Freedom Holding FRHC Form 10-Q filing Q3 FY2025

Item 1. Unaudited Condensed Consolidated Financial Statements

FREEDOM HOLDING CORP. CONDENSED CONSOLIDATED BALANCE SHEETS (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)

The accompanying notes are an integral part of these condensed consolidated financial statements

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)

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)

The accompanying notes are an integral part of these condensed consolidated financial statements.

FREEDOM HOLDING CORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)

FREEDOM HOLDING CORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)

FREEDOM HOLDING CORP CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) (All amounts in thousands of United States dollars, unless otherwise stated)

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the Condensed Consolidated Balance Sheets that sum to the total of the same such amounts shown in the Condensed Consolidated Statements of Cash Flows:

The accompanying notes are an integral part of these condensed consolidated financial statements.

FREEDOM HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

The accompanying notes are an integral part of these condensed consolidated financial statements.

FREEDOM HOLDING CORP. CONDENSED CONSOLIDATED STATEMENTS OF SHAREHOLDERS’ EQUITY (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 1 – DESCRIPTION OF BUSINESS

Overview

Freedom Holding Corp. (the "Company" or "FRHC" and, together with its subsidiaries, the "Group") is a corporation organized in the United States under the laws of the State of Nevada that through its operating subsidiaries provides securities brokerage, securities dealing for customers and for its own account, market making activities, investment research, investment counseling, investment banking services, retail and commercial banking, insurance products, payment services information processing services and lifestyle services. The Company also owns several ancillary businesses which complement its core financial services businesses, including telecommunications and media businesses in Kazakhstan that are in a developmental stage. The Company is the holding company of subsidiaries incorporated in Kazakhstan, Cyprus, the United States (USA), the United Kingdom (UK), Armenia, the United Arab Emirates, Uzbekistan, Kyrgyzstan, Tajikistan, Azerbaijan, and Turkey, and the Group also has a presence in Austria, Belgium, Bulgaria, France, Germany, Greece, Italy, Lithuania, The Netherlands, Poland and Spain. The Company's subsidiaries in the United States include a broker-dealer that is registered with the United States Securities and Exchange Commission ("SEC") and the Financial Industry Regulatory Authority ("FINRA"). The Company's common stock is traded on the Nasdaq Capital Market, the Kazakhstan Stock Exchange ("KASE"), and the Astana International Exchange ("AIX").

As of December 31, 2024, the Company owned, directly or indirectly, the following companies:

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Freedom Advertising Ltd Kazakhstan — Advertising

Freedom Shapagat Corporate Fund Kazakhstan — Non-profit

FRHC Fractional SPC LTD Kazakhstan — Issuance of debt securities

Freedom Holding Operations LLP Kazakhstan — Human resources

Freedom Horizons LLP Kazakhstan — Business consulting and services

CLUB T LLP ("CLUB T") Kazakhstan — Restaurant and cafe operations

Freedom Finance Azerbaijan LLC Azerbaijan — Financial educational center

Freedom Finance FZE. UAE — Consulting

Freedom Management Ltd. UAE — Consulting

Freedom Finance Turkey LLC Turkey — Financial consulting

Freedom Finance Technologies Ltd Cyprus — IT development

Freedom Prime UK Limited ("Prime UK") UK — Management consulting

Freedom Structured Products PLC Cyprus — Financial services

FFIN Securities, Inc. USA — Dormant

Freedom U.S. Market LLC USA 2 Management company

LD Micro ("LD Micro") USA — Event platform

Freedom US Technologies LLC USA — Technology services

Total subsidiaries 57

Through its subsidiaries, the Company offers a diverse range of financial services, including banking, brokerage, and insurance, as well as lifestyle services such as online payments, travel, ticketing, e-commerce, and telecommunications and media businesses in Kazakhstan that are in a developmental stage. It operates as a professional participant in the financial markets, holding banking and insurance licenses, as well as licenses to provide various services across multiple stock exchanges, including the Kazakhstan Stock Exchange (KASE), the Astana International Exchange (AIX), the Republican Stock Exchange of Tashkent (UZSE), and the Uzbek Republican Currency Exchange (UZCE). Additionally, it is a member of the New York Stock Exchange (NYSE) and the Nasdaq Stock Exchange (Nasdaq). Freedom EU enhances the Company's offerings by providing clients with operational support and access to investment opportunities in the United States and European securities markets.

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Accounting principles

The Group's accounting policies and accompanying consolidated financial statements conform to accounting principles generally accepted in the United States of America (U.S. GAAP).

Basis of presentation and principles of consolidation

The consolidated financial statements present the consolidated accounts of FRHC and its consolidated subsidiaries. All inter-company balances and transactions have been eliminated from the consolidated financial statements.

These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements, and related notes thereto, included in the Company’s 2024 Annual Report on Form 10-K. Note 2 to the consolidated financial statements in the Company’s 2024 Annual Report on Form 10-K contains a summary of all of the Company’s significant accounting policies, except for the following amendments:

Non-Consolidation of Freedom Securities Trading Inc.

Freedom Securities Trading Inc. (formerly known as FFIN Brokerage Services, Inc.) ("FST Belize") is a company that is outside of the Group which has been solely owned by Mr. Turlov, our CEO and majority shareholder, since July 2014. The Company does not consolidate FST Belize under either of the primary consolidation methods - the variable interest entity (“VIE”) accounting method or the voting interest method ("VOE") because (i) FST Belize is not a VIE due to the fact it has

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

sufficient equity at risk to finance its activities without additional financial support and the control over its significant activities is held by its sole shareholder, Mr. Turlov, and (ii) Mr. Turlov has a controlling interest in FST Belize such that under the VOE model FRHC is not required to consolidate FST Belize. Other than Mr. Turlov, there are no other shareholders of FST Belize or parties with participating rights or the ability to remove Mr. Turlov from his ownership position in or to make all decisions in respect of FST Belize. While prior to the end of the Company's fiscal year ended March 31, 2024 we had an omnibus brokerage relationship with FST Belize, such relationship had been terminated as of March 31, 2024.

Deconsolidation of Freedom Finance Ukraine LLC

As at December 31, 2024, the Company owned a 9% interest in Freedom Finance Ukraine LLC ("Freedom UA"), a Kyiv, Ukraine-based broker-dealer. The remaining 91% interest in Freedom UA is controlled by Askar Tashtitov, the Company's president. The Company entered into a series of contractual arrangements with Freedom UA and Mr. Tashtitov, including a consulting services agreement, an operating agreement and an option agreement. Through March 31, 2023, the Company had consolidated Freedom UA into the financial statements of the Company. On October 19, 2022, Freedom UA was added to the Ukrainian government's sanctioned entities list, resulting in suspension of its brokerage license. Following the uncertainty surrounding the situation in Ukraine and based on the Company's management's belief that the Company does not maintain effective control over Freedom UA, the Company deconsolidated Freedom UA since April 1, 2023 (the date of loss of control).

Concentration of Revenue

Revenue from one customer of the Group’s Brokerage segment represented the following amount of the Group’s consolidated revenues:

Impairment of Goodwill

Goodwill is allocated to reporting units, which are identified as the operating segments or one level below operating segments that generate separate financial information, which is regularly reviewed by management. The assignment of goodwill to reporting units allows for the assessment of potential impairment at the appropriate level within the organization.

The Company has identified its reporting units based on its organizational and operational structure, as well as the level at which internal financial information is reviewed by management to make strategic decisions. Four major reporting units have been established: brokerage, banking, insurance, and other. The management team responsible for each business reviews financial information related to this reporting unit, including revenue, expenses, and market trends.

