales team dedicated to loan origination and customer relationship management and leveraging merchant transactional data.

We've lowered the turnover threshold for loan qualification to improve qualifying merchants accessibility to credit. We have not changed our credit scoring criteria and have, to date, not experienced any change to our risk ratios. Our net loan book closed at ZAR 479 million with ZAR 234 million dispersed in Q4 and ZAR 917 million for FY '25.

Our alternative digital products offering in the Merchant division focuses in the main on the micro merchant market, offering prepaid solutions, including airtime, data, electricity, gaming, bill payments international remittances and supplier payments. The majority of our point-of-sale devices are also enabled to accept card payments, often referred to as Kazang Pay.

Devices in the field grew 8% year-on-year, now exceeding 94,000. Throughput on prepaid solutions increased 6% to ZAR 19.1 billion. We believe we gained market share in that we grew by 6%, despite losses in throughput resulting from macroeconomic forces. These include direct-to-consumer digital penetration coupled with airtime volumes coming under pressure due to changing consumer behaviors and increased public WiFi access.

Gaming throughput showed strong growth, partially offsetting airtime softness. Our supplier-enabled payments platform continues to show excellent growth as the risk and efficiency benefits of the digitization of business-to-business transaction gains traction, supply enabled payments increased 57% year-on-year to ZAR 23.4 billion.

The product market fit for supplier payments is clear. merchants benefit from instant settlement enabling immediate use of funds for supplier payments and working capital needs. While supplier payments are lower margin, they create a positive pull-through effect encouraging adoption of our merchant acquiring solutions.

Turning to the financial performance of the Merchant division. Net revenue was up 46% to ZAR 3 billion with segment adjusted EBITDA up 20% to ZAR 657 million for FY '25. This performance is a function of both organic and inorganic activity. FY '25 includes 9 months of Adumo contribution and has had a positive impact on this year's performance.

As Ali stated in the Investor Day, our expectation for the merchant business over the next 12 months is to focus on bolstering our unit economics and extracting efficiencies on our merchant platform delivering on a bundled merchant offering. Although nascent, we are pleased to see an uptick in operating margins between Q3 and Q4 '25.

In closing then, we remain well positioned to capture prevailing trends in our merchant market. Cash remains prevalent in the micro merchant market, but the shift towards digitization is accelerating. Micro merchants are increasingly recognizing the value of digital tools to enhance operational efficiency, streamline administration and mitigate risk. This growing adoption is reflected in transaction behavior with the average value per car transaction decreasing, indicating more frequent use for everyday purchases. The digitization trend is further reinforced by changes in supplier practices.

Many FMCG suppliers serving micro merchants have stopped accepting cash payments, adding momentum to the shift. The number of supplier payment transactions grew by more than 10% in FY '25 compared to FY '24. The average value per transaction increased by over 40% and total throughput by approximately 60% over the same period.

Ali will discuss the Bank Zero acquisition in more detail, but for the merchant division, we are excited about what the transaction brings to our offering and capabilities. Bank Zero will enable Osaka to offer merchant bank accounts and banking solutions tailored for small to medium merchants as well as for certain micro merchants such as tabs.

Migrating Adumo merchants to Bank Zero will allow for a more competitive and comprehensive merchant offering. In the medium term, our vertically integrated fintech platform will offer a banking service as an added feature for our merchants. The combination of Bank Zero's digital platform with Lesaka's broad product offering aligns directly with Lesaka's mission to deliver customer-focused, low-cost financial services.

The Merchant division is at a pivotal stage in its development. Our objective is to operate under a single brand and extract efficiencies as we integrate our merchant platform.

I'm pleased to welcome Kagiso Khaole and Roland Naidoo to the team. We look forward to their contribution and leadership as we take on the task of driving our merchant division through its next phase of growth.

Lincoln will now take us through the performance of the Consumer division.

Thank you, Steve. I want to take a moment to recap what has been an extremely busy and rewarding year for the consumer team. Through a combination of innovation and disciplined execution, we've seen several strategic developments that have significantly strengthened our position.

Our unwavering focus and relentless commitment have driven the continued increase in our market share within the grand beneficial market. This translated into 35% revenue growth and an 83% increase in EBITDA for this division for financial year 2025. These results are a testament to the team's dedication and strategic clarity. And they have set a strong foundation for sustained success going forward.

We launched Bungwe at the start of the financial year. Bungwe is our sales front engine and offers our service consultants a comprehensive view of each consumer enabling them to deliver a significantly improved service to our existing clients, supporting cross-sell efforts for lending, insurance and ADP while assisting with sign-up and onboarding new EPE customers. Bungwe has equipped our frontline staff with the tools to serve consumers efficiently and has achieved excellent results.

