Freedom Holding Corp. Reports First Quarter Fiscal Year 2025 Results

Business Wire

Company Delivers $451 Million in Revenue and Continues its Business Expansion

ALMATY, Kazakhstan--(BUSINESS WIRE)--
Freedom Holding Corp. (the “Company”) (NASDAQ: FRHC), a multinational diversified financial services holding company with a presence through its subsidiaries in 22 countries, today announced the results for their first quarter ended June 30, 2024 of fiscal 2025. Highlights include:

$451 million in revenue
Net income of $34 million or $0.57 per share, diluted
Total expense of $409 million
$8.5 billion in total assets as of end of quarter
S&P outlook for Company’s core subsidiaries revised from negative to positive and the Company’s outlook from negative to stable
Approximately 6,800 employees and 132 offices as of end of quarter
Launch of the Freedom Bank KZ mobile application SuperApp
Board of directors adds three new members

Income Statement Highlights:

The Company recognized revenue of approximately $451 million for the first quarter of fiscal 2025, compared to $316 million in the first quarter of fiscal 2024, a 43% increase. The Company's total expenses were approximately $409 million in the first quarter of fiscal 2025 compared to $232 million for the same period last year, an increase of approximately 77%.

Net income was approximately $34 million for the first quarter of fiscal 2025 as compared to $68 million for the same period in fiscal 2024, a 50% decrease, providing for basic and diluted earnings per share of $0.58 and $0.57, respectively. This compares to $1.16 and $1.15 for the same period last year. Weighted average common shares outstanding used to compute diluted earnings per share for the three-month periods ended June 30, 2024, and 2023 were 60.3 million and 59.3 million, respectively. The decrease in net income was driven largely by an unrealized net loss of $64.9 million attributable to Kazakhstan sovereign bonds held in proprietary trading portfolio, primarily as a consequence of market price declines, as well as increased expenses, corresponding with the growth and development of the Company’s business.

Balance Sheet Highlights:

Total assets were $8.5 billion at June 30, 2024, as compared to $8.3 billion at March 31, 2024 and cash and cash equivalents totaled $719 million at June 30, 2024, compared to $545 million at March 31, 2024. Shareholder’s equity remained relatively constant at approximately $1.2 billion as of each of June 30, 2024 and March 31, 2024.

“Our investments in people, systems, and the expansion of our fintech ecosystem continues to bear fruit…”

Timur Turlov, the Company's founder and chief executive officer, provided commentary on the quarter by stating, "As has been our process for the past number of years, we continue to direct our profits into the further expansion of our business and the first quarter of fiscal 2025 was no exception. With a $177 million increase in total expenses as compared to the same period last year, we managed to contribute over $34 million to the bottom line during the quarter. Our investments in people, systems, and the expansion of our fintech ecosystem continues to bear fruit, which is evidenced by a 188% increase in insurance underwriting income, a 51% increase in interest income, and a 17% increase in fee and commission income, with these three being our largest sources of revenue for the quarter.”

Turlov continued, “Consistent with our general growth, I’m pleased to report that we have brought our global headcount to over 6,800 highly professional team members who support our business expansion. This compares to 5,100 for the first quarter of last year.”

“Our strongest contributor to our top line was interest income of just over $226 million, followed by insurance underwriting income of $129 million, and fee and commission income of $115 million. We were also pleased to note that we experienced an increase in brokerage accounts to 532,000 from 399,000 in the same period last year, of which there was an 81% increase in active accounts.”

“…now our digital fintech platform includes our retail bank, insurance companies, and a growing list of popular ancillary services that are contributing to the growth of our customer base.”

Turlov continued, “Historically brokerage accounts set the foundation for the overall growth of our digital fintech platform, but now our platform includes our retail bank, insurance companies, and a growing list of popular ancillary services that are contributing to the growth of our customer base. These include on-line grocery, travel and entertainment services, additional regional retail offerings, and planned telecommunications and media service offerings. In support of this, in April of this year our retail bank, Freedom Bank KZ, launched its SuperApp, a one-stop shop of financial services that our customers can use to check their account balances, review transaction histories, make transfers and payments, open and manage deposits as well as have real-time portfolio monitoring and access to a whole array of investing support services at their fingertips. This is a win-win scenario as our customers will gain the convenience of access to needed products and services and we will gain significant amounts of consumer data that will allow us to continue to build value-add products that our customers will enjoy. We expect innovation like this to be a significant driver of future growth.”

“…the quarter sets the stage for another exemplary year...”