Goodwill has been allocated to each reporting unit based on its relative fair value at the time of acquisition or significant triggering events. The fair value allocation of goodwill to reporting units is periodically reassessed to ensure alignment with the Group's evolving organizational structure and operational dynamics.

Further details regarding the measurement of goodwill impairment and the results of impairment tests for each reporting unit are provided below.

The Company discloses information about its reporting units, the carrying amounts of goodwill allocated to each reporting unit, and the recognized impairment losses. The allocation of goodwill to reporting units ensures a focused evaluation of each unit's financial performance and facilitates the identification of potential impairment, enhancing the transparency and reliability of the Company's financial reporting.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

As of December 31, 2024 and March 31, 2024, goodwill recorded in the Company's Condensed Consolidated Balance Sheets totaled $48,217 and $52,648, respectively. The Company performs an impairment review at least annually unless indicators of impairment exist in interim periods. The entity compares the fair value of a reporting unit with its carrying amount. The goodwill impairment charge is recognized for the amount by which the reporting unit’s carrying amount exceeds its fair value, limited to the total amount of goodwill allocated to that reporting unit. If the fair value exceeds the carrying amount, no impairment is recorded.

The amount of goodwill at December 31, 2024 decreased compared to March 31, 2024 as a result of foreign currency translation difference. The effect was partially offset by goodwill increase due to the acquisition of a 100% interest in EliteCom LLP by Freedom Telecom Holding, which occurred after March 31, 2024. See Note 22 "Acquisitions of subsidiaries" to the condensed consolidated financial statements included in this quarterly report on Form 10-Q.

The changes in the carrying amount of goodwill for three months ended December 31, 2024 and 2023, were as follows:

Recent accounting pronouncements

In August 2018, the Financial Accounting Standards Board ("FASB") issued Accounting Standards Update ("ASU") 2018-12, Financial Services – Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts, as clarified and amended by (i) ASU 2019-09, Financial Services - Insurance (Topic 944): Effective Date, and (ii) ASU 2020-11, Financial Services - Insurance (Topic 944): Effective Date and Early Application (collectively referred

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

to herein as ASU 2018-12). ASU 2018-12 changed existing recognition, measurement, presentation, and disclosure requirements for long-duration contracts. ASU 2018-12 includes: (1) a requirement to review and, if there is a change, update cash flow assumptions used to measure the liability for future policy benefits (LFPB) at least annually, and to update the discount rate assumption quarterly, (2) a requirement to account for market risk benefits (MRBs) at fair value, (3) simplified amortization for deferred policy acquisition costs (DAC), and (4) enhanced financial statement presentation and disclosures. For the Company, the Update is effective for fiscal years beginning after December 15, 2024, or interim periods after December 15, 2025. The Company will adopt ASU 2018-12 effective April 1, 2025 using the modified retrospective transition method where permitted. ASU 2018-12 will impact the accounting and disclosure requirements for all long-duration contracts issued by the Company. The Company expects the standard to have an immaterial financial impact on its consolidated financial statements and related disclosures.

In August 2023, the Financial Accounting Standards Board issued ASU 2023-05, Business Combinations - Joint Venture Formations (Subtopic 805-60): Recognition and Initial Measurement, which clarifies the business combination accounting for joint venture formations. The amendments in ASU 2023-05 seek to reduce diversity in practice that has resulted from a lack of authoritative guidance regarding the accounting for the formation of joint ventures in separate financial statements. The amendments also seek to clarify the initial measurement of joint venture net assets, including businesses contributed to a joint venture. The guidance is applicable to all entities involved in the formation of a joint venture. The amendments are effective for all joint venture formations with a formation date on or after January 1, 2025. Early adoption and retrospective application of the amendments are permitted. The Company is currently evaluating the impact that ASU 2023-05 will have on its consolidated financial statements and related disclosures.

In October 2023, the FASB issued Accounting Standards Update No. 2023-06 (“ASU 2023-06”), Disclosure Improvements - Codification Amendment in Response to the SEC’s Disclosure Update and Simplification Initiative. ASU 2023-06 modified the disclosure and presentation requirements of a variety of codification topics by aligning them with the SEC’s regulations. The amendments to the various topics should be applied prospectively, and the effective date will be determined for each individual disclosure based on the effective date of the SEC’s removal of the related disclosure. If the SEC has not removed the applicable requirements from Regulation S-X or Regulation S-K by June 30, 2027, then ASU 2023-06 will not become effective. Early adoption is prohibited. While the Company is currently evaluating the effect that implementation of this update will have on its consolidated financial statements, no material impact is anticipated.

In November 2023, the FASB issued Accounting Standards Update 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which enhances reporting requirements under Topic 280. The enhanced disclosure requirements include title and position of the Chief Operating Decision Maker (CODM), significant segment expenses provided to the CODM, extending certain annual disclosures to interim periods, clarifying that single reportable segment entities must apply ASC 280 in its entirety, and permitting more than one measure of segment profit or loss to be reported under certain circumstances. This change is effective for fiscal years beginning after December 15, 2023 and interim periods beginning after December 15, 2024. This change will apply retrospectively to all periods presented. The Company is currently evaluating the impact that ASU No 2023-07 will have on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU No. 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The amendments in ASU No. 2023-08 are intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. The amendments are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements that have not yet been issued (or made available for issuance). If an entity adopts the amendments in an interim period, it must adopt them as of the beginning of the fiscal year that includes that interim period. ASU No. 2023-08 requires a cumulative-effect adjustment to the opening balance of retained earnings (or other appropriate components of equity or net assets) as of the beginning of the annual reporting period in which an entity adopts the amendments. The Company is currently evaluating the impact that ASU No 2023-08 will have on its consolidated financial statements and related disclosures.

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures, which would require additional transparency for income tax disclosures, including the income tax rate reconciliation table and cash taxes paid both in the United States and foreign jurisdictions. This standard is effective for annual periods

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

beginning after December 15, 2024. The Company is currently evaluating the impact that ASU No 2023-09 will have on its consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU 2024-01, Compensation - Stock Compensation (Topic 718), Scope Application of Profits Interest and Similar Awards. This standard provides clarity regarding whether profits interest and similar awards are within the scope of Topic 718 of the Accounting Standards Codification. This standard is effective for fiscal years beginning after December 15, 2024. Early adoption is permitted. The Company is currently evaluating the impact that ASU No 2024-01 will have on its consolidated financial statements and related disclosures.

In March 2024, the FASB issued ASU No. 2024-02, “Codification Improvements - Amendments to Remove References to the Concepts Statements.” ASU 2024-02 removes references to various FASB Concepts Statements within the Codification. The guidance in ASU No. 2024-02 is effective for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years, and can be applied either prospectively to all new transactions recognized on or after the date that the entity first applies the amendments or retrospectively to the beginning of the earliest comparative period presented in which the amendments were first applied. Early adoption is permitted. The Company is currently evaluating the impact that ASU No 2024-02 will have on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No. 2024-03, “Income Statement – Reporting Comprehensive Income – Expense Disaggregation Disclosures” (Subtopic 220-40). The amendments in this Update require disclosure, in the notes to financial statements, of specified information about certain costs and expenses. The amendments in this Update are effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The amendments in this Update should be applied either (1) prospectively to financial statements issued for reporting periods after the effective date of this Update or (2) retrospectively to any or all prior periods presented in the financial statements. The Company is currently evaluating the impact that ASU No 2024-03 will have on its consolidated financial statements and related disclosures.