In our lending business, after thorough research into our consumers' financial needs and borrowing habits, we introduced a revised loan product that has been very well received. Consumers often resorted to unregulated lenders. So we increased our maximum loan amount and extended repayment terms. We did not alter our lending criteria during this process. We also completely rebuilt the lending system. It's more customer-friendly scalable and allows us to better manage risk.

Many of our consumers have taken advantage of the new lending product positively contributing to higher ARPUs. We have invested in our distribution capabilities, both talent and infrastructure. We've expanded our frontline teams and plan to open 50 new branches in financial year 2026 and add 50 branded service points.

All of this is part of our effort to better serve our customers and provide convenient access. We are now more present in rural communities than ever before, which is significant for both attracting new customers and serving our existing ones. We have continued investing in our digital platforms. We rebuilt our USSD platform to make it more reliable and user-friendly. This allows our customers to access our services digitally from anyway, saving them time and money. The usage of our USSD platform continues to grow experience.

Turning to our addressable market and future prospects. Since we repositioned our consumer business to focus on customer experience through investment in training, brand enhancement, distribution and IT platforms we have increased our permanent grant beneficiaries by 23% year-on-year. And over a 2-year period, our market share has increased from 9.1% to 13.6%.

This growth has primarily come at the expense of the Postbank, which experienced a sub decline in share following its various challenges. What has been encouraging for us is that we've been receiving a large share of the Postbank migration with approximately 20% of post-pain customers signing up to Lesaka in financial year 2025.

Moving forward, we believe we can sustain this momentum for another 12 to 18 months and attract further post paying customers at an accelerated rate that exceeds our market share. Lesaka is evolving rapidly along with our customer offerings. Beyond the core grand beneficiary market, we see a new opportunity in the payout business as we invest in this platform. Also, with the success of our insurance offering, we're in the process of opening this up to non-EP bank account holder. We have recently completed the systems work to allow for this and we anticipate commencing trial in [ Goro ].

Finally, the proposed acquisition of Bank Zero presents a significant opportunity for us to expand our consumer offering beyond the ground market, which is very exciting. During the quarter, we implemented a strategic refinement on how we report and measure our consumer base, aligning our evolving monetization strategy and increased focus on unit economics.

Historically, we segmented our grand beneficiary base into permanent and nonpermanent categories. However, both segments are revenue generating. And as such, we now report them as a combined consumer base. This approach better reflects the financial and operational performance of the division as well as the revenue-generating engagement of our entire consumer base. More accurately tracking our current and future monetization strategy for the division.

While we have historically presented these metrics separately, it's worth noting that approximately 90% of our active consumer base consists of permanent grant beneficiaries. This underscores the stability of our core customer segment, which in turn strengthens our ability to drive cross-sell opportunities. An active consumer is defined as any EPE consumer permanent or temporary grant beneficiary who has completed a voluntary debit or credit transaction within the last 90 days.

Consumers who are charged a monthly bank fee, but have not made any voluntary transaction during this period are excluded from the active count. This tighter definition more accurately captures revenue-generating engagement and aligns with our monetization strategy. We will continue to show the EasyPay Payout out separately given that this follows a different monetization model.

The fourth quarter saw another rise in net active consumers to 166,000 and 348,000 for financial year 2025. A year ago, for the competitive quarter, we saw an increase of 34,000 active consumers and 235,000 for financial year 2024. We are proud of this achievement, which reflects the investment we have made in our service offering and distribution and continues the momentum in customer acquisition. Under the revised methodology our ARPU is ZAR 85 per active customer per month, representing a 23% growth over the previous 3 years.

Turning to our KPIs. We now have 1.9 million customers, up from 1.5 million last year, representing a 23% increase. Of this space, approximately 90% are permanent grand customers, with 40% of them now holding a lending product and 34% of them having an insurance product.

As I mentioned earlier, we launched a new lending product this year, which has been very well received. While we did not modify our credit scoring criteria, we increased the maximum loan size and repayment terms, which has contributed to an 82% growth in our learning book, to ZAR 996 million at the end of the year, with a total origination of ZAR 2.5 billion for the year, up 48%.

The loan conversion rate continues to improve following the implementation of several targeted consumer lending campaigns and encouraging results from our digital channels. Our loan loss ratio has remained consistent at approximately 6% for the year. With the rollout of the new lending product targeting larger loans for a longer term, we expect a modest and nonmaterial increase in the portfolio loan loss ratio going forward.

