Net 1 Ueps Technologies Inc. (NASDAQ:UEPS) Q1 2020 Earnings Conference Call - Final Transcript
Nov 08, 2019 • 08:00 am ET
Good day ladies and gentlemen and welcome to Net1's First Quarter 2020 Earnings Conference Call. All participants will be listen-only mode. There will be an opportunity to ask questions when prompted. (Operator Instructions) Please note that this conference is being recorded. I would now like to hand the conference over to Mr. Dhruv Chopra. Please go ahead, sir.
Thank you Judith. Welcome to our first quarter 2020 earnings call. With me today is our CEO, Herman Kotze and our CFO, Alex Smith. Our press release and a supplementary investor presentation are available on our Investor Relations website, www.ir.com -- 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 press release regarding the risks and uncertainties associated with forward-looking statements. In addition, during this call, we will be using certain non-GAAP financial measures, and we have provided a reconciliation of these non-GAAP measures to the most directly comparable GAAP measures. We will discuss our results in South African rand, which is a non-GAAP measure.
We analyze our results of operations in our press release in rand to assist investors in understanding the underlying trends of our business. As you know, the Company's results can be significantly affected by currency fluctuations between the US dollar and the South African rand. We have a Q&A session following our prepared remarks.
But with that, let me turn the call over to Herman.
Herman Gideon Kotze
Thank you, Dhruv, and a good day to everybody. There has been no strategic shift since we last reported only six weeks ago. And therefore, I want to focus today's discussion mainly on our European strategy, following the exercise of our option to take a controlling stake in Bank Frick, as well as the development and progress we have made since September.
The highlights of our Q1 2020 results include: first, we reported revenue of $81 million, which includes included approximately $8 million of ad hoc hardware technology and telecom product sales, but still a nice improvement over Q4 2019 in constant currency. Second, we reported adjusted EBITDA of $2.8 million, finally returning the Group to positive EBITDA as a result of our actions over the past nine months.
Third, EPE accounts remained relatively stable at $1.1 million as did related financial services. Fourth, KSNET EBITDA margin improved over 200 basis points again this quarter to 23% compared to Q4 2019 as a result of our efforts to exit unprofitable agent and merchant relationships. And finally, we exercised our option to acquire a further 35% of Bank Frick by March 2020, which would give us a controlling interest and help us accelerate our ability to provide a vertically integrated fintech solution in Europe.
Let me now address the progress on our four key objectives for 2020. The first objective was the transition of our South African business from a B2B model to a B2C model. Our target is to grow our active account base by at