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Freedom Holding Corp. Reports Third Quarter Fiscal Year 2025 Financial Results

1. FRHC reported $655 million in revenue, a 56.5% increase year-over-year. 2. Net income decreased to $78 million compared to $96 million last year. 3. Customer base grew 55% to 3.2 million, signaling strong demand for services. 4. Operating expenses increased significantly, especially in advertising and insurance claims. 5. AI and digital investments are expected to positively influence future growth.

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FAQ

Why Bullish?

Strong revenue growth and increased customer base indicate a positive outlook. However, rising expenses must be managed effectively.

How important is it?

The article highlights financial performance and growth strategies that directly affect FRHC's price dynamics.

Why Long Term?

Growth in customer base and innovative products support sustained long-term performance, contrasting with short-term expense challenges.

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NEW YORK--(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 financial results for their third quarter and first nine months of fiscal 2025. Highlights include the following: $655 million in revenue for the quarter Net income of $1.29 earnings per share, diluted, and $1.32 earnings per share, basic Total expenses of $557 million $9.1 billion in total assets 55% increase in overall customer base to 3.2 million $225 million in interest income, $178 million in insurance underwriting income, $143 million in fee and commission income, $90 million in net gain on trading securities. Third Quarter Financial Highlights: The Company recognized revenue of approximately $655 million for the third quarter of fiscal 2025, compared to $419 million in the third quarter of fiscal 2024, a 56.5% increase. The Company's total expense was approximately $557 million in the third quarter of fiscal 2025 as compared to $307 million for the same period last year, an increase of approximately 81%. Net income was approximately $78 million for the third quarter of fiscal 2025 compared to $96 million for the similar period in the previous fiscal year, providing for basic and diluted earnings per share of $1.32 and $1.29, respectively. This compares to $1.65 and $1.63 per share, respectively, for the same period last year. Weighted average common shares outstanding used to compute diluted earnings per share for the three-month periods ended December 31, 2024, and 2023 were 60.5 million and 59.3 million, respectively. 9 Months Year to Date Financial Highlights: For the nine months ending December 31, 2024, the Company's revenue totaled approximately $1.7 billion compared to approximately $1.2 billion for the prior year period, an increase of 44%. The Company's operating expense was $1.4 billion for the period as compared to $840 million in the prior year period, an increase of 69%. Net income was approximately $227 million for the first nine months of fiscal 2025, compared to $280 million for the same period in fiscal 2024, providing for basic and diluted earnings per share of $3.83 and $3.76, respectively. This compares to $4.79 and $4.73 per share, respectively, for the same period of the last fiscal year. Weighted average common shares outstanding used to compute diluted earnings per share for the nine-month periods ended December 31, 2024, and 2023 were 60.4 million and 59.3 million, respectively. Balance Sheet Highlights: Total assets were $9.1 billion on December 31, 2024, as compared to $8.3 billion on March 31, 2024, fiscal year-end. Net working capital at the end of the third fiscal quarter was $890 million, up from $675 million on March 31, 2024. "Our ongoing investments in digital infrastructure, AI, and an offering of increasingly diversified fintech based services continues to bear fruit… ” “I am pleased to report that Freedom Holding Corp. delivered another record quarter on several fronts,” stated Timur Turlov, the Company's founder and chief executive officer. “Our ongoing investments in digital infrastructure, AI, and an offering of increasingly diversified fintech based services continues to bear fruit as evidenced by the extensive growth of our customer base, particularly in our banking and insurance segments which grew by 56% and 82% respectively, as compared to our 2024 fiscal year end.” Turlov continued, “From a consumer banking perspective, one of the most innovative products we've developed is our loyalty cashback program, which, among other things, offers clients the opportunity for cash back in the form of a unique currency linked to the value of Freedom Holding Corp. shares. Our cash back program is one of the most lucrative on the market and it allows our customers to be part of our great company. This approach is unique in our region’s financial market and has resonated well