In insurance, we also saw encouraging growth with gross premiums increasing 38% for the year. We've maintained our high collection ratio and lapse rate on our insurance book a sign of the value that our customers place on these products. These excellent operational KPIs have been reflected in our financial performance, with revenue increasing 35% annually to ZAR 1.7 billion and adjusted EBITDA up 83% to ZAR 45 million. I understand our consumer team for their tireless efforts and commitment.

I will hand over to my brother, Naeem, to take you through our plans and performance for the Enterprise division.

Good day, everyone, and thank you, Lincoln. Today, I'm excited to share the latest developments, key performance indicators and strategic direction for Enterprise division as we close out fiscal year 2025.

Let's begin by reflecting on some of the major milestones and key developments from this quarter and fiscal year 2025. This fiscal year has been transformative for Enterprise division as we developed a much clearer business and strategy. There have been material developments relating to channel expansion, technology updates, inorganic strategy and business reorganization.

First, we made significant strides in expanding distribution channels for our alternative digital payments or ADP solutions. We are now integrated and successfully went live with Standard Bank, Nedbank and Shoprite to provide ADP solutions. This expansion helps us further gain market share by embedding our services within trusted enterprise environment.

Second, we completed the acquisition of electricity private utility business, recharger and are well underway with the migration of the meter hosting infrastructure into our proprietary enterprise technologies. This acquisition strengthens our utilities vertical and demonstrates our ongoing commitment to integrating and scaling high-value infrastructure.

Third, we began the migration of the merchant acquiring volumes that have traditionally been processed through third-party providers. This strategic move will allow us to have tighter control over processing and is expected to deliver a full volume migration over the course of FY '26.

Lastly, we executed the shutdown of legacy business units, sharpening our focus on our core product offering. It's important to note that this reorganization led to one-off costs of ZAR 17 million. However, this step positions us for sustainable focused growth in the years ahead.

I will briefly take you through each business vertical within our enterprise business, outlining the solution and the revenue model. Our alternative digital payments, or ADP business is one of the largest ADP aggregator and solutions provider in South Africa. The ADP network effect creates a powerful force multiplier by selling into downstream enterprises, when enable them to reach their own customers efficiently, which in turn improves economics and scalability of our upstream partnerships.

Our ADP product suite includes both payments, provides a platform for consumers and businesses to settle accounts or invoices through our platform. We currently have over 620 billers on our platform. We currently have over 620 billers on our platform. These include municipal bills, DSTV, all telco companies and other organizations. The significant investment and integration with billers enables us to be in a unique position to allow our clients one integration, and they have access to all our billers. This position is hard to replicate by competitors.

We typically earn a fixed fee per transaction process. ADP prepaid solutions, we are amongst the largest providers of electricity, airtime, data and gaming vouchers primarily to banks, retailers and fintechs. Voucher sales allow consumers to purchase vouchers at retail outlets or online to top up the required services. This is a B2B product offering.

Our revenue model is based on commission percentage of rain volume processed. Utilities, our core products here, our electricity voucher generation and prepaid utility meters. We service a range of clients, including private landlords, property managers and municipalities.

Currently, our primary channel is large retailers such as Bolus warehouse, Leroy Merlin, ARB and BCO. We generate revenue both as a percentage of volume processed for voucher generation and through unit sales for meters. Once the meters is installed, the tenants recharge the meters through vouchers that they purchase through retailers or online. This is a high double-digit margin product offering, providing a predominantly recurring transaction-based revenue stream.

Payments, we are developing proprietary payment solutions such as PRISM Switch and PRISM HSM, to enable payment acceptance for both the group and external enterprises. This area is seeing growth in transaction volumes and device sales. All these products and services are delivered through robust enterprise channels, and our customers include banks, retailers, telcos and content providers.

Moving on to our financial and operational performance for the quarter and the year. Enterprise Division delivered a net revenue of ZAR 190 million in Q4, and ZAR 651 million for fiscal 2025, and a group adjusted EBITDA of ZAR 15 million in Q4 and ZAR 24 million for fiscal 2025. The group adjusted EBITDA includes ZAR 17 million of reorganization costs incurred in closing hardware business related to post terminals and cards. Given the focused core offering of enterprise, we've presented our core products.

In terms of the relative contributions in Q4 2025, ADP accounted for 60% of net revenue, utilities accounted for 35% of net revenue and payments represented approximately 5% of net revenue.

In fiscal 2025, enterprise was not a meaningful EBITDA contributor to the group. This was a year of consolidation and bold to gear up for FY '26, as we've mentioned in previous earnings calls. Q4's EBITDA result of ZAR 15 million for the quarter includes the impact of restructuring costs, excluding these costs, Q4 2025 implies a run rate of over ZAR 30 million per quarter.

In FY 2026, we're expecting the enterprise division's contribution to total segment adjusted EBITDA to be north of 10%, thus becoming a meaningful part of the business going forward.