In November 2024, the FASB issued ASU No. 2024-04, “Debt-Debt with Conversion and Other Options” (Subtopic 470-20). The amendments in this Update clarify the requirements for determining whether certain settlements of convertible debt instruments should be accounted for as an induced conversion. The amendments in this Update are effective for all entities for annual reporting periods beginning after December 15, 2025, and interim reporting periods within those annual reporting periods. Early adoption is permitted for all entities that have adopted the amendments in Update 2020-06. The amendments in this Update permit an entity to apply the new guidance on either a prospective or a retrospective basis. The Company is currently evaluating the impact that ASU No 2024-04 will have on its consolidated financial statements and related disclosures.

NOTE 3 – CASH AND CASH EQUIVALENTS

As of December 31, 2024, and March 31, 2024, cash and cash equivalents consisted of the following:

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

As of December 31, 2024, and March 31, 2024, total cash and cash equivalents included short-term collateralized securities received under reverse repurchase agreements which the Group concludes mainly on the KASE. The KASE, in turn, guarantees payments to the counterparty. The terms of the short-term collateralized securities received under reverse repurchase agreements as of December 31, 2024, and March 31, 2024 are presented below:

The securities received by the Group as collateral under reverse repurchase agreements are liquid trading securities with market quotes and significant trading volume. The fair value of collateral received by the Group under reverse repurchase agreements as of December 31, 2024 and March 31, 2024, was $51,963 and $133,380, respectively.

As of December 31, 2024 and March 31, 2024, securities purchased under reverse repurchase agreements included accrued interest in the amount of $18 and $106, with a weighted average maturity of 6 days and 3 days, respectively. All securities reverse repurchase agreement transactions were executed on the KASE.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 4 – RESTRICTED CASH

As of December 31, 2024, and March 31, 2024, restricted cash consisted of the following:

As of December 31, 2024, and March 31, 2024, part of the Group’s restricted cash was segregated in a special custody account for the exclusive benefit of the relevant brokerage customers.

NOTE 5 – TRADING AND AVAILABLE-FOR-SALE SECURITIES AT FAIR VALUE

As of December 31, 2024, and March 31, 2024, trading and available-for-sale securities consisted of the following:

The following tables present maturity analysis for available-for-sale securities as of December 31, 2024, and March 31, 2024:

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

As of December 31, 2024, the Group held debt securities of two issuers each of which individually exceeded 10% of the Group’s total trading and available-for-sale securities – the Ministry of Finance of the Republic of Kazakhstan (Fitch: BBB credit rating) in the amount of $2,609,589 and the Kazakhstan Sustainability Fund JSC (Fitch: BBB credit rating) in the amount of $544,675. As of March 31, 2024, the Group held debt securities of two issuers each of which individually exceeded 10% of the Group’s total trading securities and available-for-sale securities - the Ministry of Finance of the Republic of Kazakhstan (Fitch: BBB credit rating) in the amount of $2,420,855 and the Kazakhstan Sustainability Fund JSC (Fitch: BBB credit rating) in the amount of $727,440. The debt securities issued by the Ministry of Finance of the Republic of Kazakhstan and the Kazakhstan Sustainability Fund JSC are categorized as non-US sovereign debt and corporate debt, respectively.

As of the December 31, 2024 and March 31, 2024, the Group had $456 and $413 that was recognized as other-than-temporary impairment in accumulated other comprehensive loss.

The fair value of securities is determined using observable market data based on recent trading activity. Where observable market data is unavailable due to a lack of trading activity, the Group utilizes internally developed models to estimate fair value and independent third parties to validate assumptions, when appropriate. Estimating fair value requires significant management judgment, including benchmarking to similar instruments with observable market data and applying appropriate discounts that reflect differences between the securities that the Group is valuing and the selected benchmark. Depending on the type of securities owned by the Group, other valuation methodologies may be required.

Measurement of fair value is classified within a hierarchy based upon the transparency of inputs used in the valuation of an asset or liability. Classification within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement.

The valuation hierarchy contains three levels:

• Level 1 - Valuation inputs are unadjusted quoted market prices for identical assets or liabilities in active markets.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

• Level 2 - Valuation inputs are quoted market prices for identical assets or liabilities in markets that are not active, quoted market prices for similar assets and liabilities in active markets, and other observable inputs directly or indirectly related to the asset or liability being measured.
• Level 3 - Valuation inputs are unobservable and significant to the fair value measurement.

The following tables present securities assets in the Сondensed Сonsolidated Balance Sheets or disclosed in the Notes to the condensed consolidated financial statements at fair value on a recurring basis as of December 31, 2024, and March 31, 2024:

• (Level 2)
• (Level 3)_

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

• (Level 2)
• (Level 3)_

The tables below present the valuation techniques and significant Level 3 inputs used in the valuation as of December 31, 2024, and March 31, 2024. The tables are not intended to be all inclusive, but instead capture the significant unobservable inputs relevant to determination of fair value.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

The following table provides a reconciliation of the beginning and ending balances for investments that use Level 3 inputs for the nine months ended December 31, 2024, and the year ended March 31, 2024:

The table below presents the amortized cost, unrealized gains and losses accumulated in other comprehensive income, and fair value of available-for-sale securities as of December 31, 2024, and March 31, 2024:

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 6 – MARGIN LENDING, BROKERAGE AND OTHER RECEIVABLES, NET

Margin lending, brokerage and other receivables as of December 31, 2024, and March 31, 2024, consisted of:

Margin lending receivables are amounts owed to the Group from customers as a result of borrowings by such customers against the value of qualifying securities, primarily for the purpose of purchasing additional securities. Amounts may fluctuate from date to date as overall client balances change as a result of market levels, client positioning and leverage. Credit exposures arising from margin lending activities are generally mitigated by their short-term nature, the value of collateral held and the Group's right to call for margin when collateral values decline.

Collateral for margin lending receivables includes cash balances in clients' brokerage accounts and securities, adjusted for clients' off-balance sheet short positions. As of December 31, 2024, and March 31, 2024, the fair value of collateral held by the Group under margin loans was $4,478,894 and $2,824,498, respectively.

As of December 31, 2024, and March 31, 2024, the Company had three non-related party customers and one non-related party customer, respectively, whose individual balances exceeded 10% of the total margin lending, brokerage, and other receivables balance, amounted to $1,433,546 and $399,196, respectively. The collateral held from these non-related party customers was valued at $2,018,735 and $460,771 as of December 31, 2024, and March 31, 2024, respectively.

For both individual and institutional brokerage clients, the Group may enter into arrangements for securities financing transactions in respect of financial instruments held by the Group on behalf of the client or may use such financial instruments for the Group's own account or the account of another client. The Group maintains omnibus brokerage accounts for certain institutional brokerage clients, in which transactions of the underlying clients of such institutional clients are combined in a single account with us. As noted above, the Group may use the assets within the omnibus accounts to finance, lend, provide credit or provide debt financing or otherwise use and direct the order or manner of assets for financing of other clients of the Group.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

As of December 31, 2024, and March 31, 2024, using historical and statistical data, the Group had allowances for brokerage receivables in the amounts of $14,357 and $11,990, respectively.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 7 – LOANS ISSUED

Loans issued as of December 31, 2024, consisted of the following:

The Group provides mortgage loans to borrowers on behalf of the JSC Kazakhstan Sustainability Fund (the "Program Operator") related to the state mortgage program "7-20-25" and transfers the rights to claim on the mortgage loans to the Program Operator. The proceeds received from these transfers are presented within funds received under state program for financing of mortgage loans in the Condensed Consolidated Statements of Cash Flows. Under this program, borrowers can receive a mortgage at an interest rate of 7% for 20 years, and the interest payments received by the Group are recognized as interest income in the Company’s Consolidated Statements of Operations and Statements of Other Comprehensive Income. In accordance with the program and trust management agreement for the program, the Group services the transferred loans and remits all repayments of principal it receives plus 4% of the 7% interest received to the Program Operator. The interest paid to the Program Operator is recognized as interest expense in the Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income. The remaining 3% of the 7% interest is retained by Group. Under the program and trust management agreement, the Group is required to repurchase the rights to make claims on the transferred loans when either loan principal repayments or interest payments are overdue 90 days or more. The repurchase of overdue loans is performed at the loans’ nominal value and is presented within repurchase of mortgage loans under the State Program in the Condensed Consolidated Statements of Cash Flows.

