Participants
Kenneth Denos; Co-CEO; Tingo Group, Inc.
Presentation
Operator
Greetings and welcome to the Tingo Group Third Quarter 2023 Financial Results Conference Call. (Operator Instructions)
As a reminder, this conference is being recorded. Before we begin the formal presentation, I would like to remind everyone that statements made on the call and webcast may include forecast, estimates, or other information that might be considered forward-looking.
While these forward-looking statements represent our current judgment on what the future holds, they’re not guarantees and are subject to risks and uncertainties that could cause actual results to differ materially. You are cautioned not to place under reliance on these forward-looking statements, which reflect our opinions only as of the date of this presentation.
Please keep in mind that we are not obligating ourselves to revise or publicly release the results of any revision to these forward-looking statements in light of the new information or future events. Throughout today’s discussion, we will attempt to present some important factors relating to our business that may affect our predictions. You should also review our most recent Form 10-Q filed today and Form 10-K for more complete discussion of these factors and other risks, particularly under the heading risk factors.
Our press release detailing these results crossed the wire this morning and is available in the Investor Relations section of the company’s website, tingogroup.com. Your host today, Kenneth Denos, Tingo Group Co-Chief Executive Officer, will present the results of operations for the quarter ended September 30, 2023.
At this time, I will turn the call over to Tingo Group Co-Chief Executive Officer, Kenneth Denos. Please go ahead.
Kenneth Denos
Thank you, operator, and good morning, everyone. I am pleased to welcome you to today’s third-quarter 2023 financial results conference call. Despite the challenges we have encountered over the past few months, namely the short seller attack in June which had a negative impact on customer confidence, the significant devaluation of Nigeria’s currency following the lifting of certain foreign exchange restrictions, a period of economic stagnation and high inflation in Nigeria following the government elections in February of 2023, and subsequent change of presidential administrations in May. I am proud with our progress and achievements over the past three months and excited about our future prospects for the remainder of the year and beyond.
For those of you joining us for the first time, I would like to take a moment to introduce Tingo Group. Tingo Group is a diverse fintech and agri-fintech group of companies with operations in Africa, Southeast Asia, and the Middle East. We significantly expanded and somewhat transformed the company when we acquired 100% of Tingo Mobile Limited on November 30, 2022, and then acquired Tingo Foods PLC on February 7, 2023, before subsequently changing our name to Tingo Group, Inc., on February 27, 2023.
As of today, the Tingo Group is comprised of the following businesses, Tingo Mobile, which is a leading fintech and agri-fintech business in Africa that operates through a device as a service and smartphone, USSD platform model. Tingo Foods, which off takes crops form the Tingo Mobile substantial and growing customer base of farmers and processes those crops into finished food and beverage products.
Tingo DMCC, which operates a commodity trading platform and export business from the Dubai Multi Commodities Center and deals in both raw agricultural commodities from our Tingo Mobile farmers as well as finished food products from Tingo Foods. TingoPay, a SuperApp supported by our Pan-Africa partnership with Visa, following a soft launch of the beta version earlier this year, TingoPay was launched as a full version on September 13. TingoPay provides its customers with payment services and e-wallet and a range of value-added services. It also offers a range of merchant services to businesses.
We also have a number of fintech verticals that as to date been focused on the Southeast Asian market; however, as we focus on further increasing shareholder value and leveraging the most profitable and valuable parts of Tingo Group, we are currently restructuring this part of the business and winding down or disposing of any operations that do not achieve our target contribution metrics. Most recently in partnership with Pakistan government’s Khyber Pakhtunkhwa Information Technology Board, we are preparing to roll out our agri-fintech, food processing, and export businesses throughout Pakistan. We believe that our group of businesses and the synergistic ecosystem we create place us in a remarkable position from which we can expand both in our current markets and internationally and deliver significant further growth.