“Overall, we are pleased with the results of the quarter which sets the stage for another exemplary year for Freedom Holding Corp. We continue to position our company for success by making strategic investments to accelerate our organic growth and by winning the battle for expertise, both operationally and from a corporate governance perspective, in a highly competitive talent marketplace. In June of this year, we welcomed three new members to our board of directors: Dr. Kairat Kelimbetov, Andrew Gamble, and Philippe Vogeleer, all with deep experience and with diverse backgrounds which we expect will be instrumental in helping guide the continued expansion strategy of our company. Going forward, we will continue to pursue organic growth objectives and review potential acquisition targets and opportunities for additional international expansion. We are encouraged about the future prospects of the enterprise,” Turlov concluded.

Additional Select First Quarter Fiscal 2025 Highlights:

The Company’s Banking segment, comprising Freedom Bank KZ, experienced a 3% decrease in assets, a 5% decrease in its loan portfolio and an 11% increase in its deposit portfolio during the quarter, in comparison with the year-end of fiscal 2024. The Bank’s trading portfolio also decreased by 8%, driven primarily by the volatility on the debt instruments in its proprietary trading portfolio.

As of June 30, 2024 and March 31, 2024, the Company’s Insurance segment comprising Freedom Life and Freedom Insurance reported assets of $546 million and $411 million in liabilities and $530 million in assets and $403 million in liabilities, respectively. Active contracts in the life insurance business grew to 888,787 from 616,000 from in the previous year and general insurance grew to 276,234 at June 30, 2024 from 191,000 at March 31, 2024, with the increase driven primarily by innovative and competitive products as well as significant investments in our sales force and related advertising initiatives in the Kazakhstan market.

About Freedom Holding Corp.

Freedom Holding Corp., a Nevada corporation, is a diversified financial services holding company conducting retail securities brokerage, securities trading, investment research, investment counseling, investment banking and underwriting services, mortgages, insurance, and commercial banking as well as several ancillary businesses which complement its core financial services businesses, all through its subsidiaries, operating under the name Freedom24 in Europe, Freedom Broker in, Central Asia and Freedom Capital Markets in the United States. Through its subsidiaries, Freedom Holding Corp. employs more than 6,800 people and is a professional participant in the Kazakhstan Stock Exchange, the Astana International Exchange, the Republican Stock Exchange of Tashkent, the Uzbek Republican Currency Exchange, and is a member of the New York Stock Exchange and the Nasdaq Stock Exchange.

Freedom Holding Corp. is incorporated in Nevada, and has operations and subsidiaries in 22 countries, including Kazakhstan, the United States, Cyprus, Poland, Spain, Uzbekistan, and Azerbaijan, among others.

Freedom Holding Corp.'s common shares are registered with the United States Securities and Exchange Commission and are traded under the symbol FRHC on the Nasdaq Capital Market, operated by Nasdaq, Inc.

To learn more about Freedom Holding Corp., visit www.freedomholdingcorp.com.

Cautionary Note Regarding Forward-Looking Statements

This release contains "forward-looking" statements, including with respect to Freedom Holding Corp.'s potential for future growth and success. All forward-looking statements are subject to uncertainty and changes in circumstances. In some cases, forward-looking statements can be identified by terminology such as "expect," "new," "plan," "seek," and "will," or the negative of such terms or other comparable terminology used in connection with any discussion of future plans, actions, and events. Forward-looking statements are not guarantees of future results or performance and involve risks, assumptions, and uncertainties that could cause actual events or results to differ materially from the events or results described in, or anticipated by, the forward-looking statements. Factors that could materially affect such forward-looking statements include certain economic, business, and regulatory risks and factors identified in the Company's periodic and current reports filed with the U.S. Securities and Exchange Commission. All forward-looking statements are made only as of the date of this release and the Company assumes no obligation to update forward-looking statements to reflect subsequent events or circumstances. Readers should not place undue reliance on these forward-looking statements.

Website Disclosure

Freedom Holding Corp. intends to use its website, https://ir.freedomholdingcorp.com, as a means for disclosing material non-public information and for complying with U.S. Securities and Exchange Commission Regulation FD and other disclosure obligations.