Since the Group transfers the rights to make claims on the loans with recourse for loans that are more than 90 days past due, retains part of the interest received on the loans and agrees to service the loans after the sale of the loans to the Program Operator, the Company has determined that the Group retains control over the loans transferred and continues recognizing the loans, which are accounted for as secured borrowings of the Group in accordance with ASC 860, Transfers and Servicing. As the Company continues to recognize the loans as assets, it also recognizes the associated liability equal to the proceeds received from the Program Operator, which is presented separately as liability arising from continuing involvement in the Condensed Consolidated Balance Sheets. This liability accrues 4% interest annually as described above. As of December 31, 2024 and March 31, 2024, the corresponding liability amounted to $472,867 and $521,885, respectively.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

As of December 31, 2024 and March 31, 2024, mortgage loans include loans under the state mortgage program "7-20-25" with an aggregate principal amount of $484,237 and $532,389, respectively, were presented within loans issued in the Condensed Consolidated Balance Sheets.

The Group has an agreement with FFIN Credit, a company established and controlled by FRHC's controlling shareholder, chairman and chief executive officer, Mr. Timur Turlov, to purchase uncollateralized retail loans from FFIN Credit. FFIN Credit is a non-bank credit institution that issues loans in Kazakhstan under simplified lending procedures. FFIN Credit was created as a pilot project to test and improve the scoring models used for qualifying and issuing loans. The principal operation of FFIN Credit is to provide loans to customers online using biometric identification and its proprietary scoring process. After completion of the pilot project, it is anticipated that FFIN Credit will be sold by Mr. Turlov to the Company. Freedom Bank KZ has legal ownership over the loans purchased from FFIN Credit. However, in accordance with U.S. GAAP, the Group does not recognize those loans, since effective control over the transferred loans are maintained by FFIN Credit. Instead, the Group recognizes the loans receivable from FFIN Credit as right of claim for purchased retail loans on the Consolidated Balance Sheets within loans issued. As of December 31, 2024 and March 31, 2024, right of claims for purchased retail loans amounted to $135,242 and $146,152, respectively.

The total accrued interest for loans issued amounted to $11,874 as of December 31, 2024 and $8,327 as of March 31, 2024.

Loans issued as of March 31, 2024, consisted of the following:

Credit quality indicators

Freedom Bank KZ uses a loan portfolio quality classification system that indicates signs of a significant increase in credit risk and contractual impairment, depending on the analysis of reasonable and supportable information available at the reporting date. The loan portfolio is classified into “not credit impaired”, “with significant increase in credit risk” and “credit impaired” agreements.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Loans “not credit impaired” under the agreement are serviced as usual, there are no primary signs of an increase in credit risk. Agreements classified as “with significant increase in credit risk” represent loans for which there is an increase in the credit risk expected over the life of the agreement compared to the initial risk at the date of recognition of the loan. In practice, the sign of such classification is the presence of overdue debt on principal and interest for a period of more than 30 days or the absolute probability of default threshold (PD) exceeding 20%. Agreements classified as “credit impaired” represent loans for which at the reporting date any of the following conditions is met: (i) the individual borrower has been in default for 90 or more days or the borrowers being legal entities have been in default for 60 or more days, (ii) the borrower for the last 6 months (for individuals) and 12 months (for legal entities) restructured the contract due to the deterioration of the financial condition, (iii) the borrower is recognized as credit impaired, a sign of default or a sign of bankruptcy is present, (iv) the deterioration of the financial performance of the borrower, or (v) the presence of other information indicating the existence of a high credit risk.

The table below presents the Group's loan portfolio by credit quality classification and origination year as of December 31, 2024. Current vintage disclosure is the requirement due to first adoption of ASC 326.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

The table below presents the Group's loan portfolio by credit quality classification as of March 31, 2024.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Aging analysis of past due loans as of December 31, 2024 and March 31, 2024, is as follows:

The activity in the allowance for credit losses for the three months ended December 31, 2024 and 2023 is summarized in the following tables.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 8 – PROVISION FOR INCOME TAXES

The Group is subject to taxation in Kazakhstan, Kyrgyzstan, Cyprus, Uzbekistan, Germany, and the United States.

The tax rates used for deferred tax assets and liabilities as of December 31, 2024, and March 31, 2024, were 21% for the United States, 20% for Kazakhstan and Azerbaijan, 10% for Kyrgyzstan, 15% for Germany, 12.5% for Cyprus, 25% for United Kingdom, 18% for Armenia and 15% for Uzbekistan.

During the nine months ended December 31, 2024, and 2023, the effective tax rate was equal to 15.5% and 15.5%, respectively.

NOTE 9 – SECURITIES REPURCHASE AGREEMENT OBLIGATIONS

As of December 31, 2024, and March 31, 2024, trading securities included collateralized securities subject to repurchase agreements as described in the following table:

The fair value of collateral pledged under repurchase agreements as of December 31, 2024, and March 31, 2024, was $2,202,919 and $2,753,601, respectively.

Securities pledged as collateral by the Group under repurchase agreements are liquid trading securities with market quotes and significant trading volume.

As of December 31, 2024 and March 31, 2024, securities repurchase agreement obligations included accrued interest in the amount of $5,456 and $11,684, with a weighted average maturity of 9 days and 12 days, respectively. All securities repurchase agreements transactions were executed through the KASE.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 10 – CUSTOMER LIABILITIES

The Group recognizes customer liabilities associated with deposit funds of its brokerage and bank customers. As of December 31, 2024, and March 31, 2024, customer liabilities consisted of:

In accordance with Kazakhstan law requirements, commercial banks conclude agreements with JSC Kazakhstan Deposit Insurance Fund ("KDIF"), under which banks are required to pay commissions to KDIF on a periodic basis, the amount of which depends on the term deposits and demand deposits received by banks from their customers. Under the agreement, KDIF insures the term deposits and demand deposits up to $38 for each customer. As at December 31, 2024, and March 31, 2024, respectively, the Group had total amounts in excess of insured bank term deposits of $630,771 and $600,972 for all customers.

NOTE 11 – MARGIN LENDING AND TRADE PAYABLES

As of December 31, 2024, and March 31, 2024, margin lending and trade payables of the Group comprised the following:

The fair value of collateral held by the Group under margin loans as of December 31, 2024, and March 31, 2024 was $1,660,840 and $2,400,361, respectively.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 12 – DEBT SECURITIES ISSUED

As of December 31, 2024, and March 31, 2024, outstanding debt securities issued by the Group included the following:

As of December 31, 2024 the carrying value of the Group’s debt securities issued by Freedom SPC bonds due 2026 were $201,535 and $64,738 for September and October, respectively. The carrying value of Freedom SPC bonds due 2028 was $200,325. The Freedom SPC bonds are denominated in U.S. dollars and were issued under Astana International Financial Centre ("AIFC") law and trade on the AIX. The Company is a guarantor of the Freedom SPC bonds.

The Freedom SPC bonds due 2026 bear interest at an annual rate of 5.5% and mature in October 2026. Interest is paid semi-annually in April and October.

