Freedom Holding Corp. SEC 10-K Report
Freedom Holding Corp. (FRHC), a diversified financial services holding company with significant operations in Kazakhstan and a presence across Europe, Asia, and North America, has released its annual Form 10-K report. The report provides a comprehensive overview of the company's financial performance, business operations, strategic initiatives, and the challenges it faces.
Financial Highlights
Total Revenue: $2,050.5 million, reflecting a 23% increase from fiscal 2024, driven by higher interest income, fee and commission income, and insurance underwriting income.
Net Income: $84.5 million, a decrease of 77% compared to fiscal 2024, primarily due to increased expenses and a higher effective tax rate.
Business Highlights
Business Overview: Freedom Holding Corp. operates as a holding company for subsidiaries engaged in securities brokerage, banking, insurance, and other financial services. The company has a significant presence in Kazakhstan, with operations extending across Europe, Asia, and North America.
Segment Realignment: In 2024, FRHC realigned its business into four segments: Brokerage, Banking, Insurance, and Other. This restructuring aims to enhance operational efficiency and better address customer needs.
Geographical Performance: Kazakhstan remains the primary market for FRHC, with significant operations in Cyprus, the United States, and several other countries. The company divested its Russian subsidiaries in February 2023.
Employee and Office Expansion: As of March 31, 2025, FRHC employed 8,691 full-time employees across 202 offices worldwide, with a diverse range of services offered in each location.
New Product Launches: In April 2024, Freedom Bank Kazakhstan launched the SuperApp, an all-in-one financial platform offering banking, payments, and investment services, enhancing customer experience with real-time portfolio tracking and personalized recommendations.
Telecommunications Expansion: In 2024, FRHC expanded into the Kazakhstan telecommunications market through Freedom Telecom, aiming to offer a diverse range of telecommunications services.
Media Platform Development: FRHC established Freedom Media LLP to build a regional streaming platform for Kazakhstan and Central Asia, aiming to provide diverse content across multiple genres.
Insurance Segment Growth: The acquisition of Freedom Life and Freedom Insurance in 2022 has strengthened FRHC's insurance offerings, with significant increases in customer base and market share in Kazakhstan.
Brokerage Segment Expansion: FRHC's brokerage segment has grown significantly, with 683,000 retail brokerage customer accounts as of March 31, 2025, driven by increased activity in Kazakhstan, Europe, and Central Asia.
Digital Fintech Ecosystem: FRHC operates a digital ecosystem integrating banking, payments, credit, brokerage, and insurance services, leveraging big data and AI to enhance customer satisfaction and retention.
Future Outlook: FRHC aims to expand its regional and global presence by building a cross-border banking network and enhancing its digital financial infrastructure, focusing on Central Asia and the Caucasus.
Strategic Initiatives
Strategic Initiatives: Freedom Holding Corp. is actively pursuing non-organic growth through targeted acquisitions to expand its integrated digital fintech ecosystem. The company is expanding into new business sectors, including telecommunications and media content in Kazakhstan, through its subsidiaries Freedom Telecom and Freedom Media. These initiatives are expected to enhance long-term growth prospects, although they will initially increase capital expenditures and negatively impact net income during the early stages.
Capital Management: The company issued U.S. dollar-denominated bonds through its subsidiary Freedom SPC to finance the development of the Freedom Telecom business, with bonds due in 2026 and 2028. Additionally, Freedom Bank KZ established several bond programs to support liquidity. The company did not declare or pay cash dividends during fiscal 2025 or 2024, opting to retain earnings to fund business operations and expansion. The company also manages its liquidity through securities repurchase arrangements and maintains a majority of its tangible assets in cash and securities that are readily convertible to cash.
Future Outlook: Freedom Holding Corp. plans to continue expanding its digital fintech ecosystem and telecommunications market presence, requiring significant capital expenditures. The company intends to finance these expenditures through a combination of own funds and borrowings, including vendor financing and bond placements. The company is focused on maintaining compliance with net capital and capital adequacy requirements and believes its current cash, cash equivalents, and ability to raise additional capital will be sufficient to meet its financing needs. The company does not anticipate paying cash dividends in the foreseeable future, as it prioritizes reinvestment in business growth.
Challenges and Risks
Market Risks: The company has a relatively limited operational history that coincided with sustained market growth, which may not be predictive of future results. The company has not experienced prolonged downturns in macroeconomic or industry growth, which poses a risk if such conditions arise.
Operational Risks: The company is expanding into new telecommunications and media businesses, which are expected to incur losses in the initial years. The success of these ventures is uncertain and could impact overall profitability.
Regulatory Risks: The company is subject to extensive regulation across multiple jurisdictions. Non-compliance with U.S., EU, UK, or other sanctions programs, especially related to the Russia-Ukraine conflict, could adversely impact the company.
Emerging Risks: The ongoing Russia-Ukraine conflict poses a risk to the company due to its historical business ties with Russia and potential secondary sanctions on Kazakhstan's financial sector.
Credit Risks: The company could suffer significant losses from credit exposure, particularly in its loan portfolio and margin lending activities. Economic or market stresses could lead to higher default rates.
Liquidity Risks: The company's ability to meet obligations depends on accessing liquidity at a reasonable cost. Changes in credit ratings or market conditions could impact funding costs.
Reputational Risks: Damage to the company's reputation, whether through regulatory non-compliance or other factors, could harm its business.
Management's strategies to address these challenges include diversifying revenue sources, enhancing risk management frameworks, and pursuing strategic acquisitions to strengthen market position.
Management acknowledges the challenges posed by rapid growth and the need for effective integration of acquisitions. The company plans to continue its growth strategy through acquisitions but recognizes the risks associated with integration and performance of acquired businesses.
The company is exposed to foreign currency fluctuation risks due to its operations in multiple countries. Fluctuations in exchange rates could materially impact financial results. Additionally, interest rate volatility, particularly in Kazakhstan, could affect the company's financial performance.
SEC Filing: Freedom Holding Corp. [ FRHC ] - 10-K - Jun. 13, 2025