Net 1 UEPS Technologies (or just Net1 for my sanity) has released results for the third quarter of 2022. The company is changing its name to Lesaka Technologies, which at least rolls off the tongue more effectively. Shareholders have already approved the change. The thinking behind this new name is that Lesaka means “kraal” (the “social and economic heart of a village”) in Setswana and Sesotho. Now you know why the feature image for this article used cattle.

With that in mind, you may be surprised that the company reports in dollars. This is because the group is listed on the Nasdaq, so results are issued quarterly and denominated in the world’s ultimate currency. The operations are in South Africa and the acquisition of Connect Group (which closed in April) cements that strategy. Connect Group brings an enormous base of micro, small and medium enterprises, of which around 35,000 are informal.

The service offering includes a prepaid value-added services platform called Kazang, a digitised cash management platform called Cash Connect, a merchant lending platform called Capital Connect and a merchant acquiring solutions business called Kazang Pay and Card Connect. The business generated around R1.1 billion in net revenue in FY21 and targeted EBITDA of R375 million for FY22 at the time the deal was announced in November 2021. Learn more about the business by visiting the website.

Revenue is up 22% in dollar terms (27% in rand terms) and Segment Adjusted EBITDA swung into the green. This excludes any corporate costs, so it isn’t a good indication of group profitability. This adjusted EBITDA number improved from a $10.7 million loss in Q3’21 to a $0.3 million profit in this quarter.

The group is loss-making overall, with a target of $19.2 million in annualised cost savings targeted in the 2023 financial year. The Connect Group acquisition closed in April (after the end of this quarter) and will be critical to the strategy going forward.

In the nine months to March 2022, the group’s operating loss was $30 million vs. a loss of $40 million in the comparable period.

At the end of the quarter, the group had $183.7 million in cash of which $169.9 million (R2.5 billion) is held in rands.

The name change will be official on 18th May. Shareholders will expect a far greater change to come in the financial performance, with all eyes on the Connect Group acquisition.