Lesaka Technologies, Inc.
Q3 2021 Earnings Call Transcript

Published: 7 May 2021

[Operator:]

Good day, ladies and gentlemen and welcome to the Net1 Q3 2021 Earnings Call. All participants will be in listen-only mode. Please note that this call is being recorded. I'd now like to turn the conference over to Dara Dierks. Please go ahead ma'am.

[Dara Dierks:]

Thank you, operator. Welcome to our third quarter 2021 earnings call. With me today is CFO and Interim CEO, Alex Smith. Our press release and supplementary investor presentation are available on our Investor Relations website at ir.net1.com. As a reminder, during this call, we will be making forward-looking statements and I ask you to look at the cautionary language contained in our Form 10-K regarding the risks and uncertainties associated with forward-looking statements. Also we will discuss our results in South African rand, which is non-GAAP measure.

[Alex Smith:]

Thanks, Dara. And good day to everyone. And thank you all for joining us on our third quarter earnings call. We hope everyone is staying healthy and safe during these difficult times. On today's call, we'll run through the following; first, we will review some of the financial and operational highlights from the quarter, then review our short term initiatives, finally, I'll review our longer term initiatives relative to our new strategic focus before opening the call up for questions. To bring everyone up-to-date on the latest COVID-19 situation in South Africa, we are currently in lockdown level one, which is the least restrictive of the five lockdown levels used in South Africa. The data on new infections has been relatively stable and at a low level through April. But there are concerns over a third wave hitting the country, as we approach the southern hemispheres winter months. The South African government is rolling out its vaccination program. But it is at a relatively early stage and has suffered from some delays. Nevertheless, we are hopeful the time will be made up and we continue - but we continue to expect uncertainty in the environment. It's now been about eight months since we announced Net 1's the strategy on which we are currently executing. Having been with the company for several years prior, as well as during this transition, I can say undoubtedly that this is a new enterprise, focused and strategic in our mission to become a major Fintech player in South Africa, focused on financial inclusion for underserved consumers and merchants. To help anchor and drive the strategy, we have recently hired a dynamic new CEO for our southern Africa business, Lincoln Mali, who is a well respected and experienced executive in the South African financial services and banking industry. This has also enabled us to attract some amazing new talent among the executive ranks and along with our ambitious goals we’ll Net 1 a very desirable place to work and grow. Lincoln only took up office on Monday, but we can already feel the excitement and revitalize energy in the business for the tasks ahead.

[Operator:]

Thank you very much, sir. The first quick question comes from Raj Sharma from B. Riley. Please go ahead, Raj.

[Raj Sharma:]

Hi. Good morning, Alex.

[Alex Smith:]

Hi, Raj.

[Raj Sharma:]

Good morning, Dara. So if you could give some little bit more – my questions related to the net account additions. Clearly there were lower than we expected and what changes that, you know, given South Africa was not necessarily in a very stricter lockdown level. And you're saying that the - I think you said that the target of the 400,000 net new ads has been pushed out a few quarters or a few months. What changes that going forward? How do you - how do you - how would you see this happening from 27,000 to significantly higher?

[Alex Smith:]

I think we see the key catalyst here becoming much more proactive in terms of our marketing of the product and much more, I guess public engagement with our target market. Really the customer base that we're requiring at the moment comes out of people that are starting to accept grants. Its people that are opening bank accounts because they are now entitled to from the government. That's a relatively small portion of the target customer base. And as I said in the prepared remarks, I think we have been - we've never really not never but we've done very limited I think over the last two and a half years, and we much of the last quarter we’re preparing what we believe is a very compelling marketing campaign. And we are going through the process now of lining up the start of that process. We see that as a as a major catalyst. And I think, you know, we're also planning on various stakeholder engagements that we believe can also assist in that process of enabling us to start ramping up customer acquisition at a faster level.

[Raj Sharma:]

So, you know, the sequential - there was a sequential decline in net new ads and what would explain that or was it…

[Alex Smith:]

Trading in this last quarter and appropriate level of supervision of Cell C, given our limited involvement, and we don't want the current management or the board for that part distracted from the aim of rebuilding the African – the core South African business, which is where our core competency lies. Cell C was far outside of that. We're focused on financial inclusion and funding - you know, in the financial services space for consumers and merchants. And, you know, I think if you want a more detailed discussion around where things lie, in respect of Cell C associate, then, you know, we're very happy to engage offline on that.

[Operator:]

Thank you very much. Ladies and gentlemen, that concludes today's conference. Thank you for joining us. You may now disconnect your lines.