Despite the challenges I mentioned earlier, we achieved year-over-year quarterly revenue growth and despite a decline in revenue and earnings in the third quarter compared to the second quarter, we have made significant progress with the further development of the business, and we are confident that the fourth quarter will see a return to growth. What is important to note is that we have had to endure significant challenges and headwinds between June and September, not least because of the substantial devaluation of Nigeria’s currency in June and a period of economic stagnation in Nigeria following its government collection and subsequent change in presidential administration. As mentioned in our second quarter trading update, it is worth noting that the significant devaluation of Nigeria’s currency occurred as a result of the Central Bank of Nigeria’s removal of foreign exchange restrictions, which we believe will deliver significant long-term benefits to our business, including the acceleration of the dollarization of our business and helping our export and commodity trading activities become more profitable. Furthermore, once the policies of Nigeria’s new government have been fully implemented. We expect Nigeria’s currency to appreciate and its economy to rebound strongly, which should be markedly beneficial to the company and our shareholders.
Following completion of our acquisition of Tingo Mobile on November 30, 2022, we have been highly profitable notwithstanding the headwinds we noted above. We have also achieved organic growth, including through our partnership with the All Farmers Association of Nigeria known as AFAN. This growth is set to continue following the expected delivery in the fourth quarter of 2023 of 6 million smartphone handsets that we plan to distribute to new AFAN customers.
Our financial results highlights for the group as shown on this slide are representative of our strong financial performance since the completion of our acquisition of Tingo Mobile on November 30, 2022, and our subsequent acquisition of Tingo Foods. For the nine months ended September 30, 2023, the company generated over $2.41 billion in revenue, $870.8 million in gross profit, $492.5 million in operating income, and $777.9 million in EBITDA. Furthermore, our high levels of operational cash flow enabled us to invest $426.4 million in this quarter on the purchase of mobile phones for new customers as well as inventory payments for our Tingo’s DMCC export business.
As mentioned previously, our reason why Tingo Group is very important to us — and those of you that have listened to or read our presentations will most likely already be aware of our mission statements. For those of you who are not familiar, our overarching mission at Tingo Group is to foster digital and financial inclusion through our fintech platforms and to drive social and economic upliftment. In our agri-fintech businesses, our mission includes our commitment to make a significant difference in improving global food supply and tackling the world’s food security crisis by delivering farmer empowerment, improved crop yields, a reduction in post-harvest losses, and better access to both foreign and domestic markets. At a regional level, we also aim to support farmers in Africa and now Pakistan to achieve sustainable foods that self-sufficient and bringing into Africa’s food insecurity and poverty.
By way of a recap, we entered into a definitive merger agreement to acquire a Tingo Mobile on May 10, 2022. Following this, we immediately appointed a team of some of the world’s largest and most reputable professional advisers to undertake extensive due diligence and financial analysis. The team included a big four accounting firm, a number one US law firm in Africa, and a number one US M&A investment banks. We announced on June 15, 2022, that the due diligence exercise had been completed and the findings were positive. The original merger agreement was amended and restated in October 2022 to facilitate the expedited acquisition about 100% of Tingo Mobile, and the acquisition was subsequently completed on November 30, 2022.
With the benefit of the companies and Tingo Mobile’s collaboration, the fourth quarter of 2022 marked the beginning of the geographical expansion of Tingo Mobile with the opening of offices in Ghana, Malawi, and Dubai. The fourth quarter also soft launched the Tingo’s DMCC commodities trading platform and export business, and the soft launch of the beta version of the TingoPay’s SuperApp in partnership with Visa.
By January 2023, we began to pivot the company’s insurance and fintech verticals to better complement the Tingo businesses with the goal of leveraging an already established brands and large customer base. Then on February 7, 2023, we acquired the Tingo Foods’ food and beverage processing business to further strengthen the Tingo’s Seed to Sale ecosystem. Also on February 27, 2023, we changed our corporate name and ticker symbol to better reflect the importance of the Tingo brand to the business and to provide improved clarity to our external stakeholders including current and prospective partners, customers and investors.
Our reporting a full year 2022 financial results on March 31, 2023, was followed in April by the announcement of Tingo Mobile’s exclusive partnership with PCX and AFAN. On May 30, we completed our first commodity export trades through Tingo’s DMCC, marking a major milestone in our strategy to ultimately dollarize the company’s net earnings.