with our growing customer base.” Turlov commented further, “We’ve been actively developing our Freedom digital ecosystem with Freedom Bank at its core, disrupting the regional banking and online retail services sectors with the delivery of innovative financial services and lifestyle products for our clients. The Bank now serves over 1.4 million customers who form part of the 522,486 individuals who use the Freedom SuperApp, where many of our breakthrough products are available. The SuperApp not only provides access to the best products and services available in the Freedom ecosystem, but also allows them to shop, compare, save money, and earn cash back.” “We expect that our continued development and deployment of new AI based analytics will have a positive impact on insurance risk assessments…” “Commensurate with our record revenues, we experienced a significant increase in our operating expenses during the quarter, which included a near doubling of our advertising expenses and a similar increase in our Fee and commission expenses, which were in line with our expectations. We also saw a substantial increase in our Insurance claims incurred, net of reinsurance, which came in at $105 million. This was in line with our 125% increase in underwriting income and the growth of our customer base in this segment to nearly 1 million customers. We expect that our continued development and deployment of new AI based analytics will have a positive impact on insurance risk assessments and related expenses going forward,” the CEO added. “During the quarter Freedom Insurance set a record of 1,399 online policies sold in a single day with more and more customers choosing our insurance products over our competitors'. We believe that this results from our products being 100% digital, diverse, and extremely convenient in terms of the payout of benefits. This was further evidenced by Freedom Insurance ranking in the top 5 for general insurance, and our Life division is in the top 3 for life insurance,” noted the CEO. Additional third quarter fiscal 2025 highlights: Insurance underwriting income for the quarter was $177.5 million, an increase of $98.5 million or 125%, compared to the three months ended December 31, 2023 and there was a net gain on trading securities of $89.6 million during the quarter as compared to a net loss on trading securities of $5.1 million for the three months ended December 31, 2023. Fee and commission income for the three months ended December 31, 2024 was $143.4 million, an increase of $23.3 million, or 19%, compared to the three months ended December 31, 2023, and there was a net gain on derivatives for the three months ended December 31, 2024 in the amount of $11.9 million, an increase of $54.5 million, or 128%, compared to the three months ended December 31, 2023. The Company reported approximately 618,000 total retail brokerage customers as of December 31, 2024 as compared to approximately 530,000 as of March 31, 2024. Banking customer count totaled approximately 1,407,000 at the Company’s subsidiary, Freedom Bank KZ, as of December 31, 2024, as compared to approximately 904,000 as of March 31, 2024. About Freedom Holding Corp. Freedom Holding Corp., a Nevada corporation, is a diversified financial services holding company conducting retail securities brokerage, investment research, investment counseling, securities trading, investment banking and underwriting services, mortgages, insurance, and consumer banking through its subsidiaries, operating under the name Freedom Finance in Europe and Central Asia, and Freedom Capital Markets in the United States. Through its subsidiaries, Freedom Holding Corp. employs more than 8,200 people and is a professional participant in the Kazakhstan Stock Exchange, the Astana International Exchange, the Republican Stock Exchange of Tashkent, and the Uzbek Republican Currency Exchange and is a member of the New York Stock Exchange and the Nasdaq Stock Exchange. 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. The Company has its main market of operations in Kazakhstan and has operations through its subsidiaries in 22 countries. 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 (the "Company") potential for future growth and success, and the ongoing development and deployment of technology, services, and products that would continue to sustain future growth or improve related expenses. 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. Financial Tables to Follow FREEDOM HOLDING CORP.   CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)   December 31, 2024 March 31, 2024 ASSETS Cash and cash equivalents (including $50 and $203 from related parties) $ 577,940 $ 545,084 Restricted cash (including $3,198 and $— with related parties) 742,153 462,637 Trading securities (including $1,128 and $1,326 with related parties) 3,415,517 3,688,620 Available-for-sale securities, at fair value 418,614 216,621 Margin lending, brokerage and other receivables, net (including $22,391 and $22,039 due from related parties) 2,037,673 1,660,275 Loans issued (including $139,514 and $147,440 to related parties) 1,454,259 1,381,715 Fixed assets, net 159,384 83,002 Intangible assets, net 44,488 47,668 Goodwill 48,217 52,648 Right-of-use asset 39,242 36,324 Insurance contract assets 26,518 24,922 Other assets, net (including $16,294 and $5,257 with related parties) 171,040 102,414 TOTAL ASSETS $ 9,135,045 $ 8,301,930 LIABILITIES AND SHAREHOLDERS’ EQUITY Securities repurchase agreement obligations $ 2,199,703 $ 2,756,596 Customer liabilities (including $51,017 and $44,127 to related parties) 3,783,291 2,273,830 Margin lending and trade payables 319,043 867,880 Liabilities from insurance activity 407,877 297,180 Current income tax liability 48,276 32,996 Debt securities issued 468,835 267,251 Lease liability 40,401 35,794 Liability arising from continuing involvement 472,867 521,885 Other liabilities (including $157 and $9,854 to related parties) 132,007 81,560 TOTAL LIABILITIES $ 7,872,300 $ 7,134,972 Commitments and Contingent Liabilities (Note 23) — — 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; 60,619,217 shares issued and outstanding as of December 31, 2024, and 60,321,813 shares issued and outstanding as of March 31, 2024, respectively 61 60 Additional paid in capital 222,968 183,788 Retained earnings 1,226,079 998,740 Accumulated other comprehensive loss (189,216 ) (18,938 ) TOTAL FRHC SHAREHOLDERS’ EQUITY $ 1,259,892 $ 1,163,650 Non-controlling interest 2,853 3,308 TOTAL SHAREHOLDERS’ EQUITY $ 1,262,745 $ 1,166,958 TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY $ 9,135,045 $ 8,301,930 FREEDOM HOLDING CORP.   CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND STATEMENTS OF OTHER COMPREHENSIVE INCOME (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)     Three Months Ended December 31, Nine Months Ended December 31, 2024 2023 2024 2023 Revenue: Fee and commission income (including for the three months ended $556 and $30,112, for the nine months ended $2,259 and $66,029 from related parties) $ 143,436 $ 120,159 $ 379,976 $ 330,565 Net gain/(loss) on trading securities 89,564 (5,089 ) 105,779 77,498 Interest income (including for the three months ended $380 and $7,566, for the nine months ended $1,023 and $22,650 from related parties) 224,688 226,445 661,016 588,857 Insurance underwriting income 177,472 79,017 467,224 181,882 Net gain on foreign exchange operations 3,945 38,825 18,513 54,430 Net gain/(loss) on derivatives 11,889 (42,568 ) 30,691 (71,795 ) Other income 4,196 1,845 23,606 8,988 TOTAL REVENUE, NET $ 655,190 $ 418,634 $ 1,686,805 $ 1,170,425 Expense: Fee and commission expense $ 93,927 $ 42,818 $ 264,911 $ 103,116 Interest expense 131,136 131,223 401,519 365,650 Insurance claims incurred, net of reinsurance 104,511 40,989 218,504 96,491 Payroll and bonuses 77,395 45,083 201,129 116,711 Professional services 10,955 6,217 26,468 24,793 Stock compensation expense 13,417 1,039 36,088 3,303 Advertising expense 21,472 11,066 58,722 27,805 General and administrative expense (including for the three months ended $7,892 and $1,502, for the nine months ended $16,864 and $9,063 from related parties) 73,437 32,106 171,782 86,211 Provision for/(recovery of) allowance for expected credit losses 30,612 (3,526 ) 39,269 15,462 TOTAL EXPENSE $ 556,862 $ 307,015 $ 1,418,392 $ 839,542 INCOME BEFORE INCOME TAX 98,328 111,619 268,413 330,883 Income tax expense (20,191 ) (15,544 ) (41,529 ) (51,408 ) NET INCOME $ 78,137 $ 96,075 $ 226,884 $ 279,475 Less: Net loss attributable to non-controlling interest in subsidiary (144 ) (293 ) (455 ) (842 ) NET INCOME ATTRIBUTABLE TO COMMON $ 78,281 $ 96,368 $ 227,339 $ 280,317 OTHER COMPREHENSIVE INCOME Change in unrealized gain on investments available-for-sale, net of tax effect 7,993 1,486 15,673 5,893 Reclassification adjustment for net realized (gain)/loss on available-for-sale investments disposed of in the period, net of tax effect 872 (1,881 ) 1,039 (3,145 ) Foreign currency translation adjustments (101,212 ) 28,100 (186,990 ) (3,593 ) OTHER COMPREHENSIVE (LOSS)/INCOME (92,347 ) 27,705 (170,278 ) (845 ) COMPREHENSIVE (LOSS)/INCOME BEFORE NON-CONTROLLING INTERESTS $ (14,210 ) $ 123,780 $ 56,606 $ 278,630 Less: Comprehensive loss attributable to non-controlling interest in subsidiary (144 ) (293 ) (455 ) (842 ) COMPREHENSIVE (LOSS)/INCOME ATTRIBUTABLE TO COMMON SHAREHOLDERS $ (14,066 ) $ 124,073 $ 57,061 $ 279,472 EARNINGS PER COMMON SHARE (In U.S. dollars): Earnings per common share - basic 1.32 1.65 3.83 4.79 Earnings per common share - diluted 1.29 1.63 3.76 4.73 Weighted average number of shares (basic) 59,372,323 58,578,691 59,331,443 58,557,577 Weighted average number of shares (diluted) 60,548,794 59,289,256 60,422,124 59,287,086

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