	June 30, 2024			March 31, 2024

ASSETS
Cash and cash equivalents (including $257 and $203 from related parties)	$	718,678		$	545,084
Restricted cash (including $1,121 and $— with related parties)		1,179,510			462,637
Trading securities (including $1,256 and $1,326 with related parties)		3,393,936			3,688,620
Available-for-sale securities, at fair value		262,860			216,621
Margin lending, brokerage and other receivables, net (including $37,836 and $22,039 due from related parties)		1,217,885			1,660,275
Loans issued (including $136,558 and $147,440 to related parties)		1,314,552			1,381,715
Fixed assets, net		100,474			83,002
Intangible assets, net		45,535			47,668
Goodwill		50,591			52,648
Right-of-use asset		35,006			36,324
Insurance contract assets		24,949			24,922
Other assets, net (including $23,057 and $5,257 with related parties)		139,584			102,414
TOTAL ASSETS	$	8,483,560		$	8,301,930

LIABILITIES AND SHAREHOLDERS’ EQUITY
Securities repurchase agreement obligations	$	2,558,794		$	2,756,596
Customer liabilities (including $84,970 and $44,127 to related parties)		2,699,912			2,273,830
Margin lending and trade payables (including $255 and $507 to related parties)		836,309			867,880
Liabilities from insurance activity (including $57 and $470 to related parties)		320,394			297,180
Current income tax liability		40,485			32,996
Debt securities issued		266,398			267,251
Lease liability		35,390			35,794
Liability arising from continuing involvement		505,659			521,885
Other liabilities (including $8,349 and $9,854 to related parties)		68,040			81,560
TOTAL LIABILITIES	$	7,331,381		$	7,134,972
Commitments and Contingent Liabilities (Note 22)		—			—

SHAREHOLDERS’ EQUITY
Preferred stock - $0.001 par value; 20,000,000 shares authorized, no shares issued or outstanding		—			—
Common stock - $0.001 par value; 500,000,000 shares authorized; 60,721,010 shares issued and outstanding as of June 30, 2024, and 60,321,813 shares issued and outstanding as of March 31, 2024, respectively		60			60
Additional paid in capital		197,205			183,788
Retained earnings		1,033,140			998,740
Accumulated other comprehensive loss		(81,393	)		(18,938	)
TOTAL FRHC SHAREHOLDERS’ EQUITY	$	1,149,012		$	1,163,650

Non-controlling interest		3,167			3,308
TOTAL SHAREHOLDERS’ EQUITY	$	1,152,179		$	1,166,958

TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY	$	8,483,560		$	8,301,930

	Three Months Ended June 30,
	2024			2023

*Revenue:*
Fee and commission income (including $866 and $15,896 from related parties)	$	115,489		$	98,703
Net (loss)/gain on trading securities		(52,102	)		31,816
Interest income (including $270 and $5,352 from related parties)		226,004			149,349
Insurance underwriting income		129,408			44,889
Net gain on foreign exchange operations		8,089			19,301
Net gain/(loss) on derivative		12,494			(30,605	)
Other income		11,333			2,757
TOTAL REVENUE, NET	$	450,715		$	316,210

*Expense:*
Fee and commission expense (including $157 and $99 from related parties)	$	80,147		$	28,684
Interest expense (including $381 and $168 from related parties)		145,718			95,046
Insurance claims incurred, net of reinsurance		47,309			21,514
Payroll and bonuses		57,524			31,630
Professional services		7,268			6,625
Stock compensation expense		10,615			1,233
Advertising expense		17,201			8,100
General and administrative expense (including $2,725 and $478 from related parties)		45,105			24,475
(Recovery of)/provision for allowance for expected credit losses		(1,770	)		14,326
TOTAL EXPENSE	$	409,117		$	231,633

INCOME BEFORE INCOME TAX		41,598			84,577

Income tax expense		(7,339	)		(16,656	)

NET INCOME	$	34,259		$	67,921

Less: Net loss attributable to non-controlling interest in subsidiary		(141	)		(181	)
NET INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	34,400		$	68,102

*OTHER COMPREHENSIVE INCOME*
Change in unrealized gain on investments available-for-sale, net of tax effect		3,374			2,239
Reclassification adjustment for net realized loss on available-for-sale investments disposed of in the period, net of tax effect		(18	)		(958	)
Foreign currency translation adjustments		(65,811	)		(1,760	)
OTHER COMPREHENSIVE LOSS		(62,455	)		(479	)

COMPREHENSIVE (LOSS)/INCOME BEFORE NON-CONTROLLING INTERESTS	$	(28,196	)	$	67,442

Less: Comprehensive loss attributable to non-controlling interest in subsidiary		(141	)		(181	)

COMPREHENSIVE (LOSS)/INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS	$	(28,055	)	$	67,623

EARNINGS PER COMMON SHARE (In U.S. dollars):
Earnings per common share - basic		0.58			1.16
Earnings per common share - diluted		0.57			1.15

Weighted average number of shares (basic)		59,258,085			58,512,215
Weighted average number of shares (diluted)		60,255,593			59,293,691