For the first two years of Freedom SPC bonds due 2028, the annual interest rate is 12% and for subsequent years the interest rate will be fixed and set as the sum of Effective Federal Funds Rate (EFFR) as of December 10, 2025 and a margin of 6.5%. Interest is paid on a monthly basis. The bondholders have a right of early redemption after two years following the issue date at nominal value plus accrued interest. After two years following the issue date, the issuer has the option to redeem the bonds in full or in part at nominal value plus accrued interest.

During the quarter ended December 31, 2024, the Company issued additional bonds with the aggregate principal amount of $200,000 with an annual interest rate of 10.5% and maturity date in September 2026. Interest is paid on a quarterly basis.

Debt securities issued are initially recognized at the fair value of the consideration received, less directly attributable transaction costs.

The Group has no financial covenants to comply with under the terms of its debt securities.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 13 – INSURANCE CONTRACTS ASSETS AND LIABILITIES FROM INSURANCE ACTIVITIES

As of December 31, 2024, and March 31, 2024, assets from the Group's insurance activity comprised the following:

As of December 31, 2024, and March 31, 2024, liabilities from the Group's insurance activity comprised the following:

As of December 31, 2024, and March 31, 2024, liabilities from insurance activity increased mainly due to the increase of reserves for claims and claims' adjustment expenses and the increase of unearned premium reserve as a result of the expansion of operations.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 14 – FEE AND COMMISSION INCOME

Fee and commission income is recognized when, or as, the Group satisfies its performance obligations by transferring the promised services to the customers. A service is transferred to a customer when, or as, the customer obtains control of that service. A performance obligation may be satisfied at a point in time or over time. Revenue from a performance obligation satisfied at a point in time is recognized at the point in time that the Group determines the customer obtains control over the promised service. Revenue from a performance obligation satisfied over time is recognized by measuring the Group’s progress in satisfying the performance obligation in a manner that depicts the transfer of the services to the customer. The amount of revenue recognized reflects the consideration the Group expects to receive in exchange for those promised services (i.e., the “transaction price”). In determining the transaction price, the Group considers multiple factors, including the effects of variable consideration, if any.

The Group’s revenues from contracts with customers are recognized when the Group's performance obligations are satisfied at an amount that reflects the consideration expected to be received in exchange for such services. The majority of the Group’s performance obligations are satisfied at a point in time and are typically collected from customers by debiting their brokerage account with the Group.

Brokerage Services

The Group earns commission revenue by executing, settling and clearing transactions with clients primarily in exchange-traded and over-the-counter financial instruments related to corporate equity and debt securities, money market instruments and exchange-traded options and futures contracts. Trade execution and clearing services, when provided together, represent a single performance obligation, as the services are not separately identifiable in the context of the contract. Commission revenue associated with combined trade execution and clearing services, as well as trade execution services on a standalone basis, are recognized at a point in time on trade date when the performance obligation is satisfied.

Banking Services

The Group earns revenue from two primary streams related to commissions from bank services:

• The Group earns banking commissions by executing client orders for money transfer, purchase and sale of foreign currency, and other banking services. A substantial portion of the Group's revenue is derived from commissions from private clients through accounts with transaction-based pricing. Commission revenue is collected and recognized by the Company at a point in time at the execution of the order.
• Interchange — The Group acts as an agent between customers and international payment systems, such as VISA and MasterCard. When using third-party payment platforms or networks, the Group is an agent for the payment processing services to retail customers and, therefore, revenue is recognized on a net basis, as the Group is not primarily responsible for fulfilling the payment processing on third parties' payment platforms/networks and has no discretion in establishing the selling price of the payment processing service to the retail customer on third party payment platforms/networks. Fees from customers using third-party payment platform are earned for processing debit card transactions.

Payment Processing

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

The Group earns revenue from two primary streams related to payment processing:

• Commissions from payment processing services, which include activities such as authorization, clearing, and settlement of electronic payments. The Company recognizes revenue at the time when the payment card transaction is completed. Commission rates are based on the amounts of transactions. Fees are typically billed and paid monthly.
• Provision of IT infrastructure to merchants to facilitate payments. The Company recognizes revenue at the time when the performance obligation is satisfied which is as soon as payments are facilitated. These services are typically provided under a commission rate from amounts of facilitated payments. Fees are typically billed and paid monthly.

Underwriting and Market-Making Services

The Group earns underwriting revenues by providing capital raising solutions for corporate clients through initial public offerings, follow-on offerings, equity-linked offerings, private investments in public entities, and private placements. Underwriting revenues are recognized at a point in time on the relevant placement date, as the client obtains the control and benefit of the capital markets offering at that point. These revenues are generally received within 90 days after the placement date. Transaction-related expenses, primarily consisting of legal, travel and other costs directly associated with the transaction, are included in underwriting revenues. These costs are deferred and recognized in the same period as the related investment banking transaction revenue. However, if the transaction is abandoned and does not close, the accounting treatment for the transaction-related costs may differ. In such cases, the accounting principles typically require the immediate recognition of the transaction-related expenses as an expense in the period in which the decision to abandon the transaction is made. This ensures that the costs associated with the abandoned transaction are recognized and reflected accurately in the financial statements of the entity.

Receivables and Contract Balances

Receivables arise when the Group has an unconditional right to receive payment under a contract with a customer and are derecognized when the payment is received. Margin lending, brokerage and other receivables are disclosed in Note 6 "Margin Lending, Brokerage and Other Receivables, Net" in the notes to condensed consolidated financial statements.

Contract assets arise when the revenue associated with the contract is recognized before the Group’s unconditional right to receive payment under a contract with a customer (i.e., unbilled receivable) and are derecognized when either it becomes a receivable or the cash is received. As of December 31, 2024 and March 31, 2024, the Group's contract asset balances were not material.

Contract liabilities arise when customers remit contractual cash payments in advance of the Group satisfying its performance obligations under the contract and are derecognized when the revenue associated with the contract is recognized either when a milestone is met triggering the contractual right to bill the customer or when the performance obligation is satisfied. As of December 31, 2024 and March 31, 2024, contract liability balances were not material.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

During the three months and the nine months ended December 31, 2024, and December 31, 2023, fee and commission income comprised:

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 15 – NET GAIN ON TRADING SECURITIES

During the three months and the nine months ended December 31, 2024, and December 31, 2023, net gain on trading securities was comprised of:

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 16 - NET INTEREST INCOME/EXPENSE

Net interest income/expense for the three months ended December 31, 2024, and December 31, 2023 included the following:

Net interest income/expense for the nine months ended December 31, 2024, and December 31, 2023 includes:

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 17 - NET GAIN/(LOSS) ON DERIVATIVES

NOTE 18 – RELATED PARTY TRANSACTIONS

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Related party transactions as of December 31, 2024 and March 31, 2024, consisted of the following:

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

During the three and nine months ended December 31, 2023, the Group engaged in various related party transactions, a substantial amount of which were conducted with FST Belize, a Belize company which is wholly owned by the Company’s chief executive officer, chairman and majority shareholder, Mr. Timur Turlov, and is not part of the Group. During such periods, FST Belize had its own brokerage customers, which included individuals and a market-maker institution and conducted business with the Group through a client omnibus account at Freedom EU. The Group terminated these arrangements with FST Belize before the end of fiscal 2024, leading to a decrease in related party transactions during three and nine months ended December 31, 2024 as compared to the corresponding periods in 2023.

As of March 31, 2024, the Group's margin lending receivables from Fresh Start Trading Ltd, amounted to $12,890. Fresh Start Trading Ltd is a Cyprus-based company that was controlled by an individual who served on Freedom EU’s management until November 5, 2024. From November 5, 2024, Fresh Start Trading Ltd. is no longer controlled by a Company's related party. Fresh Start Trading Ltd was mainly involved in foreign currency trading activity. Margin lending receivables from Fresh Start Trading Ltd were mainly denominated in Euros, and they were fully collateralized by cash denominated in U.S. dollars.