I will now hand back to Ali.

Thanks, Naeem. We go into FY 2026, excited at the prospects for our business. Clearly, one of the most significant events for the company is the expected completion of the Bank Zero transaction, which we signed at the end of this past financial year. Bank Zero is a South African neobank with a modern proprietary scalable technology stack with a very efficient cost structure that relies on digital onboarding.

We do not believe there is a more efficient banking operation in the country nor one that has less third-party dependencies on its platform that is primed for growth. This transaction is, in fact, more an augmentation of capabilities and team than an acquisition, in that the purchase consideration is predominantly being settled in Lesaka shares, and the Bank Zero team will be joining Lesaka.

They saw an ability for us to accelerate their growth given our distribution and complementary product offering, just as we see their ability to accelerate ours. It is an exceptional, experienced and entrepreneurial team who share our desire to change the game and better serve consumers and merchants in our country.

I've had the personal fortune of working with several members of the team in the past, and it is a delight to have the opportunity to do so again. We look forward to welcoming Michael Jordaan, former CEO of F&B to the Board; and Yatin Narsai, former CEO -- I think it's easiest to think of the rationale for the transaction in three buckets.

Firstly, the -- this is both in terms of the product we can offer and the cost. In terms of product, it should reduce dependencies on third parties improve our responsiveness to clients, increase availability, reduce friction and can expand the range of customers we can address. In terms of cost, we currently have expenses we incur associated with bank sponsorship both in terms of direct fees and indirectly in foregone interest or float revenue, which have a negative drag on our P&L.

We believe in a collaborative and interoperable payment ecosystem so we intend to maintain some third-party bank relationships. However, dependencies will be reduced and our optionality will increase.

Secondly, the acquisition will increase the range of products that we can offer. Notably, we will be able to offer banking services to our merchant base and also to enterprise customers, cross-selling banking into our merchant base and supporting fintechs and others with an Alliance banking offering that is poorly catered for in the South African market. In addition to this, Bank Zero is in the process of applying for an FX license, pending approval, which would open up cross-border opportunities for our customers.

Thirdly, following completion of the transaction, we believe we can reduce gross debt by about ZAR 1 billion by holding a substantial portion of the consumer and merchant book in the bank. We will also have greater flexibility in expanding the book and doing so at a lower cost as we build customer deposits. Another development in the coming year will be the consolidation of our office and brand footprint. We currently have 41 offices in the group outside of our branch network, and multiple brands across the group.

We will be rationalizing this over the financial year to less than 20 offices with a particular focus on consolidating our office environments in Johannesburg, Cape Town and Durbin. The three cities where we have the greatest number of employees. We are also in the process of consolidating our brands and in due course, we'll unveil a refreshed umbrella brand, aligning our representation to stakeholders, employees and customers across the segments we address and allowing us to concentrate marketing resource and spend.

The consolidation process will have the most material impact on our merchant business as has been touched on in this presentation previously. And to lead that process, we are excited that Kagiso has joined us as the CEO of our merchant business. He is an exceptional leader who's experienced SpaceX Starlink, Uber and Samsung ideally positions him to take the merchant business forward. We're excited and delighted that we can attract the very best in the country and on the continent to our mission. And indeed, Kagiso will join other standout leaders in the executive team over the coming months, including Roland and Akash, who we also mentioned earlier this week will be joining us. These are three of several executive hires who we've made over the last few months, raising the depth and breadth of our bench strength.

Turning to outlook. we are pleased to reaffirm our net revenue, group adjusted EBITDA and positive net income guidance for FY '26. In addition to that, we are providing Q1 2026 guidance for net revenue and group adjusted EBITDA. We are also pleased to introduce, for the first time, adjusted earnings per share guidance. It is worth noting that in 2024, our adjusted earnings per share was ZAR 0.80. This year, we achieved ZAR 2.29.

Our guidance for FY 2026 is more than ZAR 4.60 per share, an increase of more than 100% year-on-year. We have a team, the assets and the market opportunity. We look forward to executing against this potential over the coming year and continue to drive value for the consumers merchants and enterprises we serve as well as our shareholders. We will now take any questions you have.

[Operator Instructions] We have our first question on the conference call line. Please, can we open up for Theo O'Neill from LHR.

A couple of questions. First question on the consumer division. It looks like you have a full plate of growth opportunities, and I was wondering if you could rank or talk about the near-term opportunity between your three core products and overall market share and maybe rank where you think the strength will be in near term?

Firstly, the most important thing for us is always account growth. We have taken more market share from the Postbank migration. We've taken the largest tank than our natural market share. We've taken about 20% of those customers that are migrating. So we think that's important for us. We have also launched our lending product. We see a lot of room for that, and we think that, that's an important one.