On August 31, we announced the commencement of a quarterly dividend payable to the holders of both our common stock and Series B convertible preferred stock and the adoption of a dividend policy. The foreign exchange conversion for the payment of the first dividend, which is in the amount of $20 million, is expected to be approved by the Central Bank of Nigeria, which we expect to receive very soon.
Most recently, we executed a memorandum of understanding with the Khyber Pakhtunkhwa Information Technology Board or KPITB to launch and roll out the company’s business and service offerings into Pakistan. KPITB is a governmental body established in the province of the Khyber Pakhtunkhwa, Pakistan for the promotion of information technology from the public and private sector.
By way of a recap and update on the Tingo Mobile business that was founded some 23 years ago, we began with a Tingo Mobile business as a service model and then Nwassa USSD fintech platform, which we believe is the leading agri-fintech platform in Africa.
Following the signing of our updated definitive merger agreement in October 2022, we set about accelerating our growth strategy. In November and December of 2022, we signed trade agreements with two major partners with the aim of expanding Tingo Mobile’s customer base from 9.3 million to an expected 30 million. We signed a trade partnership with the All Farmers Association of Nigeria, which included a commitment to enroll a minimum of 20 million new customers to Tingo Mobile. We also launched in Ghana and signed a trade agreement with the Kingdom of Ashanti, which included a commitment to enroll a minimum of 2 million new customers to Tingo Mobile and the target goal of enrolling more than 4 million new customers overall. Soon afterwards, we launched into Malawi and have made progress towards several trade partnerships there with a goal of establishing a base for rollout in the future across the East Africa, including into Tanzania, Mozambique, and Zambia.
Looking further ahead, we plan to expand in the future into other parts of Africa as well as into Asia and other relevant markets in the world. Through our other businesses within the Tingo family, TIO, mainly Tingo Foods and Tingo DMCC, we aim to increase offtake and demand for produce from Tingo Mobile’s customers, thereby creating a virtuous self-reinforcing cycle. In April 2023, as part of the further strengthening of our ecosystem, Tingo Mobile entered into a tripartite agreement with PCX and AFAN which we will discuss in more detail shortly.
Lastly, as we look to expand the reach of our Nwassa and marketplace platform, we are making good progress in testing and further developing the forthcoming loss of web platform and Nwassa app, which we intend to launch before the end of the year to complement the already successful USSD GSM platform.
Tingo Foods was acquired by the group on February 7, 2023. This is a business that Dozy Mmobuosi has been developing independently of Tingo Mobile. Tingo Foods was launched as a stand-alone company in September 2022, focusing on supplying a relatively small range of products to several large distribution and wholesale businesses. Tingo Foods is already creating significant demand and offtake for Tingo Mobile’s farmers, while at the same time creating supply for Tingo’s DMCC’s commodity trading and export business.
In the first eight months of trading since we acquired Tingo Foods PLC in February 2023, the business has generated revenue of $1.16 billion and delivered an operating profit of $427.1 million. As mentioned previously, the US dollar equivalent of the revenue and earnings of Tingo Foods was adversely impacted by the significant devaluation of Nigeria’s currency against the US dollar in June 2023 when the Central Bank of Nigeria removed certain foreign exchange restrictions. We believe that these actions will ultimately be beneficial for the company, providing a true measure of the actual exchange rate between the two currencies and ultimately helping to accelerate the dollarization of the business.
The Tingo Foods business was also adversely affected by the economic disruption in Nigeria then soon around the time of the change in presidential administration, which resulted in several customers delaying orders. Tingo Foods is set to multiply capacity in revenue with a new state-of-the-art $1.6 billion food processing facility in the Delta State of Nigeria. Our joint venture construction partner has confirmed that the project is on track to enable Tingo Foods to commence processing operation on-site in 2024. We believe Africa’s farmers and agricultural sector will benefit from the significant expansion of the continent’s own processing capabilities, increasing crop demand, reducing post-harvest losses, ensuring fair selling prices for farmers, and delivering financial upliftment.
In December 2022, we launched Tingo DMCC, which is an agricultural commodity platform and export business in partnership with the Dubai Multi Commodities Center, DMCC. As part of the Tingo ecosystem, Tingo DMCC is already becoming a significant source of offtake of raw crops from Tingo Mobile’s farmers and is also expected to be a major customer for Tingo Foods in the future as it looks to export their finished food and beverage products.