During the three and nine months ended December 31, 2024, the Group incurred general and administrative expenses relating to the Kazakhstan Chess Federation in the amount of $3,401 and $9,753, respectively. Kazakhstan Chess Federation is a Kazakhstan-based company in which Mr. Timur Turlov holds a management position. The Group continues to support the development of chess as a sport in Kazakhstan. During the three and nine months ended December 31, 2024, the Group has made financial contributions to the Kazakhstan Chess Federation to support the preparation and holding of championships, tournaments, training camps and other events.

As of December 31, 2024 and March 31, 2024, 18% and 7% respectively, of the Group's total related party customer liabilities were bank deposits from Turlov Family Office Securites LTD held by Freedom Bank KZ. Turlov Family Office Securities LTD is a private securities brokerage company that is wholly owned by Mr. Timur Turlov. As of March 31, 2024, 24% of the Group's total related party customer liabilities were deposits of Fresh Start Trading Ltd held by Freedom EU related to brokerage services provided by our subsidiary Freedom EU to Fresh Start Trading Ltd.

As of December 31, 2024 and March 31, 2024, 58% of the Group's total related party other assets were prepayment on the potential acquisition of A-Telecom as part of our strategy to enter the telecommunications market in Kazakhstan and build a digital fintech ecosystem.

As of December 31, 2024, and March 31, 2024, the Group had loans issued which included uncollateralized bank customer loans purchased from FFIN Credit, a company outside of the Group which is controlled by Timur Turlov.

NOTE 19 – STOCKHOLDERS’ EQUITY

During the three months ended December 31, 2024, the Company awarded stock grants totaling 48,600 shares, 750 of which were vested on the date of the award.

The table below presents Stock Incentive Plan awards granted on the dates indicated.

Stock awards granted on: Units

October 1, 2024 47,850

October 1, 2024 immediate stock awards 750

NOTE 20 – STOCK BASED COMPENSATION

The compensation expense related to restricted and non-restricted stock grants was $13,417 during the three months ended December 31, 2024, and $1,039 during the three months ended December 31, 2023. As of December 31, 2024 there was $39,914 of total unrecognized compensation cost related to non-vested shares of common stock granted. The cost is expected to be recognized over a weighted average period of 3.93 years. The compensation expense related to stock awards, which vested on the date of the award was $72 and $0 during the three months ended December 31, 2024 and December 31, 2023, respectively.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

The Company has determined the fair value of shares awarded during the three months ended December 31, 2024, using the Monte Carlo valuation model based on the following key assumptions:

The table below summarizes the activity for the Company's stock awards during the nine months ended December 31, 2024:

NOTE 21 – LEASES

At December 31, 2024, the Group was party to a number of noncancellable leases, predominantly operating leases of office space, which expire at various dates through 2034. The Group's primary involvement with leases is in the capacity as a lessee where a Group company leases premises to support the Group's business.

The Group determines whether a contract is or contains a lease at inception of the contract and whether that lease meets the classification criteria of a finance or operating lease. Operating lease liabilities and right-of-use (ROU) assets are recognized at the lease commencement date based on the present value of the future minimum lease payments over the lease term. The future lease payments are discounted at a rate that estimates the Company’s collateralized borrowing rate for financing instruments of a similar term and are included in accounts payable and other liabilities. The operating lease ROU asset, included in premises and equipment, also includes any lease prepayments made, plus initial direct costs incurred, less any lease incentives received. The Company recognizes fixed lease costs on a straight-line basis throughout the lease term in the Consolidated Statement of Income. Certain of these leases also have extension or termination options,

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

and the Company assesses the likelihood of exercising such options. If it is reasonably certain that the Group will exercise the options to extend, then we include the impact in the measurement of our ROU assets and lease liabilities.

When readily determinable, the Company uses the rate implicit in the lease to discount lease payments to present value; however, the rate implicit on most of the Group's leases are not readily determinable. Therefore, the Company must discount lease payments based on an estimate of its incremental borrowing rate.

The table below presents the lease related assets and liabilities recorded on the Company's Condensed Consolidated Balance Sheets as of December 31, 2024:

The following table presents as of December 31, 2024, the maturities of the lease liabilities:

Lease commitments for short-term operating leases as of December 31, 2024 and December 31, 2023 was approximately $862 and $576, respectively. The Group's rent expense for office space was $2,365 and $6,858 for the three and nine months ended December 31, 2024 and $725 and $2,344 for the three and nine months ended December 31, 2023, respectively.

The Group has leases that involve variable payments tied to an index, which are considered in the measurement of operating lease ROU assets and operating lease liabilities.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 22 – ACQUISITIONS OF SUBSIDIARIES

Acquisition of SilkNetCom

On September 17, 2024, the Company completed the acquisition of SilkNetCom LLP by purchasing 100% of its participating interest. SilkNetCom LLP specializes in the field of provider services, IT and construction of telecommunications networks in private and public sectors.

The purpose of the acquisition of SilkNetCom LLP was to use the acquired assets and licenses to develop our telecommunications business.

As of September 17, 2024, the date of the acquisition of SilkNetCom LLP, the fair value of the net assets of SilkNetCom LLP was $23,672. The total purchase price was allocated as follows:

Acquisition of EliteCom

On October 17, 2024, the Company completed the acquisition of EliteCom LLP by purchasing 100% of its participating interest. EliteCom LLP provides telecommunications services, including Internet access, telephone services and cable television for individuals (B2C), provision of Internet access services for legal entities (B2B).

The purpose of the acquisition of EliteCom LLP was to use the acquired assets and licenses to develop our telecommunications business.

As of October 17, 2024, the date of the acquisition of EliteCom LLP, the fair value of the net assets of EliteCom LLP was $1,721. The total purchase price was allocated as follows:

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 23 – COMMITMENTS AND CONTINGENT LIABILITIES

Legal, regulatory and governmental matters

The Group is involved in various claims and legal proceedings that arise in the normal course of business. The Company recognizes a liability when a loss is considered probable and the amount can be reasonably estimated. If a material loss contingency is reasonably possible but not probable, the Company does not record a liability but discloses the nature and amount of the claim, as well as an estimate of the potential loss, if such an estimate can be determined. Legal fees are recorded as expenses when incurred. While the Company does not anticipate that the resolution of any current claims or proceedings will significantly impact its financial position, an adverse outcome in some or all of these cases could materially affect the Company's results of operations or cash flows for specific periods. This assessment is based on the Company's current understanding of relevant facts and circumstances, and the Company's perspective on these matters may evolve with future developments.

The Company accounts for potential losses related to litigation in accordance with FASB ASC Topic 450, “Contingencies.” As of December 31, 2024 and March 31, 2024, accruals for potential losses related to legal, regulatory and governmental actions and proceedings were not material.

Off-balance sheet financial instruments

Freedom Bank KZ is a party to certain off-balance sheet financial instruments. These financial instruments include guarantees and unused commitments under existing lines of credit. These commitments expose the Company to varying degrees of credit and market risk which are essentially the same as those involved in extending loans to customers, and are subject to the same credit policies used in underwriting loans. Collateral may be obtained based on Freedom Bank KZ's

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

credit evaluation of the counterparty. The Company's maximum exposure to credit loss is represented by the contractual amount of these commitments.

Unused commitments under lines of credit

Unused commitments under lines of credit include commercial, commercial real estate, home equity and consumer lines of credit to existing customers. These commitments may mature without being fully funded.

Unused commitments under guarantees

Unused commitments under guarantees are conditional commitments issued by Freedom Bank KZ to provide bank guarantees to customers. These commitments may mature without being fully funded.