And the third one is us growing beyond our APE based on our insurance. There's about 4 million customers who don't have access to funeral plans who are grand beneficiaries. We see that opportunity. So we see ourselves growing within this space. And of course, in the medium term, we do see opportunities when the Bank Zero transaction has been consummated for us to give more opportunities beyond just the grant space. So that's the way we would like to think of our business and the growth opportunities we see.

Anything else from your side here?

Yes. I wanted to ask the same question on the enterprise side. If you could rank or talk about the near-term growth expectations there across the core products and market share?

Theo, as you mentioned, for the Enterprise division, this was a transition year. We invested significantly in the platform. We've also grown our distribution network and we've now fully integrated the recharger business. As I've mentioned during my script, if you look at the last quarter, the run rate of around group adjusted EBITDA of about ZAR 30 million is what we want to build on. And we're also looking at the Enterprise division will be contributing north of 10% of the guidance forecast that Ali provided for the full year.

We have another call -- another question from the Chorus Call line. This time, it's from [ Ross Krige ] at Investec Securities.

Hello, everyone. Thanks, Phil. Can you hear me, okay?

We can hear you well. Thank you, Ross.

Okay. Great. I have quite a few questions. Sorry, just bear with me. Just maybe I'll split -- I'll go one at a time. The first one is a 2-part question just on the pending Bank Zero acquisition. I'm just wondering, so on 2 points here on the first, the integration of Bank Zero, I'm just wondering how you see that playing out in terms of the time it takes to integrate and the cost incurred in doing that?

And then secondly, just regard -- regarding the expectation that there will be a profitable contribution in year 1, is that net of all the factors that you mentioned are you on the call? Or is that as a stand-alone entity? Let me pause there.

Thanks, Ross. I mean on the integration, if I can ask Steven to chat too. On the profitability, Ross, Obviously, we don't know exactly when the transaction will complete. But my belief is that certainly, if the business is not profitable at the time of completion, it will be close to and with synergies that can be easily and quickly realized it will be. So I don't think there'll be a material gap. That's excluding the more material, I suppose, revenue opportunities that were touched on in the presentation.

On the integration, Steve?

From an integration perspective, we've got very detailed plans, which we're busy working on and we will be ready on the day the transaction close to affect those integration plans. Clearly, we'll be putting the aspects of our consumer and merchant businesses that are engaged in banking activities into the bank. It won't change the way we ultimately report in terms of consumer and merchant.

But the integration aspects are well planned. And we think in the end, this is a business I think we are taking on about 45 people. So it's very easily integratable from a culture perspective, I think we're very well aligned. And to a large extent, much of what we are getting with Bank Zero is a part of the platform that we don't have. So it's complementary to what we do and very easy to integrate.

Thank you, Steve. Ross, do you want to shoot with your next question?

Thanks both. Okay. Just on the goodwill impairment, I was just hoping to get a bit more detail on the -- I understand the different moving parts there. And that is noncash. But just on the CG is impacted. Just wondering what those were, if you can give any more detail on that and the reasons behind that?

So goodwill, Ross, as you know, is obviously a very large number in our balance sheet is roughly $200 million, ZAR 3.5 billion. And it comprises basically the excess of the price we paid relative to the fair value of the underlying assets, both tangible and intangible that we acquired.

When we bought the business, as I put them into the buckets, the Connect Group and the Adumo Group and the Recharger Group. Obviously, as integrated groups, they had a number of underlying businesses or cash-generating units. As we go through our impairment tests, we need to value each and every one of those cash-generating units. So I'll use, for example, Adumo, we bought one Adumo Group.

But in effect, we've got seven different CGUs. So as we've been iterating the businesses, the business models within those combined seven has obviously given rise to an expectation of different levels of cash flows from each of those underlying seven different business units. When we run our goodwill impairment tests, some of those then have ended up with a lower carrying value than what we originally described for that specific when we bought it, giving rise to then a handful of impairments of roughly ZAR 300 million in aggregate.

The flip side of that is, obviously, some of the other underlying CGUs, our valuations have increased. But in terms of the accounting standards, we can't write up goodwill from over and above what we acquired at, but we are required to write down. So when I take them in aggregate, the businesses we bought, very comfortable that the valuations have appreciated but some of my parts in effect, don't equal hole from a goodwill impairment perspective.

Maybe give you one specific example would be around our MI business, where we have iterated the business model, exiting some of the unprofitable lines. That obviously is a different view we had on the business and when we acquired it. And of course, when I run it through a DCF cash flow, that then gives rise to necessity or for an impairment.

