Business Context and Reporting Period
Company: Freedom Holding Corp. (FRHC)
Filing Type: Form 10-K (Annual Report)
Reporting Period: Fiscal year ended March 31, 2026
Business Overview: FRHC is a holding company operating a diversified financial services ecosystem across Central Asia, Europe, and North America. Its operations are organized into four segments: Brokerage, Banking, Insurance, and Other (including telecommunications, media, and e-commerce). The company's primary market is Kazakhstan, where it operates a digital fintech ecosystem anchored by the Freedom SuperApp. As of March 31, 2026, the company employed 11,846 people across 230 offices.
Key Financial Metrics
| Metric | Fiscal 2026 | Fiscal 2025 | Change |
|---|---|---|---|
| Total Revenue, Net | $2,191.3 million | $2,004.2 million | +9.3% |
| Net Income | $153.3 million | $76.2 million | +101.2% |
| Total Assets | $13.2 billion | $9.9 billion | +33.3% |
| Total Liabilities | $11.7 billion | $8.7 billion | +34.5% |
| Net Liquid Assets | $6.97 billion | $5.01 billion | +39.1% |
| Operating Cash Flow | $185.2 million | $1,681.1 million | -89.0% |
| Effective Tax Rate | 32.1% | 27.2% | +4.9 pts |
Segment Performance (Revenue):
- Brokerage: $831.5 million (+16%)
- Banking: $689.2 million (+36%)
- Insurance: $497.8 million (-22%)
- Other: $172.8 million (+20%)
Material Changes vs. Prior Period
- Revenue Growth: Driven by a 375% increase in net gain on trading securities (due to sales of Kazakhstani corporate debt) and a 143% increase in sales of goods and services (telecom expansion). This offset a 29% decline in net insurance revenue caused by regulatory caps on agent commissions.
- Profitability Surge: Net income doubled primarily due to higher trading gains and improved net income before tax ($226.0 million vs. $104.6 million), despite a higher effective tax rate driven by new Kazakhstani tax legislation.
- Balance Sheet Expansion: Total assets grew 33% to $13.2 billion, fueled by a 29% increase in the loan portfolio ($2.05 billion) and a 19% increase in investment securities ($3.34 billion).
- Cash Flow Volatility: Operating cash flow dropped significantly to $185.2 million from $1.68 billion, largely due to changes in operating assets and liabilities, specifically a decrease in margin lending and trading securities balances.
- Customer Base: Retail brokerage accounts grew to 858,000 (+26%), and banking customers doubled to 5.03 million. Freedom SuperApp monthly active users reached 2.59 million (+154% YoY).
Guidance, Outlook, Risks, and Unusual Items
Strategic Outlook & Guidance:
- Expansion: Management is pursuing aggressive expansion into telecommunications and media in Kazakhstan and acquiring Turkish Bank A.S. (subject to regulatory approval).
- AI Data Center: A non-binding MOU was signed to develop a large-scale AI data center in Kazakhstan with an estimated initial investment of $2 billion. The project is subject to feasibility analysis and financing.
- Loss Expectations: The company expects its new telecommunications and media businesses to incur losses for the next several years before becoming profitable.
Material Risks & Contingencies:
- SEC Investigation: The Company and CEO Timur Turlov received a Wells Notice from the SEC regarding an investigation into settlement practices, internalized trades, and accounting practices. The Company cannot estimate the potential loss or outcome.
- Geopolitical Exposure: Significant exposure to Kazakhstan's economy and regional instability (Russia-Ukraine conflict, Iran war). Approximately 84% of revenue and 63% of assets are attributable to Kazakhstan operations.
- Customer Concentration: A single institutional market maker customer accounted for 71% of fee and commission income in Fiscal 2026.
- Related Party Transactions: Significant transactions exist with entities controlled by the CEO, including loan purchases and sponsorship agreements.
Investor Verification Checklist
- SEC Wells Notice Outcome: Monitor for any civil enforcement actions, settlements, or penalties resulting from the SEC investigation into internalized trades and accounting practices.
- Customer Concentration Risk: Verify the stability of the relationship with the single institutional market maker responsible for 71% of fee income.
- AI Data Center Feasibility: Assess the progress of the $2 billion AI data center project, specifically regarding financing commitments and regulatory approvals in Kazakhstan.
- Insurance Segment Recovery: Evaluate the impact of regulatory caps on insurance agent commissions on future revenue growth in the Insurance segment.
- Geopolitical Stability: Monitor the economic and political stability of Kazakhstan and the impact of regional conflicts on the company's primary revenue source.
- Related Party Dealings: Review the terms and arm's-length nature of ongoing transactions with entities controlled by CEO Timur Turlov.