Bank guarantees

Bank guarantees are conditional commitments issued by Freedom Bank KZ to guarantee the performance of a customer to a third party. These guarantees are primarily issued to support trade transactions or guarantee arrangements. The credit risk involved in issuing guarantees is essentially the same as that involved in extending loan facilities to customers. A significant portion of the issued guarantees are collateralized. Total lending related commitments outstanding as of December 31, 2024, and March 31, 2024, were as follows:

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 24 – SEGMENT REPORTING

The following tables summarize the Company's Statement of Operations by its reportable segments for the periods presented. There are no revenues from transactions between the segments and intercompany balances have been eliminated in disclosures.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

The following tables summarize the Company's total assets and total liabilities by its business segments as of the dates presented. Intercompany balances have been eliminated for separate disclosure.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

FRHC’s chief operating decision maker (CODM) is Chief Executive Officer, Chief Financial Officer and President, which, acting collectively, manages the Company, including allocating resources and measuring performance. Company’s CODM uses both GAAP total revenue and net income in assessing each segment’s performance and determining how to allocate resources among segments.

Brokerage

Companies in the Brokerage segment offer securities brokerage, securities dealing for customers and for the Group's own account, market making activities, investment research, investment counseling, underwriting and market-making services to a global client base of retail investors, corporations, financial institutions, merchants and government and municipal entities. Companies in the Brokerage segment also conduct proprietary securities trading.

The Group's services in this segment include providing clients with access to the world's largest stock exchanges and a gateway to global investment opportunities. Additionally, the Group's offerings in this segment include professional securities analytics, empowering clients with valuable insights and market intelligence to make informed investment decisions. To ensure a seamless experience, the Group provides user-friendly trading applications that offer convenience and flexibility.

Banking

Companies in the Banking segment generate banking service fees and interest income by providing services that include lending, deposit services, payment card services, money transfers, correspondent accounts, supporting both individual and corporate clients with innovative digital financial solutions. To ensure a seamless experience, the Banking segment provides user-friendly banking application that offers convenience and flexibility. Companies in the Banking segment also conduct proprietary securities trading activities.

Insurance

Companies in the Insurance segment offer products including life insurance, obligatory insurance, tourist medical health insurance and auto insurance. These insurance products are designed to offer comprehensive coverage and tailored solutions to protect individuals, property, auto and businesses in the event of unforeseen events or risks. Companies in the Insurance segment also conduct proprietary securities trading activities.

Other

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

Activities of companies in the Other segment include provision of payment processing services, financial educational center services, financial intermediary center services, financial consulting services, administrative management services, telecommunication services information processing services, entertainment ticketing sales, online air and railway ticket purchase aggregation and an online retail trade and e-commerce application. The Other segment also includes transactions conducted by the Company in connection with repurchase agreements.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 25 - STATUTORY CAPITAL REQUIREMENTS

The Company has two insurance subsidiaries operating in Kazakhstan: Freedom Life (a regulated life insurer) and Freedom Insurance (a regulated property and casualty insurance entity). The Law of the Republic of Kazakhstan No. 126-II "On Insurance Activities" (the "Insurance Law") is the main law regulating the insurance sector in Kazakhstan. It establishes a framework for insurance activities, registration and licensing of insurance companies and regulation of insurance activities by the Agency of the Republic of Kazakhstan for Regulation and Development of Financial Market (“ARDFM”).

Freedom Life and Freedom Insurance are required to notify and coordinate with the ARDFM any proposals to declare or pay a dividend. The amount of dividends these subsidiaries are permitted to declare is limited to the relevant subsidiary’s realized retained earnings and dividends can only be paid to the extent they will not cause a breach of the minimum solvency and capital requirements of the relevant subsidiary. As of December 31, 2024 and March 31, 2024, Freedom Life and Freedom Insurance were in compliance with the ARDFM dividend, minimum solvency and minimum capital requirements. Freedom KZ in its capacity of an insurance holding is also limited in declaration and payment of dividends if such payment leads to breach of capital ratios applicable to insurance companies Freedom Life and Freedom Insurance.

There are no significant differences between the statutory accounting practices and statements prepared in accordance with U.S. GAAP for the insurance subsidiaries.

In addition, the Company's subsidiaries operate under various securities brokerage, banking and financial services regulations and must maintain such licenses in order to conduct their operations. As of December 31, 2024 and March 31, 2024, the Company, through its subsidiaries, held: (a) brokerage licenses (i) in Kazakhstan issued by ARDFM and the Astana Financial Services Authority (the "AFSA"), (ii) in Cyprus issued by the Cyprus Securities and Exchange Commission ("CySEC"), (iii) in the United States issued by FINRA, (iv) in Armenia issued by the Central Bank of Armenia, and (v) in Uzbekistan issued by the Ministry of Finance of the Republic of Uzbekistan, (vi) in Kyrgyzstan issued by the Service for Regulation and Supervision of the Financial Market under the Ministry of Economy and Commerce of the Kyrgyz Republic (the "SRFM"); (b) a banking license for foreign currency operations in Kazakhstan issued by the ARDFM; (c) a banking license for corporate and retail banking services in Kazakhstan issued by the ARDFM (including for currency exchange operations); and (d) special registration as a payment service provider in Kazakhstan with the National Bank of the Republic of Kazakhstan, and licenses in Uzbekistan and Kyrgyzstan for payments services from the National Bank of the Kyrgyz Republic and the Central Bank of Uzbekistan, respectively. In addition, following receipt of a principal approval by the Turkey's financial regulatory and supervisory authority granted on January 9, 2025, we are in the process of obtaining a license to provide brokerage services in Turkey.

The table below presents net capital/eligible equity, required minimum capital, excess regulatory capital and retained earnings as of December 31, 2024 for each of the regulated entities that is material for our condensed consolidated financial statements.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

According to the requirements of National Bank of the Republic of Kazakhstan, the regulator of Freedom KZ and Freedom Life, capital is adjusted through subtraction of non-liquid assets. Consequently, it may result that net capital for regulatory purposes may be lower than retained earnings balances. As per capital requirements applicable to Freedom EU regulated by the Cyprus Securities and Exchange Commission and Freedom Global regulated by Astana Financial Services Authority, current year profit is not included within net capital for regulatory purposes, as profits can only be included in net capital after a statutory audit is completed.

The table below presents net capital/eligible equity, required minimum capital, excess regulatory capital and retained earnings as of March 31, 2024 for each of the regulated entities that is material for our condensed consolidated financial statements.

FREEDOM HOLDING CORP. NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS (Unaudited) (All amounts in thousands of United States dollars, except share data, unless otherwise stated)

NOTE 26 – SUBSEQUENT EVENTS

The Company has performed an evaluation of subsequent events through the time of filing this quarterly report on Form 10-Q with the SEC. During this period the Company did not have any additional material recognizable subsequent events.

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The following discussion and analysis presents management’s perspective on the financial condition and results of operations of Freedom Holding Corp. ("FRHC") and its consolidated subsidiaries. Except where the context otherwise requires or where otherwise indicated, references herein to the "Company," "Freedom," "we," "our," and "us" mean Freedom Holding Corp. together with its consolidated subsidiaries. References to a "fiscal year(s)" mean the 12-month periods ended March 31 for the referenced year. The following discussion and analysis is intended to highlight and supplement data and information presented elsewhere in this quarterly report on Form 10-Q, and it should be read in conjunction with our unaudited condensed consolidated financial statements and the accompanying notes included in this quarterly report on Form 10-Q and the discussion under the heading “Management's Discussion and Analysis of Financial Condition and Results of Operations” included in our annual report on Form 10-K for the fiscal year ended March 31, 2024, filed with the Securities Exchange Commission ("SEC") on June 14, 2024 (the “2024 Form 10-K”).