I use it as a specific example. When I look across the whole chain, there's a number of these instances, which give rise to the combined impairment of just over ZAR 300 million.

Thank you, Dan. Ross, does that answer your question?

Yes. Thanks, Dan. That's helpful. Moving on, just -- look, I know you've been very clear in your Capital Markets Day and today and in general about your competitive advantages. But just in light of Nedbank's acquisition of Ecoa, I think First also today flagging their success or success so far in the SME space and the intention to keep pushing there. Just an update on the competitive environment in general would be helpful.

So I mean maybe I'll start, if it's relating specifically to the SME environment, I'll also ask Steve afterwards for his thoughts. The first thing is, I think -- it's a recognition of the opportunity that exists in the market that multiple parties are highlighting it. I think we should be slightly concerned if it wasn't acknowledged that this is clearly a material growth vector in our country and indeed in our region, and that's why we are positioned for it.

So I think that if you're attracting a big opportunity, you should expect that other parties will also participate in that. I also think that more than one party will succeed in addressing that opportunity. And I think that that's good. There can also be mutually beneficial outcomes.

As a business, we're not focused on trying to maximize our share of the pie. I think we are very focused on trying to increase the pie by providing customers with better solutions than exists today by innovating by creating opportunity and not fighting over legacy profit pool.

And so we can work effectively with other parties in that respect. I think we do have specific differential features associated with how we engage in the merchant business specifically, we are focused on businesses that are not seeking a single product solution. We are focused on businesses, for example, in the micro merchant space on the informal space where we connect a collection of solutions, alternative digital payments, cash needs, supply payments needs with the merchant acquiring.

So you registered, for example, Ecoa as a business respect to Nedbank. It's a narrower subset of offering. And in the more formal space, again, we are very focused on the integrated solutions. Specifically also through our software business in GAP.

And we think that we are irregular as a business in the breadth of offering that we can provide for those segments. And ultimately, we are also regular and that while we are a technology-first business, we have our own distribution channel dedicated to those customer needs. So we differentiate ourselves in those ways. I think as we've discussed in the investor presentation. And we welcome other businesses, engaging with our customers to help us better serve those customers.

Okay. Is that it guys from your side on that?

So I think the only thing that I would add possibly is that, as Ali said, first of all, it endorses our thesis, which is the interest in the segment endorses why we've positioned ourselves there. And the other point I would simply make is that we are not a proxy for the market. We are an insurgent. We have a very small market share, a substantial TAM and so we have the ability to grow significantly based on our current positioning.

Thanks, Steve. Ross, any further questions?

Just on the last one, just on the regulatory developments. I was wondering if there's anything on the horizon through [ HAP ] engagements or anything -- any other channels that we should be aware of in terms of the other beneficial regulatory developments?

Thanks so much, Ross. We have had an engagement with the Reserve Bank where they had published the draft exemption to the bank's act. We, through [ ASAP ] gave comprehensive feedback and comments. And the essence of the comments were to make sure that the regulator doesn't create many banks doesn't create more onerous requirements to the industry and create an environment for more competition and more innovation.

The Reserve Bank convened a few weeks ago, a session where they reported back, and there was a positive sentiment from the [ ACEP ] members that -- there was positive movement that has been done that they've heard a lot of the sentiments that were coming from the fintech community. We are now waiting for something in the next few weeks where the final proposal will come out. So we are waiting with bated breath to see what that indication will be.

Obviously, we still have other engagements that we've made on other issues like the governance of the sector and meaningful participation by fintech and we've also made representations on an interchange. So we're still waiting for feedback on those. But on the broad opening up of the payment system, directionally, it looks like the Reserve Bank is going in the right direction.

Ross, does that answer the question? Anything else or we could?

I'm going to take the last question from the conference call, and then we'll move to the questions on the webcast. The next question is from [ Mike Steer ] at Avior Capital Markets.

Can you hear me all right?

Yes.

Great. Thanks for the opportunity to ask questions. I have a few. I think I'll just read them all out at once, and then happy to repeat if necessary. So firstly, in light of the recent Cell C news, how does the restructuring effect the Lesaka's current 5% shareholding. Are you supportive of the restructuring? And do you see any benefit accruing to the group if the restructuring and listing is successful, and there is a subsequent evaluation of that business?

Next one is just around the shock right disruption now that they've entered the banking sector. Just any color on how you perceive this -- how you perceive this threat and how you plan on coming out on top in this competitive environment?

And then finally, a strong quarter, but please maybe unpack the impairments and PPA acceleration in a bit more detail. I understand these are noncash items, but so we got to understand how much more is to come? I think you mentioned ZAR 160 million next year. But is there any anticipated increase to this number following that the Bank Zero acquisition.

