Freedom Holding Corp. (NASDAQ:FRHC) is a multinational diversified financial services holding company that has established a formidable presence across 22 countries. With a rich history spanning over a decade, the company has evolved into a powerhouse, offering a comprehensive suite of financial solutions to its growing client base.

Company Overview

Founded with the core purpose of providing access to international capital markets for retail brokerage clients, Freedom Holding Corp. has grown rapidly since its inception. The company's initial focus was on providing securities brokerage services to individuals, businesses, and financial institutions. These services included securities trading and margin lending, depending on the region. Alongside its brokerage operations, Freedom Holding Corp. developed a robust investment banking business, with professionals offering strategic advisory services and capital markets products.

As part of its growth strategy, the company has expanded beyond its original brokerage and investment banking operations to encompass a wide range of financial services. This diversification includes retail and commercial banking, insurance products, payment services, and information processing services. Furthermore, Freedom Holding Corp. has strategically acquired several ancillary businesses that complement its core financial services offerings, strengthening its position in the market.

Technological Innovation

One of the key factors driving Freedom Holding Corp.'s success has been its ability to leverage cutting-edge technology to deliver innovative financial solutions. The company's flagship online trading platform, Tradernet, has been a game-changer, offering clients a seamless and secure trading experience across a wide range of financial instruments. The recent launch of the SuperApp by Freedom Bank KZ, the company's banking subsidiary, further exemplifies its commitment to digital transformation, consolidating all essential financial services into a single, user-friendly platform.

Financials

Freedom Holding Corp.'s financial performance has been consistently strong, with the company reporting record-breaking results in recent years. In the fiscal year 2024, the company reported total revenues of approximately $1.64 billion, a remarkable 105% increase from the previous fiscal year. This growth was primarily driven by a substantial increase in interest income, fee and commission income, and insurance underwriting income.

The company's net income for fiscal 2024 stood at $375.54 million, showcasing its ability to generate robust profitability. However, Freedom Holding Corp. reported negative operating cash flow of $1.06 billion and negative free cash flow of $1.11 billion for the same period, indicating potential challenges in cash management and operational efficiency.

In the most recent quarter (Q2 2025), the company reported revenue of $506.91 million, representing a year-over-year growth of 16.3% compared to Q2 2024. Net income for the quarter stood at $114.66 million. However, the company continued to face cash flow challenges, with negative operating cash flow of $462.45 million and negative free cash flow of $471.91 million for the quarter.

Liquidity

Freedom Holding Corp.'s liquidity position presents a mixed picture. As of September 30, 2024, the company had $569.18 million in cash and cash equivalents and $895.65 million in restricted cash. The company's debt-to-equity ratio stands at 2.26, indicating a relatively high level of leverage. The current ratio and quick ratio are both 1.34, suggesting that the company has sufficient short-term assets to cover its short-term liabilities, but with limited cushion.

Insurance Division Growth

One of the standout segments within Freedom Holding Corp.'s diversified business model is its insurance division. The company's insurance subsidiaries, Freedom Life and Freedom Insurance, have experienced remarkable growth, with insurance underwriting income increasing by 182% in fiscal 2024 compared to the previous year. As of September 30, 2024, Freedom Life had 1.07 million active contracts, a significant increase from 616,300 active contracts as of March 31, 2024. Similarly, Freedom Insurance had 408,810 active contracts as of September 30, 2024, compared to 190,870 active contracts as of March 31, 2024. This impressive performance underscores the company's ability to capitalize on emerging opportunities and diversify its revenue streams.

Challenges and Risks

The ongoing geopolitical tensions and economic uncertainties in the regions where Freedom Holding Corp. operates have the potential to impact its financial performance. The company's exposure to currency fluctuations and changes in regulatory environments also pose risks that require careful monitoring and mitigation. In August 2023, Freedom Holding Corp. faced allegations made in a short-seller report by Hindenburg Research. The company responded by commissioning an external review, which concluded that the claims were meritless. The independent directors have expressed full confidence in the company and its business model. Despite this challenge, Freedom Holding Corp. has continued to grow and expand its operations.

Resilience and Adaptability

Despite these challenges, Freedom Holding Corp. has demonstrated its resilience and adaptability. The company's management team has consistently proven its ability to navigate through turbulent times, capitalizing on emerging opportunities and positioning the company for long-term success.

Future Outlook

Looking ahead, Freedom Holding Corp. remains committed to its growth strategy, with plans to further expand its global footprint and diversify its service offerings. The company's recent foray into the telecommunications and media sectors in Kazakhstan, through the establishment of Freedom Telecom and Freedom Media, underscores its ambition to create a comprehensive digital fintech ecosystem.

Business Segments

Freedom Holding Corp. operates through four main segments: Brokerage, Banking, Insurance, and Other.

The Brokerage segment, as of September 30, 2024, had 42 offices providing brokerage and financial services across various countries, including Kazakhstan, Cyprus, Armenia, the United States, Uzbekistan, and Kyrgyzstan. The segment offers a comprehensive range of securities brokerage services and investment banking solutions. It operates through various subsidiaries, including Freedom KZ and Freedom Global in Kazakhstan, Freedom UZ in Uzbekistan, Freedom EU overseeing European operations, and PrimeEx, a registered agency-only execution broker-dealer on the floor of the New York Stock Exchange.

The Banking segment is primarily represented by Freedom Bank KZ, a pioneer in digital retail and commercial banking services in Kazakhstan. The bank offers a wide array of financial products, including deposit accounts, debit and credit cards, digital mortgages, and business loans. As of September 30, 2024, Freedom Bank KZ's assets increased by 1% and its deposit portfolio increased by 12% compared to March 31, 2024.

The Insurance segment consists of two companies in Kazakhstan: Freedom Life, providing life and health insurance products, and Freedom Insurance, offering general insurance products. Both companies have shown significant growth in active contracts and total assets.

The Other segment includes various services such as payment processing, entertainment ticketing sales, online air and railway ticket purchase aggregation, and e-commerce services. The company has also recently established subsidiaries in Kazakhstan to operate telecommunications and media businesses, which are currently in the developmental stage.

Geographic Presence

Freedom Holding Corp. has a significant presence in Kazakhstan, which serves as its main market. The company has also expanded its operations to Cyprus, the United States, the United Kingdom, Armenia, the United Arab Emirates, Uzbekistan, Kyrgyzstan, Tajikistan, Azerbaijan, and Turkey. Additionally, it has a presence in several European countries, including Austria, Belgium, Bulgaria, France, Germany, Greece, Italy, Lithuania, The Netherlands, Poland, and Spain.

Industry Trends

The financial services industry in the regions where Freedom Holding Corp. operates has experienced robust growth, with a compound annual growth rate (CAGR) of approximately 15-20% over the past three years. This growth has been primarily driven by increasing retail investor participation and a growing demand for digital financial services, aligning well with the company's strategic focus on technological innovation and digital transformation.

Conclusion

In conclusion, Freedom Holding Corp. has established itself as a formidable player in the global financial services industry. With its robust financial performance, innovative technological capabilities, and diversified business model, the company is well-positioned to capitalize on the evolving landscape and deliver sustainable value to its shareholders. As the company navigates the dynamic and often challenging global environment, its resilience and adaptability will be key to its continued success. However, the negative cash flow figures and high debt-to-equity ratio suggest that the company may need to focus on improving its cash management and operational efficiency to ensure long-term financial stability.