Lesaka Applied sciences, a South African digital funds fintech, has met its first revenue goal since launching in 2022, whilst income from its service provider division fell by double digits.
The corporate reported a internet revenue of R61 million ($3.6 million) within the second quarter of its 2026 monetary yr, in contrast with a lack of R589 million ($34.7 million) a yr earlier, in keeping with its monetary outcomes.
Lesaka’s service provider unit, which serves small and mid-sized companies by its Kazang and Join manufacturers, noticed income fall by 13% year-on-year to R2.26 billion ($131.9 million). Whereas the service provider base grew 8% year-on-year, common income per service provider fell 10%.
“The components the place we’re having challenges are within the volumes in airtime, the margin compression within the airtime house, and the margin stress in buying,” Lincoln Mali, CEO of Lesaka Applied sciences Southern Africa, informed TechCabal in an interview.
Card transaction volumes rose to R12.1 billion ($654 million), money volumes elevated 5% to R31.9 billion ($1.72 billion), and the variety of retailers accepting playing cards climbed to 73,500. Nonetheless, that development has not been sufficient to offset weaker margins in airtime, a class Lesaka traditionally dominated.
Mali mentioned airtime gross sales are down as a result of prospects now have extra choices. Competitors has intensified, with many customers counting on free Wi‑Fi, promotional airtime presents, and public hotspots as a substitute of buying airtime.
From scale to depth
Lesaka is now much less reliant on single-product airtime gross sales and is extra centered on layering a number of providers onto every service provider, in keeping with Mali
The corporate has consolidated its service provider operations underneath a single management construction and is reshaping the way it measures success, prioritising lively retailers, aggregated output, and product penetration over sheer footprint.
Various Digital Funds (ADP), which embrace supplier-enabled funds, surged 27% year-on-year to R14 billion ($870 million), pushed largely by a soar in provider funds. Greater than 102,000 retailers at the moment are utilizing these providers.
Lending can be rising as a key lever. Service provider mortgage originations rose 35% to R205 million ($12.1 million), whereas the excellent portfolio elevated 28% to R389 million ($22.9 million).
Mali sees a compounding impact, with retailers who borrow extra prone to route provider funds by Lesaka’s platform.
Diversification cushions the blow
Whereas development within the retailers slowed, Lesaka’s client and enterprise divisions surged, cushioning the group.
The Shopper phase, which serves underserved people and small retailers by loans, accounts, funds, and insurance coverage, noticed its income rise by 38%.
Adjusted earnings greater than doubled, pushed by development in accounts, lending, and insurance coverage. Lesaka says it now serves greater than 2 million lively shoppers, with market share rising to 14.3%.
“We’ve seen our market share on this house soar from 11.9% a yr in the past to 14.3%. That now makes us the second largest enterprise in that house after Capitec,” mentioned Mali.
The enterprise unit, promoting fee, information, and software program providers to corporates, grew income 58% to R253.2 million and swung into profitability, posting R24.3 million ($1.43 million) in adjusted earnings. New shoppers embrace Shoprite and Investec, increasing Lesaka’s distribution footprint nicely past casual retail.
Lesaka expects its deliberate R1.09 billion ($56.3 million) acquisition of Financial institution Zero, a digital lender, to additional reshape the service provider providing. By funding service provider loans with financial institution deposits somewhat than wholesale capital, the group expects decrease funding prices.
“The financial institution is making use of for a licence to do lending,” mentioned Mali. “Probably the most profound implication is that at present we borrow cash from business gamers and order lending to our retailers. That’s not a really environment friendly approach of lending. But when we now have a financial institution that may be capable to lend in the back of deposits that sit within the financial institution, that might be a couple of billion rand swing.”
Mali mentioned the technique would have a stronger influence on the service provider division, because the fintech would be capable to supply retailers extra versatile money options.
Regardless of the drag, Mali mentioned the service provider enterprise is anticipated to finish the yr flat on a year-on-year foundation.
The diversification is about to deepen if Lesaka completes the Financial institution Zero acquisition, which might deliver a banking licence and a completely digital infrastructure into its ecosystem.
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