All right. Thanks Okay. So three topics. Cell C, Shoprite and PPA. On Cell C, I don't know, Dan, do you want to talk to briefly?

See, it's -- we currently hold a 5% stake in Cell C. We've all seen the public announcements and the path towards IPO towards the back end of this calendar year. Are we supportive? Well, we're engaging in the underlying detail around those respective conversion steps. We currently carry the stake in our books at a zero valuation.

So of course, we'd be absolutely delighted to see the Cell C IPO get away and be able to then carry our investment in Cell C at whatever the market deems the appropriate market valuation once listed. We, of course, need to make sure that we do preserve our rights and our valuation -- the potential valuation of our stake.

And so we'll obviously work through the broader restructuring details with both Cell C management team and obviously, the sponsors.

Okay. On the Shoprite thing. I mean I think Steven referred to in the consumer business space, we're coming from a very low base, very low market share. Relatively Shoprite, launching their proposition, I think, has is another of many entrants into the market, and there's much bigger players today in the market who also have strategic relationships with them.

I don't think that we see anything other than as an opportunity to continue to ensure that what we are providing for our customers meets their expectations, focus on the differentiation that we offer. We have a different distribution model. We have specific focal areas, which are distinct from theirs. We also have good collaborations with them. And I don't expect that to change through their banking offering. I don't know, Lincoln, if you have anything to add there?

To again echo what Ali and Steve had said, again, this is another indication of a segment of the market that we've chosen on the consumer side, that other players are trying to come in there.

Secondly, to also echo something else that Ali and Steve said that in certain of these environments, we're going to compete. But on some of these things, we will collaborate and we have some collaborations with Shoprite, but I think the main point is that we clear about what we offer. And we offer a much more comprehensive solution than other players in this specific market. We offer transactional account.

We are offering lending proposition, offering insurance and we offer alternative digital products. And so we think that we have a comprehensive proposition and that's what we will offer to our clients. And we've got a unique distribution model for that customer base. So we will continue to do what we do and try and win the support of our customers.

I think ultimately, our principal competitor is always going to be inefficiency. Our principal competitor is always going to be what we are capable of delivering for our customers rather than other parties. And as long as we maintain that as our access and our True North, I think we'll continue to be successful. I think when other businesses are there, we can learn, and that is helpful. but it shouldn't be our focus.

The third question you asked was on the PPA. I think there was quite a lot that was provided before. I don't know, Dan, if there's anything you want to add to what you did before?

Happy to recap the principles around...

Mike, is there anything specific that would be helpful?

I think you actually did capture it. No worries. Yes, that's all from my side. And thanks for the opportunity to ask you ask questions, and congrats on the results.

I'm going to move to the questions. We've got 10 minutes left. There are four questions on the webcast chat. So let me start with the first one. It's from [ Versa ] at RMB Morgan Stanley. The question is -- and I'm going to break this question into parts because there's four aspects to it.

First one, what are the main risks to achieving greater than 100% growth in EPS and achieving positive net income in FY '26? especially given the macroeconomic environment. That's the first question. Should we go with that first?

Yes, sure. Let's take that first. I mean, what I'd say is, again, we're not a proxy for the macroeconomic environment. I think we are positioning ourselves where there's tailwinds and the digitization of society and serving the underserved. But ultimately, I think our growth represents the fact that clearly, we have a different trajectory. We've been consistent in our ability to deliver on our profitability guidance as I think was mentioned in the presentation consecutive quarters, and we have every expectation to continue to do so.

When we set the EPS guidance with a minimum bound, which means that clearly, we have an expectation of exceeding that, the same with the net profit guidance. So we have every expectation that we will do that. If you're asking where would I be concerned?

We obviously can always be subject to exogenous shocks to things that we today don't recognize or don't see and this can come in different contexts. I think you could also have potentially certain noncash impairments like we have experienced through the integration process of our merchant business.

But on the flip side, there's other things that could positively impact, for example, there was the mention of our position in Cell C, which we value at Zero. So we are certainly very, very hopeful that when we have this conversation in a year's time, it is by exceeding those targets.

Thanks, Ali. The next part of [ VIOs ] question, is what are the current trends in credit quality and loss rates in both the consumer and merchant lending books? Are you seeing any warning -- early warning signs of stress?

I think on the consumer, I'll go to Lincoln and then maybe, Steve, on the merchant.

We have not seen any stress in the quality of our book. We have had the same loan loss ratio of below 6%. We monitor that book very, very closely. And even with the changes that we've made, we've not seen any change in the quality of the book. And we think that the changes we've made, which is a longer term from 6 to 9 months more from 2,000 to 4,000, all of that augurs well for the quality of the book forward. So we don't see any of the things that are happening in the economy directly translating into a change or deteriorating of quality in that book.