Having spent several months working with AFAN and their farmers on the aggregation of both volumes of produce, we completed our first export trades on May 30, 2023 and delivered $668 million of export revenue in the five reap months to September 30, 2023. Through the farmers of Nigeria, which are estimated to total around 60 million and with the addition of Ghana, Malawi, and now Pakistan as well as certain other territories in the future, we have access to several billion dollars per annum of agricultural produce for our export business. Furthermore, our exclusive partnership with PCX and AFAN, which strengthens our supply chain and good handling capabilities and gives us priority access to the PCX commodity trading platform is already proving to be valuable as we develop the business and build a strong foundation.
The Tingo DMCC export business is expected to dollarize and globalize Tingo Group while at the same time providing Tingo Mobile’s farmers and Tingo Foods direct access to international markets.
On April 26, it was announced that Tingo Mobile had partnered with PCX and AFAN for the exclusive use of AFAN’s existing network of 2,322 warehouses across Nigeria for a minimum term of 30 years. We believe this strategic partnership uniquely positions Tingo to monetize Nigeria’s crop ecosystem across its population of 213 million and the global export market.
Under the terms of the agreement, Tingo Mobile has the right of first refusal to purchase or trade any of the produce stored in the AFAN warehouses, which it intends to use primarily to serve the Tingo Foods food processing business and the Tingo DMCC commodity trading and export business. PCX has installed its leading edge, the e-Warehouse Receipt System, in all of the partnership’s warehouses enabling crops and other produce to be commoditized and traded by Tingo from the date of delivery. Tingo Mobile is also to be granted a priority position on the PCX commodity trading platform, enabling Tingo DMCC to trade farming produce and other commodities on the spot, futures, physical, and on a derivative basis. AFAN, the umbrella body for Nigeria’s farming sector has committed to coordinate all agricultural cooperatives and members to utilize the partnership’s warehouses to handle their produce. In addition, the partnership has committed to a targeted increase in the number of warehouses to 80,000 in the next few years.
Tingo Mobile also has the right to supplement the warehouse space to preapprove third parties, such as e-commerce businesses and wholesale businesses. As mentioned previously, this partnership with AFAN and PCX is expected to considerably increase our offtake of crops and other produce from farmers, which we believe will help to satisfy the substantial future input requirements of our food processing and commodity trading and export business. Importantly, the agreement also further augments our Seed to Sale model, helping us to achieve our objectives of reducing post-harvest losses and crop wastage while also increasing food production levels and meaningfully improving food security.
For those of you joining us for the first time, TingoPay the full version, which was launched and on Android and IOS in September of this year is a super app that offers a range of value added services in partnership with Visa. Such services, including digital Visa card, e-wallet payment services, marketplace, e-commerce, insurance, and finance. As a full market B2C and B2B offering, the TingoPay SuperApp and Visa partnership is helping us to diversify and expand Tingo Group into new sectors with the aim of making TingoPay and Tingo household names as widely recognized that thesis itself. To assist us in achieving market penetration, our Pan-Africa partnership with Visa includes their provision of marketing and customer acquisitions for. SMEs and all business sectors will benefit from our new range of Tingo Visa merchant services and the TingoPay business portal and our smallholder farmer customers will see significant additional advantages through the integration of TingoPay with our Nwassa agri-marketplace platform.
The TingoPay business portal and Tingo Visa merchant services enabled subscriber farmers and businesses in all sectors to easily and securely accept payments and connect online transactions in their domestic or foreign currencies as well as to manage the cards as well as the recurring payments and access transaction statements. With the full version launched in September, we continue to develop new features, including the addition of new functions and several new value-added services that will be featured in future versions.
