Freedom Holding Corp. (FRHC)·Q3 2024 Earnings Summary

Executive Summary

• Revenue of $418.6M rose 96% year over year; diluted EPS was $1.63, and net income was $96.1M. Sequentially, revenue declined versus Q2’s $435.6M while pre-tax income also fell to $111.6M from $134.7M .
• Interest income remained the primary driver at $226.4M (+182% YoY), with insurance underwriting income surging to $79.0M (+177% YoY). Trading losses of ~$5.1M were primarily tied to Kazakhstan Development Fund bonds, and derivatives losses were $42.6M .
• Operating expenses rose to $307.0M (+88-89% YoY), reflecting strategic expansion and higher financing costs; interest expense increased to $131.2M amid larger repo financing and client deposit costs .
• Geographic mix skews to Central Asia, which generated ~$361M (86% of quarterly revenue); Europe (excluding Eastern Europe) delivered $39.5M; management signaled ongoing branch expansion in Italy, Netherlands, Austria, and Bulgaria .
• Management reiterated a “record year” narrative and digital ecosystem cross-sell strategy; no formal guidance was provided in the press release or 10-Q. Wall Street consensus estimates from S&P Global were unavailable for comparison due to access limitations .

What Went Well and What Went Wrong

What Went Well

• Interest income strength: $226.4M, up 182% YoY, driven by portfolio expansion, higher bond mix, margin loans, and retail banking loans .
• Insurance underwriting momentum: $79.0M (+177% YoY) with broadening product and market traction .
• Geographic execution: Central Asia contributed ~$361M (86% of revenue) with 137% YoY growth; management emphasized a growing digital fintech ecosystem and cross-selling capabilities. Quote: “Our aim of building out a digital fintech ecosystem… continues to bear fruit, particularly in our Central Asian markets” — CEO Timur Turlov .

What Went Wrong

• Trading headwinds: Net loss on trading securities of ~$5.1M (vs. +$25.5M YoY) largely tied to Kazakhstan Development Fund bond declines .
• Derivatives losses: Net loss on derivatives of $42.6M added to non-interest income volatility .
• Higher funding costs: Interest expense rose to $131.2M amid increased repo financing and deposit costs; overall operating expenses climbed to $307.0M (+88-89% YoY). Quote: “Our operating expenses grew in line with our strategic expansion… coincided with increased interest expenses of approximately $131 million” — CEO Timur Turlov .

Financial Results

Core P&L vs prior year and prior quarter

Revenue composition (Q3 FY2024)

Segment/Geographic breakdown (Q3 FY2024)

KPIs

Guidance Changes

Earnings Call Themes & Trends

Note: No Q3 FY2024 earnings call transcript was available in the document set, so themes reflect press release and filings .

Management Commentary

• “Our fiscal year 2024 has been excellent thus far, highlighted by the planned diversification of our revenue streams and the healthy expansion of almost all business lines in each of our regions.” — Timur Turlov, CEO .
• “Our operating expenses grew in line with our strategic expansion plans for this year… [and] coincided with increased interest expenses of approximately $131 million as the amount of short-term financing through repurchase agreements and percentage costs on clients' deposits have grown as well.” — Timur Turlov .
• “Our aim of building out a digital fintech ecosystem… continues to bear fruit, particularly in our Central Asian markets, where our cross-selling capabilities continue to expand.” — Timur Turlov .

Q&A Highlights

• No Q3 FY2024 earnings call transcript was available; Q&A themes and clarifications cannot be assessed from primary sources .

Estimates Context

• S&P Global consensus estimates for Q3 FY2024 EPS and revenue were unavailable due to access limitations; as a result, a beat/miss vs consensus cannot be determined from S&P Global data at this time. Values intended from S&P Global but could not be retrieved due to API limit; investors should rely on reported figures until estimates can be accessed .

Key Takeaways for Investors

• Revenue mix and engine: Interest income at $226.4M is the core driver; sustaining growth hinges on securities portfolio scale, margin lending activity, and retail loan growth .
• Central Asia dominance: 86% of revenue ($361M) originates from Central Asia/Eastern Europe; concentration benefits scale but introduces sovereign/currency exposure and local market sensitivities .
• Non-interest income volatility: Trading losses (~$5.1M) and derivatives losses ($42.6M) underscore mark-to-market and instrument-specific risk (e.g., Kazakhstan Development Fund bonds) .
• Funding cost trajectory: Interest expense of $131.2M and repo obligations of $2.89B reflect growth and funding intensity; margin pressure is possible if funding costs outpace asset yields .
• Insurance underwriting is becoming material: $79.0M this quarter (+177% YoY) supports diversification and may reduce earnings volatility over time .
• Sequential normalization: Revenue and pre-tax income softened vs Q2, suggesting near-term volatility; monitor trading/derivative impacts and funding costs for quarter-to-quarter earnings durability .
• Strategic expansion continues in Europe (new branches), supporting medium-term distribution and cross-sell; execution in new markets will be key to sustaining growth without materially diluting margins .

Appendix: Additional details supporting analysis

• Total revenue: $418.6M vs $214.0M YoY; net income: $96.1M vs $62.4M YoY; diluted EPS: $1.63 vs $1.05 YoY .
• Sequential: Q2 revenue $435.6M; pre-tax $134.7M; net income $115.5M; diluted EPS $1.95 .
• Composition drivers and losses: Interest income $226.4M; insurance underwriting $79.0M; net trading loss ~$5.1M; derivative loss ~$42.6M .
• Repo obligations and collateral: $2.89B repo liabilities; collateral pledged $2.90B; KASE execution; weighted average maturity ~11 days .
• Brokerage customers: ~458k; ~56% with positive balances .