Freedom Holding Corp. — FY2024 Form 10-K Summary
Reporting period: Fiscal year ended March 31, 2024; comparisons are with the year ended March 31, 2023 unless noted. Although the request metadata says “2023 Q4,” this filing is an annual report for FY2024, and the supplied text does not provide standalone fourth-quarter results. Amounts below are U.S. dollars unless stated otherwise.
Business context and reporting period
Freedom is a Kazakhstan-centered financial services holding company operating brokerage, banking, insurance, payment-processing, ticketing and e-commerce businesses, with telecommunications and media ventures in development. It reported 530,000 retail brokerage accounts, 6,197 employees and 161 offices at year-end. The company divested its Russian subsidiaries in February 2023 and reorganized reporting into Brokerage, Banking, Insurance and Other segments; comparative segment data was recast.
Key financial metrics
| Metric | FY2024 | FY2023 |
|---|---|---|
| Revenue, net | $1,635.1 million | $795.7 million |
| Total expenses | $1,199.7 million | $559.8 million |
| Income before tax | $435.4 million | $235.9 million |
| Net income | $375.0 million | $205.6 million |
| Diluted earnings per share | $6.33 | $3.45 |
| Net interest income | $327.1 million | $85.7 million |
| Net cash used in operating activities | $1,064.4 million | $951.7 million |
| Net cash used in investing activities | $638.2 million | $1,463.2 million |
| Net cash from financing activities | $1,674.6 million | $2,133.4 million |
Net income was approximately 22.9% of revenue; income before tax was approximately 26.6% of revenue. These are simple ratios, not company-reported margin measures. Interest income rose 181% to $828.2 million, while interest expense rose 140% to $501.1 million. Net trading gains were $133.9 million, including $95.7 million of unrealized gains, mainly from Kazakhstan sovereign bonds. Derivatives generated a $103.8 million loss, principally from currency swaps. The effective tax rate was 13.9%, versus 18.1%.
Total assets grew 63% to $8.30 billion; total liabilities were $7.13 billion and shareholders’ equity was $1.17 billion. Cash and cash equivalents were $545.1 million, while restricted cash was $462.6 million. The company reported $3.14 billion of net liquid assets, defined as cash, trading securities and margin/brokerage receivables less repo obligations. Trading securities totaled $3.69 billion, including $2.76 billion pledged under repurchase agreements. Issued debt securities were $267.3 million; repo obligations were $2.76 billion. Customer liabilities, including deposits, were $2.27 billion.
Operating cash outflow reflected growth in trading securities and margin lending/brokerage receivables, partly offset by increased margin-lending and trade payables. FY2024 financing included $1.19 billion of repo proceeds and $206.3 million of net debt-security issuance. The filing reports no common-stock cash dividend in FY2024 and says dividends are not expected in the foreseeable future.
Material changes versus the prior comparable period
- Revenue more than doubled, up 105%, and net income increased 82%. Higher trading-security interest, larger customer loan and margin-loan balances, brokerage activity and insurance growth were key contributors.
- Revenue mix shifted toward interest income (51% of revenue versus 37% in FY2023); fee and commission income fell to 27% of revenue from 41%.
- Bank loans issued increased to $1.38 billion from $826.3 million; margin-lending, brokerage and other receivables rose to $1.66 billion from $376.3 million. The filing separately cites margin-lending receivables of approximately $1.64 billion.
- Repo obligations rose to $2.76 billion from $1.52 billion, and customer liabilities increased to $2.27 billion from $1.93 billion. Interest expense growth partly reflected greater repo financing and deposit growth.
- Banking revenue increased 151% to $614.7 million; Brokerage revenue rose 60% to $617.0 million; Insurance revenue doubled to $341.0 million. Other revenue was $62.5 million, but the segment recorded an $82.7 million pretax loss.
- The company adopted CECL on April 1, 2023, recording a $22.8 million after-tax reduction to opening retained earnings. FY2024 allowance for expected credit losses was $21.2 million.
Outlook, risks, contingencies and unusual items
Management provided no consolidated earnings guidance. It expects the new telecommunications business to incur losses in its initial years; its strategy and budget are being reassessed, and the modeled plan anticipates a significant positive contribution beginning in 2028. Freedom Media has estimated capital expenditures of about $54 million over five years. The filing contains inconsistent media profitability timelines: one passage forecasts profitability from calendar 2026, while another forecasts losses through 2026 and profitability from 2027. Investors should confirm management’s current plan.
Material risks include dependence on Kazakhstan (approximately 89% of FY2024 revenue and 81% of year-end assets), volatile markets and interest rates, currency exposure, credit and margin-lending risk, leveraged securities financing, and reliance on a concentrated proprietary portfolio. The Ministry of Finance of Kazakhstan and Kazakhstan Sustainability Fund securities totaled approximately $2.39 billion and $669.8 million, respectively. A 100-basis-point increase in rates was estimated to reduce portfolio fair value by $128.9 million, before any sale-related realization.
Customer and related-party concentration remains important. One non-related Brokerage customer generated $296.3 million of consolidated revenue in FY2024. A market-maker customer at Freedom Global generated $196.7 million in fee and commission income and approximately $100 million in margin-loan interest income. FST Belize, owned by CEO Timur Turlov, accounted for 14% of fee and commission income in FY2024, down from 60% in FY2023; the omnibus brokerage arrangement was terminated as of March 31, 2024. Sanctioned or potentially sanctioned customer balances were approximately 3.4% of total customer liabilities at year-end.
The company cites continuing Russia-Ukraine conflict and sanctions exposure, Ukrainian sanctions against the CEO and former Ukrainian subsidiary, regulatory and AML/sanctions compliance risks, cybersecurity and third-party technology dependencies, and the possibility of higher funding costs. S&P affirmed the holding company’s “B-” rating in October 2023 but revised the outlook to negative. The estate of a former shareholder is pursuing litigation; the company deposited $8.4 million with the court and reported settlement discussions, while denying liability.
The FY2024 financial statements received an unqualified audit opinion. Management and Deloitte reported effective internal control over financial reporting as of March 31, 2024, following remediation of previously reported material weaknesses. The auditor identified related-party revenue, payment-processing revenue and CECL allowance estimates as critical audit matters. The company also disclosed a roughly $3 million loss from a payment-card transaction-processing failure during the 2022-to-2023 calendar-year transition.
Important facts for investors to verify
- Reconcile the filing’s standalone-period information: this is FY2024 annual reporting, not a standalone 2023 Q4 report.
- Assess sustainability of interest and trading income, including unrealized Kazakhstan bond gains, currency-swap losses and the sensitivity of results to rates and currency movements.
- Review credit quality, CECL assumptions, margin-loan collateral and concentration, including the single-counterparty collateral exposure disclosed in the notes.
- Track repo funding, collateral encumbrance, deposit stability, debt servicing and the availability of cash across regulated subsidiaries; reported group liquidity may not be freely transferable.
- Confirm the current market-maker customer economics and the post-termination impact of the FST Belize arrangement, including related-party governance safeguards.
- Obtain updated telecom and media budgets, committed capital spending and a reconciled media profitability forecast; the filing’s media timelines conflict.
- Monitor sanctions and regulatory developments, the Ukrainian sanctions matter, the shareholder-estate litigation and ongoing internal-control coverage for acquired companies.