Strip away the jargon and Lesaka Technologies, the fintech platform listed on both the Nasdaq and the JSE, reveals a disarmingly straightforward business model. Quite simply, the company helps low-income consumers move away from cash to digital ways of receiving and spending money, accessing credit and buying insurance. The group also helps small merchants accept payments, manage cash, sell prepaid products, access working capital and run basic business software.
Lesaka’s consumer and merchant divisions each contribute roughly 45% of group profits, while the enterprise segment, which accounts for about 10%, processes bill payments, prepaid services and utility transactions at scale.
The strategy is to grow the ecosystem by attracting more consumers and merchants and to sell more products to existing customers and keep broadening the product suite so that Lesaka captures a larger share of their everyday financial activity.
The market has not fully bought into Lesaka’s refreshed services offering. The share price — R82 at the time of writing — is wedged between a 12-month high of R95 and a low of R65. Over a year the share price is barely 2% higher. In year-to-date trading it has crept up 4%, though it has risen more than 20% from the mid-November lows last year.
The third-quarter 2026 result might be strong enough to attract more market attention. Net revenue rose 16% year on year and adjusted earnings jumped from 52c to 180c a share. Net debt to group adjusted ebitda improved from 2.5 times in the previous quarter to 2.1, putting the group close to its medium-term target of two. Lesaka executive chair Ali Mazanderani also lifted full-year adjusted earnings guidance from 460c a share to a new range of 550c-600c — a forecast that excludes the pending acquisition of Bank Zero and any “mergers & acquisitions that we may conclude”.
The Bank Zero deal — which should, according to Mazanderani, be concluded in the coming months — will form part of the financial 2027 guidance, likely to be set out later this year. Mazanderani did note that from a net income perspective Lesaka is expected to be profitable for the 2026 financial year. He says it will be the first year this will be the case since its creation four years ago, in May 2022.
But the strength is uneven. The standout performer was the consumer division, where segment adjusted ebitda rose 81%. Merchant, by contrast, grew profits year on year but slipped backwards in net revenue from the previous quarter.
The consumer arm is the old core of Lesaka. The group was previously Net1 UEPS Technologies, a business long associated with social grant payments in South Africa, before being reshaped and rebranded. Today the division is built around transactional accounts, credit and insurance, with grant beneficiaries still at the centre of the model. Management believes its share of this market, which it understands so well, can rise from 14.6% to 25% over the medium to long term.
It is a powerful niche, because the income stream is predictable, even if the customers are financially stretched
During question time, after the investor representation, Investec analyst Ross Krige pointed to the operating leverage potential in the consumer segment. He suggested Lesaka could build significantly higher ebitda margins off this base. Mazanderani said the group does see the ability to expand margins — which he pointed out had already stretched from 26% to 34% over a year. “There is more room for growth as we scale the platform.”
It is a powerful niche, because the income stream is predictable, even if the customers are financially stretched. A grant recipient can receive money into a Lesaka account, use that account for transactions, take a short-term loan and buy insurance. That creates multiple revenue lines from the same customer.
The main consumer profit engine, however, is lending. In the third quarter, the outstanding book grew 73% to about R1.4bn. The newer nine-month loan product now accounts for almost half of new lending originations, increasing both the average term and the size of the book. Importantly, third-quarter profits were boosted by the cumulative effect of loans written in earlier periods, especially in the second quarter.
That is good news as long as the credit book performs, but it is also on this that sceptics will focus. Management says the portfolio remains within normal risk parameters and its provision level is above observed risk experience, but the market will still want proof that growth has not come at the expense of future credit quality. In financial services, fast lending growth almost always looks best before the bad debts are fully visible.
The merchant division, by contrast, is strategically important because it is meant to show that Lesaka is more than a consumer credit story. That becomes even more relevant ahead of the pending Bank Zero integration, especially given Bank Zero’s historical focus on SMEs as a digital banking provider.
Lesaka splits its merchant base in two: community and corporate merchants. Community merchants are smaller businesses, often operating in township, informal or semi-formal markets. They generate lower revenue per merchant but are growing faster. Corporate merchants are larger, more formal businesses with much higher average revenue per user, but growth is slower and competition is tougher in single-product areas such as card acquiring. This mix shift explains part of the pressure in the division.
Merchant lending originations fell 22% year on year to R227m. Management says this was not caused by a lack of opportunity but by a deliberate decision to be conservative with credit while the company refines the lending model. That is sensible if it protects book quality, but it also means the division is not yet delivering the clean growth investors would like to see.
Cash flow was strong in the third quarter, but investors should not overextrapolate. Management noted that the December quarter is Lesaka’s peak-volume period, when working capital typically builds, and that the third quarter usually benefits from a reversal of that seasonal outflow.
In addition, a macro test is coming. The third quarter ended on March 31, before the sharp rise in fuel prices. For Lesaka’s customer base, fuel is not a small line item. It affects transport costs, food prices, disposable income and working capital. Low-income consumers and small merchants feel those shocks quickly. The current quarter will therefore be a useful test of whether the consumer loan book and merchant volumes can hold up when household budgets are squeezed.
Lesaka’s latest results were impressive. The next few quarters will show whether the results were also of high quality.
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