Freedom Holding Corp. Releases Q2 2024 10-Q Report

Freedom Holding Corp., a diversified financial services company operating in brokerage, banking, insurance, and other sectors, has released its Form 10-Q report for the second quarter of 2024. The report highlights significant financial and operational developments, reflecting the company's strategic initiatives and market performance.

Financial Highlights

• Total Revenue: $450.7 million, an increase of $134.5 million or 43% compared to the three months ended June 30, 2023, primarily driven by increases in interest income, insurance underwriting income, and fee and commission income.
• Net Income: $34.4 million, a decrease of $33.7 million or 50% compared to the three months ended June 30, 2023, primarily due to increased expenses across various categories including interest expense, payroll and bonuses, and insurance claims incurred.

Business Highlights

Revenue Segments

The company is organized into four segments: Brokerage, Banking, Insurance, and Other.

• Brokerage: Focuses on retail brokerage and investment banking. Saw a notable increase in interest income and fee and commission income due to increased brokerage activity and customer base expansion.
• Banking: Includes lending and deposit services. Experienced a decline due to net losses on trading securities and foreign exchange operations during the reporting period.
• Insurance: Offers life and general insurance services. Showed significant growth due to increased underwriting income.
• Other: Includes payment processing and telecommunications services. Experienced growth primarily due to foreign exchange gains and revenue from the disposition of a subsidiary.

Geographical Performance

The main market of operations is Kazakhstan, with subsidiaries in multiple countries including Cyprus, the United States, Armenia, the United Arab Emirates, Uzbekistan, and Turkey. The company divested its Russian subsidiaries in February 2023. The expansion of retail client activity in Kazakhstan, Europe, and other Central Asian jurisdictions has been a major driver of growth.

Sales Units

As of June 30, 2024, the company had approximately:

• 532,000 retail brokerage customers
• 1,055,000 banking customers
• 692,000 insurance customers
• 330,000 customers in other segments

This reflects an increase in customer numbers across all segments compared to March 31, 2024.

New Product Launches

The company launched the SuperApp mobile application in April 2024 through Freedom Bank KZ. This app consolidates essential financial services into one platform, offering clients a seamless way to manage their finances with features like account balance checks, transaction histories, transfers, payments, deposits management, loans, real-time portfolio monitoring, and analytical reports.

New Production Initiatives

The company is expanding into the telecommunications market in Kazakhstan through its subsidiary Freedom Telecom. This involves establishing a new independent telecommunications operator to provide a range of services including internet connectivity and mobile network services. Additionally, Freedom Media was established to provide media content in Kazakhstan.

Future Outlook

The company is committed to further developing its digital fintech ecosystem by integrating core financial services with ancillary business offerings. It aims to provide a comprehensive digital experience through a single platform. The strategic objective includes expanding into new business areas such as telecommunications and media in Kazakhstan. The company plans to finance these expansions through a combination of own funds and borrowings.

SEC Filing: Freedom Holding Corp. Releases Q2 2024 [ NASDAQ:FRHC ] - 10-Q - Aug. 09, 2024