Tingo Mobile, Nwassa, TingoPay, Tingo Foods, and Tingo DMCC — we have created a full agri-fintech ecosystem, which is at the heart of our business. We communicate with and push services to our farmers through the smartphone handsets we supply to them. The farmers can then use Nwassa to purchase inputs for their fund business, to purchase other services, to make payments, and sell the produce. Tingo Foods forms an important part of the ecosystem as both a valuable potential customer and source of offtake for Tingo Mobile’s farmers processing their raw crops into finished food and beverage products. Finally, Tingo DMCC is in position to trade and export, both the raw crops with Tingo Mobile’s farmers and the finished food and beverage products of Tingo Foods, which is able to sell into a global market where demand significantly outstrips supply. This already strong Seed to Sale ecosystem is now strengthened further by the recently signed deal between Tingo Mobile, PCX, and AFAN as the partnership provides us access to a substantial nationwide network of warehouse facilities as well as securing a considerable increase in produce supply and offering us enhanced commodity trading opportunities until the Tingo ecosystem creates a reinforcing loop of financial and digital inclusion alongside an increase in food supply and reduction in post-harvest losses, which in turn improve food security and reduce food poverty.
Ultimately, these factors deliver financial and social upliftment not only to our farmers, but also to all of our stakeholders. At the center of everything we do are our core values and our commitment to our environmental, social, and governance goals. We foster digital and financial inclusion through our technology platforms driving the social and economic upliftment of our customers. We meaningfully improve the global food supply and help tackle the world’s food security crisis by empowering the farmer, helping them to increase crop yields, reduce post-harvest losses, gain from improved access to markets, and benefit from share prices. Our technology and platforms also delivered significant environmental benefits, reducing crop wastage, improving farming and food production efficiency, promoting sustainable farming techniques, and reducing freight miles. As part of our commitment towards the environment and social upliftment, we are focused on adopting a mature ESG framework underpinned and guided by the United Nations Sustainable Development Goals.
Turning to our third-quarter 2023 financial results as reported in this morning’s 10-Q filing, which I am pleased to present. A full breakdown of our financial results is available in our regulatory filings and in the press release that crossed the wire earlier this morning.
Now turning to some of the key figures. Net revenues for the three months ended September 30, 2023, were $586.21 million compared to $13.8 million for the three months ended September 30, 2022, an increase of 4,161%. Net revenues for the nine months ended September 30, 2023, were $2.41 billion compared to $35.3 million for the nine months ended September 30, 2022, an increase of 6,740%. The increase is mainly attributable to the addition of the Tingo Mobile and Tingo Foods acquisitions completed on December 1, 2022, and February 9, 2023, respectively, and the commencement of export trades through Tingo DMCC in May 2023.
Gross profit for the three months ended September 30, 2023, was $137.9 million or 25.4% of revenue compared to $3.2 million or 23% of revenue for the three months ended September 30, 2022. Gross profit for the nine months ended September 30, 2023, was $870.8 million or 36% of revenue compared to $6.5 million or 19% of revenue for the nine months ended September 30, 2022. The increase is mainly attributable to the addition of the Tingo Mobile and Tingo Foods acquisitions completed on December 1, 2022, and February 9, 2023, respectively, and the commencement of export rates of Tingo DMCC in May 2023.
Selling and marketing expenses for the three months ended September 30, 2023, was $0.7 million as compared to $1.3 million for the three months ended September 30, 2022. Selling and marketing expenses for the nine months ended September 30, 2023, were $174.9 million as compared to $4.9 million for the nine months ended September 30, 2022. General and administrative expenses for the three months ended September 30, 2023, were $75.9 million compared to $9.2 million for the three months ended September 30, 2022. General and administrative expenses for the nine months ended September 30, 2023, were $127.9 million compared to $30.2 million for the nine months ended September 30, 2022, mainly attributed to the addition of costs from Tingo Mobile and Tingo Foods.
Operating profit for the three months ended September 30, 2023, was $50.1 million versus an operating loss of $8.7 million for the three months ended September 30, 2022. Operating profit for the nine months ended September 30, 2023, was $492.5 million versus an operating loss of $32.5 million for the nine months ended September 30, 2022, the increase being mainly attributed to the acquisitions of Tingo Mobile and Tingo Foods and the commencement of export trades to Tingo DMCC as explained above.
Net income for the three months ended September 30, 2023, was $20.7 million compared to a net loss of $7.7 million for the three months ended September 30, 2022. Net income for the nine months ended September 30, 2023, was to $294.0 million compared to a net loss of $30.7 million for the nine months ended September 30, 2022.
