Freedom (FRHC) - 2025 Q4 - Annual Report

Customer Growth and Segments - As of March 31, 2025, the Banking segment had 2,515,000 customers, a significant increase from 904,000 customers as of March 31, 2024, representing a growth of approximately 177%[37] - As of March 31, 2025, the Brokerage segment had 683,000 total customer accounts, up from 530,000 accounts as of March 31, 2024, marking a growth of approximately 29%[56] - As of March 31, 2025, Freedom Life had 572,872 customers and 1,038,516 active contracts, while Freedom Insurance had 597,375 customers and 824,838 active contracts[47] - Monthly active users (MAU) reached 1.02 million in March 2025, a 12% year-on-year increase, with daily active users (DAU) averaging 183,000[63] Financial Performance - Freedom Life experienced a 156% increase in gross insurance premiums written for the fiscal year ended March 31, 2025, compared to the previous fiscal year, and recognized a net profit of approximately $15.3 million[47] - Freedom Insurance had a 107% increase in written insurance premiums received for the fiscal year ended March 31, 2025, and also recognized a net profit of approximately $15.3 million[47] - The loan portfolio in the Banking segment increased by 16%, while the deposit portfolio increased by 41% compared to March 31, 2024[39] - The Other segment accounted for $144.0 million, or 7%, of total revenue for the fiscal year ended March 31, 2025, primarily from payment processing services and online ticket sales[57] Digital Ecosystem and Technology - The company operates a digital fintech ecosystem that integrates banking, payments, credit, brokerage, and insurance services through a single interface[58] - The FreedomSuperApp supports multi-currency accounts and integrates with over thirty government and commercial data sources, enhancing user experience[62] - The average time from application to disbursement for digital mortgages is now under 24 hours, significantly improved from several weeks[70] - The company’s proprietary Tradernet software platform is a key technology product, contributing to its service appeal and success[115] Employee and Workforce - As of March 31, 2025, the company employed 8,764 employees, with 8,691 full-time and 73 part-time, across 22 countries[90] - The workforce included 4,212 women and 4,479 men, highlighting a commitment to diversity in multi-ethnic cultures[90] Regulatory and Compliance - The company holds various licenses across jurisdictions, including brokerage licenses in Kazakhstan, Cyprus, the United States, Armenia, and Uzbekistan, as well as banking and insurance licenses[118] - The company’s telecommunications and media subsidiaries hold licenses for local telephone services, internet access, and broadcasting, subject to various regulatory requirements[119] - Freedom KZ and Freedom Global are currently implementing a verification platform across all brokerage companies, banks, and other entities within the group[129] - Freedom Bank KZ utilizes a database integrated with its banking system to check customers against over 715 lists from international and national security agencies[130] Environmental and Social Responsibility - In fiscal year 2025, the company completed an inventory of greenhouse gas emissions for all environmentally material subsidiaries, aligning with sustainability goals[110] - The company established the Freedom Shapagat Corporate Fund in August 2023 to pursue social, charitable, and educational goals through voluntary contributions[105] - The company provided financial support for the Oasis Project, focusing on ecological restoration in the Aral region[111] Risk Management - The company is exposed to interest rate risk, particularly in Kazakhstan, where a 200 basis point increase in interest rates could lead to a decline in the fair market value of the trading portfolio by $87.7 million[552] - A hypothetical 100 basis point decrease in interest rates could result in an increase in the fair market value of the trading portfolio by $50.7 million[553] - The company manages foreign currency exchange risk by holding financial liabilities in the same currency and may use forward, swap, and option contracts to mitigate exposures[555] - Geopolitical risks, including the Russia-Ukraine war, have contributed to increased volatility in global financial markets, impacting the company's operations and liquidity[577] Financial Position and Investments - As of March 31, 2025, the company's exposure to equity investments at fair value was $111.1 million, down from $126.1 million in 2024, indicating a decrease of approximately 11.8%[558] - The company reported a total loss of $90.0 million in 2025 compared to $76.5 million in 2024, reflecting an increase of 17.8%[560] - Trading securities losses amounted to $131.3 million in 2025, significantly lower than the $342.5 million loss in 2024, indicating a reduction of 61.7%[560] - Margin lending receivables from customers reached $3.3 billion, with $2.3 billion attributable to three non-related party customers, indicating significant concentration risk[564]