Lesaka's Q2 2025: Unpacking Contradictions in Growth Rates, Strategies, and Adumo's Profitability

These are the key contradictions discussed in Lesaka's latest 2025Q2 earnings call, specifically including: Merchant Division Growth Rates, Enterprise Division Strategy, Revenue Growth Expectations, and Adumo's Growth Rate and Profitability:



Revenue Growth and Strategic Acquisitions:
- Lesaka Technologies reported net revenue increased by 42% year-on-year, with Merchant Division net revenue up 68%.
- Growth was driven by strategic acquisitions like Adumo and Recharger, enhancing product offerings and market share, particularly in the merchant acquiring and digital payment segments.

Cash Vaults and Customer Base Expansion:
- Cash vaults grew by 4%, and vault cash settlements increased over 100% year-on-year for Kazang customers.
- This expansion is attributed to Lesaka's efforts to integrate cash management services into micro merchant operations, addressing cash handling risks and providing working capital benefits.

Consumer Division Performance:
- The Consumer Division's revenue increased by 31%, with segment adjusted EBITDA growing by 61%.
- Growth was supported by cross-selling initiatives, leading to increased loan originations and insurance penetration, and the inclusion of Adumo Payouts added to the customer base.

Operational Challenges and Cost Optimization:
- Lesaka's costs increased by ZAR 250 million, influenced by the integration of Adumo and increased employee-related expenses.
- The company is optimizing its operational structure and costs through a comprehensive refinance of debt facilities, aiming to reduce interest charges and improve capital structure.

Regulatory Environment and Market Opportunities:
- Lesaka highlights the potential for regulatory changes, such as the South African Reserve Bank's planned exemption to the Banks Act, which could enhance the company's ability to disrupt the market.
- These changes could facilitate revenue acceleration and cost reduction, leveraging Lesaka's strategic positioning and growth potential in the digital payments market.