From the merchant perspective, likewise, for the year that we've just had, our impairment ratios are sitting at about 1.4% of all originated debt, which is pretty consistent with the history. If anything, we are starting to see a slight improvement. So it feels like some of the stress in the SME space is coming off. And I think our biggest challenge is really focusing more on getting the origination and scaling into those -- into the space. But impairments is certainly not an issue for us at this point.

Anything else, guys, on that one? Okay. I've got -- we can -- we have time for two last questions. The first one is from [ Frank Yang ] at [ Briwood ]. Some strong guidance provided here please unpack your FY '26 guidance drivers speaking specifically to each of the divisions and please confirm that it excludes Bank Zero.

Thanks, so yes, it excludes Bank Zero. And obviously, once that regulatory approval happens in the transaction, hopefully completes, we will have to reassess. But we don't have an expectation that it would materially impact FY '26. In terms of the guidance, I mean, the EBITDA at the midpoint of the range guidance that we provided is a 46% year-on-year growth. Clearly, you can't grow at that rate without there being growth, I think, through all three, frankly, of the pillars of our business: consumer, enterprise and merchant.

And our expectation is that all of those pillars, they will grow at different rates, but certainly north of 20% in each case and in some instances, materially more than that. I don't know if the guys want to mention any of the particular dynamics in the consumer merchant enterprise business. But I think we don't break down the specific segment growth.

The general principle, I would say is that in each context, we have a driver associated with the number of consumers in the consumer business and the ARPU. In our consumer business, we expect both the consumer base to continue to increase as we take share and the ARPU to continue to increase as we cross-sell.

In the Merchant business, likewise, we expect to see growth in our merchant base as our value proposition is distinctive. And we expect to see the growth in our ARPU as we cross-sell increasingly the products through the integration of those businesses. And in the enterprise business, where the drivers is really processed volume and a take rate. We have seen material contract wins over the course of this last quarter.

And so we expect to see the growth in volumes attributable to that. and the take rate, we expect to also be increasing through the mix effect as our utility business is growing the fastest and it has a higher margin, relatively speaking to the ADP business. So on each of the key KPIs against each of the key segments, we expect to see good growth, leading in the aggregate to the midpoint of the growth that we've articulated.

I'd say, maybe just as a final point, as a business, we actually have an enormous amount of resilience in terms of the contributions. We have these three segments, all of which are pointing in the right direction and each of which has a number of customers, our consumer business, close to 2 million end customers. our merchant business north of 100,000 customers and our enterprise business also a material footprint in terms of customer base. So we don't have single points of dependency in that respect.

And then the last question for today and for the people whose questions we didn't get to, I will respond to you separately after the call. I'm going to take a question from Craig Smith at Anchor Securities.

Thank you for your time today. Exciting transaction, so I presume you're referring to Bank Zero. What is still required for the transaction to close? And what is the expected timing on this? Any updates you can provide. He then asks, does this transaction mean that Lesaka is now becoming a bank? And how quickly can we expect the consumer and merchant loan books to move across to Bank Zero and retire the ZAR 1 billion of gross debt?

So I'll let Steve talk to the completion time line. But just on the specific point of Lesaka becoming a bank. So I think -- I don't think we have becoming a bank any more than we've become an insurance company. We have an insurance business, which is a subsidiary, and that helps provide insurance propositions to our customers. I think having a bank as a subsidiary of part of the group will help enable us to provide consumers and merchants with better solutions.

But as the transaction structure is the bank as a subsidiary of Lesaka Technologies. I don't know, Steven, if you want to talk to the time lines or?

Just in terms of time lines, we -- clearly, the transaction is subject to PA approval and also competition commission approval. We have Finserv approval, but from a time line perspective, we are hopeful that by the end of March, April, we should be in a position that the transaction goes unconditional. But we're factoring that we expect this transaction to close before June '26.

If I can just say, we're incredibly excited about this acquisition. As I mentioned earlier, we'll be integrating our issuing business and our credit businesses into the banking business. This is a well-engineered neobank. We are excited not just about the synergies that will flow from this transaction, but also some of the very creative organic strategies that sit within the bank.

In terms of funding the loan books that currently sit within our consumer business and our merchant business. The answer to that question will be as quickly as we possibly can. And to a large extent, it will depend on the size of the deposit book when the transaction closes. We do anticipate though that the majority will be able to be exercised when the deal closes and the rest is just a timing difference as we grow the retail deposit base.

I think that's it in terms of time. If anyone has additional questions, please reach out to me. Thank you for listening today, and thank you to the team.