Adjusted EBITDA for the three months ended September 30, 2023, was $122.6 million compared to consolidated EBITDA loss of $8.1 million for the three months ended September 30, 2022. Adjusted EBITDA for the nine months ended September 30, 2023, was $777.9 million compared to consolidated EBITDA loss of $29.3 million for the nine months ended September 30, 2022.
Tingo Group invested heavily in the growth of Tingo Mobile, Tingo Foods, and Tingo DMCC during the nine months ended September 30, 2023, including one, making an upfront payment of $711.7 million on the purchase of 6 million handsets for new AFAN customers; number two, prepaying AFAN for produce for Tingo Foods and settling their brought forward payables resulting in a total net outlay of $369.9 million; and third, self-funding stock purchases of $370.4 million for Tingo DMCC’s export sales — the revenues for which are scheduled to be received during the fourth quarter of 2023. In addition, tax payments totaling $174 million were made for Tingo Mobile on its taxable earnings for fiscal year 2022, and the company also incurred a loss on foreign exchange. As a result, the balance cash and cash equivalents on September 30, 2023, decreased to $53.4 million compared to $500 million on December 31, 2022.
In August, we announced the commencement of a quarterly dividend payable to the holders of both our common stock and Series B convertible preferred shares. The foreign exchange conversion for the payment of the first dividend, which is in the amount of $20 million. Exchange conversion is subject to approval by the Central Bank of Nigeria, the finalization of which is expected soon.
Our goal is to increase the amount of quarterly dividend as we grow our earnings and cash balances.
The summary of the income statement of Tingo Group for the three months and nine months ended September 30, 2023, compared to September 2022 is provided on page 15 of the presentation. A reconciliation of GAAP operating income and loss to the non-GAAP EBITDA for the three and nine months ended September 30, 2023, compared to September 2022 is provided on page 16 of the presentation. A summary of the most notable investment in cash expenditure items made by the company during the three and nine months ended September 30, 2023, is provided on page 17 of the presentation.
The key cash expenditure items incurred during the third quarter included further higher installment payments made to our mobile phone supplier totaling $279 million. The corresponding order of smartphones has been allocated to 6 million new customers introduced by the All Farmers Association of Nigeria or AFAN under the terms of our trade agreement with AFAN on October 20, 2022. The smartphones will be held as fixed assets of the company and are expected to generate monthly mobile leasing revenues and loss of transaction revenues during the fourth quarter of 2023. The other main cash expenditure item which we incurred during the third quarter with payment of $147 million for produce for our Tingo DMCC export business. The receipt for all our export sales made in the third quarter are scheduled to receive in the fourth quarter of 2023.
A summary of the balance sheet highlights is provided on page 18 of the presentation. A summary of the income statement of Tingo Group for the three and nine months ended September 30, 2023, compared to the three and nine months ended September 30, 2022, is provided on page 19 of the presentation.
My Board and I believe Tingo Group continues to be uniquely and strongly positioned both as a company and as an attractive investment proposition. We are a highly profitable Nasdaq-listed company, having generated revenue of $2.41 billion and EBITDA of $777.9 million in the first nine months of 2023. We have a strong balance sheet, and our operations are significantly cash flow positive. We announced the commencement of a quarterly dividend, the first payment of which is awaiting Central Bank of Nigeria approval. We have a full agri and food ecosystem from Seed to Sale, creating a virtuous cycle for both us and our customers. Our food processing and commodity export business has vast potential. We are making a difference towards addressing the global food shortage and food security crisis and we are a benefactor of commodity price inflation.
Our Visa-Tingo partnership and TingoPay SuperApp are well-positioned to expand Tingo significantly into new B2C and B2B markets. We have proven proprietary fintech platforms which are replicable in new geographical markets and new sectors. We have a vast addressable global market, including a new and significant opportunity in Pakistan. We believe that we have a significant ESG impact that can grow considerably further in the future.
My Board and I believe Tingo Group continues to be uniquely and strongly positioned both as a company and as an attractive investment proposition. We are a highly profitable Nasdaq-listed company, having generated revenue of $2.41 billion and EBITDA of $777.9 million in the first nine months of 2023. We have a strong balance sheet, and our operations are significantly cash flow positive. We announced the commencement of a quarterly dividend, the first payment of which is awaiting Central Bank of Nigeria approval. We have a full agri and food ecosystem from Seed to Sale, creating a virtuous cycle for both us and our customers. Our food processing and commodity export business has vast potential. We are making a difference towards addressing the global food shortage and food security crisis and we are a benefactor of commodity price inflation.
Our Visa-Tingo partnership and TingoPay SuperApp are well-positioned to expand Tingo significantly into new B2C and B2B markets. We have proven proprietary fintech platforms which are replicable in new geographical markets and new sectors. We have a vast addressable global market, including a new and significant opportunity in Pakistan. We believe that we have a significant ESG impact that can grow considerably further in the future.
Thank you. Operator, my colleagues and I from Tingo are now ready to take questions from participants.
Question and Answer Session
Operator
Can you expand on the reason for the decrease in the Nwassa revenue during the quarter? And do you see this as temporary?
Kenneth Denos
Once we generate this revenue through the transactions made by our farmers. These farmers using the Nwassa, the purchase farming inputs, they notify us. They have produced to sell, they access a range of services such as bill payments, microfinance, and insurance. Unfortunately, the negative press we received in June was picked up in Nigeria, including in newspapers and other media that is distributed into the rural parts of the country. The Nwassa platform just like any commercial platform is based on trust, and these farmers want to know that their transactions will go through and that their money is safe. So unfortunately, the negative press created a significant amount of fear and lack of confidence in our farmers, which resulted in a slump of transaction volume and revenue.
Thankfully, we’ve been able to work with cooperatives, and with AFAN’s to restore customer confidence, which is having a major positive impact. Also, you may have seen in our recent press release, AFAN which is the umbrella organization for the entire farming industry of Nigeria, has now adopted us as their exclusive agricultural platform, and they are also increasing the promotion and support towards us
With all the steps we are taking, we expect to resume the growth rates we are enjoying prior to the short seller attack, additional to which we should benefit from a step up in revenues and earnings from both Nwassa and mobile leasing when our 6 million new phones are deployed to 6 million new customers in December.
Operator
Revenue for Tingo Foods dipped slightly compared to the second quarter. What was the reason for this?
Kenneth Denos
Tingo Foods which was also affected by negative press, not so much in relation to our customers, but very much still in relation to the farmers that supply us. On the supply side, our farmers have to be able to trust that we will pay them for the crops they produce and unfortunately their confidence decreased when they saw the negative press. Again, thankfully, with the support of the cooperative and the AFAN, we have made good headway in restoring the confidence of the farmers to sell their produce to us. And we expect to be back to the levels of supply that we enjoyed prior to the short seller attacks.
Now it’s worth noting that Tingo Foods also suffered from seasonality in July and August when the level of crop being harvested dropped significantly. So, this factor combined with the drop in supplier confidence towards us had a real impact. I am pleased to say, however, that with the rebound, we experienced some supply levels together with our sales outlook for the next few months. We are confident of a strong into the year and yet we can achieve healthy growth thereafter.
Operator
You previously mentioned that the Tingo DMCC export business was expected to generate around $1 billion of revenue during the quarter, whereas your actual export revenue was around one-third of this. Were orders delayed? Or did you suffer cancellations?
Kenneth Denos
Again, for the reasons mentioned in my previous two answers. Our export business, unfortunately suffered from both order postponements and order cancellations in the third quarter, in particular, from the new customers we have just started to do business with. This has not only resulted in a considerable loss of revenue and earnings for us in the third quarter, which we hope to catch up over the coming months, but it also delays the dollarization of our business. In fact, much of the postponed or cancelled business was set to be transacted in US dollar and other primary currencies. Notwithstanding the challenges we have faced, I’m pleased to say that we are seeing strong signs of recovery in our operations, and we expect to be back on track by year end and I believe in a great position to have a strong 2024.
Operator
Do you have an update regarding the delivery and deployment of the 6 million smartphones you ordered in Q2? And that you have made sizable payments against in both Q2 and Q3?
Kenneth Denos
Yes, we are scheduled to receive delivery of the 6 million devices from our supply partner by the end of November with their deployment through AFAN immediately thereafter. So, we expect to receive and generate lease revenue as well as transaction revenue through the Nwassa platform from these devices by year end 2023. With an uplift in mobile phones with more than 60% to be followed by our AFAN’s commitment to introduce a further 13 million customers as well as our expansion plans for Ghana, Malawi, and Pakistan, we’re excited about our growth prospects for 2024 and beyond.
Operator
Can you provide an update on the status of construction of your new food processing facility?
Kenneth Denos
For some as you know, some of our executive and management team and members of the media have visited the site in June of this year, and we are now planning a further media visits that take place around year end or early in the new year. We can’t though confirm that our construction joint venture partner is on track, and we remain confident we’ll be in a position to commence operations at least in Phase 1 of the facility by 2024.
Operator
Is there an update on the dividend that you announced in August?
Kenneth Denos
We are working closely with our banks in Nigeria as well as the Central Bank of Nigeria to receive the foreign currency conversion approval as soon as possible. As some of you will be aware, we had hoped to receive this approval long before now; however, the new process that all Nigerian companies must follow have proven to be more complex and elongated than originally envisaged. I am though pleased to say that the approval is expected very soon.
Operator
Are you considering an increase in the requests of the FX conversion to cover a second dividend payment rather than having to go through this all over again immediately?
Kenneth Denos
With our current foreign exchange conversion application at an advanced stage, we don’t wish to risk causing any disruption or further delay by changing the amount. Our intention is, therefore, to obtain the approval of our current application before then submitting a new application for a larger amount. It is our understanding that the approval process for subsequent foreign exchange conversions will be more straightforward than has been the case for this first conversion. We also expect the approval timeline to be much shorter.
Operator
It has been mentioned in previous announcements that the Board were considering a share buyback or a one-off special dividend in addition to the quarterly dividend. Is this still the case? As I personally believe this would help rebuild shareholder confidence.
Kenneth Denos
Yes, this is generally still the case. As we noted in our presentation, we are optimistic about the company’s continued growth development and cash flows from operation, and we expect to be in a position to carry out some form of a special dividend as well as paying a regular quarterly dividend in the future.
Operator
When will the A credit rating in Nigeria be restored?
Kenneth Denos
We have recently commenced interactions with the credit agency to restore our credit rating as part of which we are providing with up-to-date information. We hope to receive the restoration of our credit rating either by the end of this year or during the early part of 2024.
Operator
You recently announced plans to expand into Pakistan and an MOU with the government of Pakistan, this sounds like a very big opportunity. Can you provide any further information?
Kenneth Denos
Yes, we believe it is a big opportunity. Here’s just some key points to consider. Pakistan is the fifth largest country in the world by population. The country represents one of the largest agricultural markets in the world but at the same time, Pakistan suffers from low crop yields and very high levels of post-harvest loss. And if we can effectively deploy our business model, the Tingo model and the Tingo ecosystem, it’s expected to have a significant impact on Pakistan’s agricultural sector and add considerable value. In addition, we are receiving significant support from the Pakistan government, both at a provincial level and the federal level, which we believe will help our rollout as well as rolling out our agri-fintech business in Pakistan. We also intend to launch our food processing and export business in the country where, again, it is evident there is a significant need.
Operator
Any you any closer to finding a permanent industry leading Nasdaq-experienced CTO?
Kenneth Denos
We’ve been evaluating and have had informal discussions with highly qualified individuals in this regard. No offer formal decisions have yet been made, but we are making good progress on that point.
Operator
This concludes the question-and-answer session. I would now like to turn the call back over to Mr. Denos for his closing remarks. Please go ahead.
Kenneth Denos
Thank you, operator. I would like to thank each of you for joining our earnings conference call today and look forward to continuing to update you on our ongoing progress and growth. If we were unable to answer any of your questions, please reach out to our IR firm MZ Group who would be more than happy to assist.
Operator
Thank you. This concludes our session for today. You may now disconnect.