Special Note About Forward-Looking Information

All statements other than statements of historical fact included herein, any documents incorporated herein by reference, or any related discussions in this quarterly report on Form 10-Q, if any, including without limitation, statements regarding business strategy, credit rating, impact of new accounting pronouncements, expected capital expenditures and plans to finance such capital expenditure in the telecommunications business, treasury policy, expected outcome of litigation, aims, goals, and plans and objectives, and other than non-historical statements are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. In some cases, forward-looking statements can be identified by terminology such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “future,” “intend,” “likely,” “may,” “might,” “plan,” “potential,” “predict,” “project,” “should,” “strategy,” “will,” “ would,” and other similar expressions and their negatives.

OVERVIEW

Our Business

Freedom Holding Corp. ("FRHC"), incorporated under the laws of the State of Nevada, combines cutting-edge financial services with an array of lifestyle solutions. Through our subsidiaries, we provide a diverse range of offerings, including securities brokerage, market making, investment research, financial advisory, investment banking, retail and commercial banking, insurance products, payment solutions, and data processing services. We also own several ancillary businesses intended to complement our core financial services businesses, including telecommunications and media businesses in Kazakhstan that are in a developmental stage.

We own and operate lifestyle-focused platforms such as the e-commerce solution, the premier online travel booking service and the go-to platform for entertainment and event management. These services, alongside our core financial businesses, provide convenience and value for our clients, making FRHC more than a financial services provider but also a lifestyle enabler.

From the very beginning, our mission has been to democratize access to international capital markets for retail and institutional clients alike. Today, we are improving the financial industry by creating an integrated digital fintech ecosystem designed to meet the evolving demands of a global customer base. Our strategy centers on providing a seamless, user-friendly experience by combining innovative technologies with a comprehensive suite of services accessible through a single, unified platform. Our ambition is to set the gold standard for digital customer experiences, leveraging advanced technologies to deliver customized solutions that make managing finances and accessing global markets simpler, faster, and more intuitive. By fostering innovation and pushing boundaries, we aim to remain at the forefront of the industry.

The main market of our operations is Kazakhstan. Our operating subsidiaries are located in Kazakhstan, Cyprus, the United States, the United Kingdom, Armenia, the United Arab Emirates, Uzbekistan, Kyrgyzstan, Tajikistan, Azerbaijan, and Turkey, and we also have a presence in Austria, Belgium, Bulgaria, France, Germany, Greece, Italy, Lithuania, The Netherlands, Poland and Spain. We divested our Russian subsidiaries in February 2023. Our subsidiaries in the United States include an SEC- and FINRA-registered broker dealer. As of December 31, 2024, we had 7,761 employees and 204 offices (of which 51 offered brokerage services, 56 offered insurance services, 29 offered banking services and 68 offered other financial and non-financial services).

Products and Services

Our business is organized into four segments: Brokerage, Banking, Insurance, and Other. Additional information regarding our segments can be found in the narrative and tabular descriptions of segments and operating results under this Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations of this quarterly report; and Note 24 "Segment Reporting" of the notes to our condensed consolidated financial statements included in Item 1 of this quarterly report.

Our Brokerage segment primarily focuses on retail brokerage and investment banking. Our Banking segment encompasses lending, deposit services, payment card services, money transfers, and correspondent accounts, supporting both individual and corporate clients with innovative digital financial solutions. Our Insurance segment offers life and general insurance services. Our Other segment includes payment processing services, e-commerce, online ticket sales, and new business areas including telecommunications and media services. We also engage in proprietary securities trading activities through each of our four segments.

The expansion of our retail clients’ activity has been a major driver of our growth, particularly in Kazakhstan, Europe and other Central Asian jurisdictions. Over recent years, we have observed a significant increase in retail clients’ activity across these key markets, which has been instrumental in scaling our business. Below is the table with number of our customer for our key segments:

Brokerage Segment

As of December 31, 2024, in our Brokerage business segment we had 51 offices that provided brokerage and financial services, investment consulting and education, including offices in Kazakhstan, Cyprus, Armenia, United States, Uzbekistan, and Kyrgyzstan and representative offices in a number of other European countries. In addition, following receipt of a principal approval by the Turkey's financial regulatory and supervisory authority granted on January 9, 2025, we are in the process of obtaining a license to provide brokerage services in Turkey. We provide a comprehensive range of securities brokerage services to individuals, businesses and financial institutions. Depending on the region, our brokerage services may include securities trading and margin lending. Our investment banking business consists of investment banking professionals in Kazakhstan, Uzbekistan, and the United States who provide strategic advisory services and capital markets products.

Freedom KZ and Freedom Global are professional participants on the KASE and the AIX. Foreign Enterprise LLC Freedom Finance ("Freedom UZ") is a professional participant on the Republican Stock Exchange of Tashkent ("UZSE") and the Uzbek Republican Currency Exchange ("UZCE").

Freedom EU oversees our European region operations (including Austria, Belgium, Bulgaria, Cyprus, France, Germany, Greece, Italy, the Netherlands, Poland, Lithuania, Spain, and the United Kingdom). In Cyprus, it is licensed to receive, transmit and execute customer orders, establish custodial accounts, engage in foreign currency exchange services and margin lending, and trade our own investment portfolio. Freedom EU serves as a hub for the Group's brokerage operations, providing transaction processing and intermediary services to our regional customers and to institutional customers that may seek access to the securities markets in the United States and Europe.

PrimeEx is a registered agency-only execution broker-dealer on the floor of the New York Stock Exchange ("NYSE"). PrimeEx is a member of the NYSE, Nasdaq, FINRA and the Securities Investor Protection Corp ("SIPC"). PrimeEx conducts investment banking and equity capital markets business under the name Freedom Capital Markets ("FCM").

As of December 31, 2024, we had 1,749 employees in our Brokerage segment, including 1,478 full-time employees and 271 part-time employees.

Banking Segment

Our Banking segment consists of the operations of Freedom Bank KZ, which is a pioneer in digital retail and commercial banking services in Kazakhstan, offering a large variety of deposit, debit and credit cards allowing its customers to make purchases around the world in multiple different currencies, pay in installments or on credit, save their funds, manage their investment accounts, or get an increased cashback that may be transferred to the International Fund for the Salvation of the Aral Sea. Freedom Bank KZ provides digital mortgages, digital car loans, digital business loans, and payment acquiring services for individual entrepreneurs. On October 15, 2024, we obtained a banking license in Tajikistan.

As of December 31, 2024, Freedom Bank KZ's assets decreased by 2%, its loan portfolio increased by 5%, its deposit portfolio increased by 27%, its trading portfolio decreased by 9%, in each case in comparison with March 31, 2024. The increase in the loan and deposit portfolios reflects continued customer demand and growth in our banking services, while the decline in trading portfolio aligns with our strategic focus on core banking operations. During the three months ended December 31, 2024, the banking segment continued to exhibit growth. In particular, net gain on trading securities increased in comparison to the three months ended December 31, 2023, reflecting favorable market conditions and improved trading strategies.

We have 29 office locations in Kazakhstan and Tajikistan that provide banking services to our customers. As of December 31, 2024, we had 2,825 employees in our Banking segment, all of which were full-time employees.

Insurance Segment

We have two insurance companies in Kazakhstan, a life insurance company, Freedom Life, and a direct insurance carrier, excluding life, health and medical, Freedom Insurance.

Freedom Life provides a range of health and life insurance products to individuals and businesses, including life insurance, health insurance, annuity insurance, accident insurance, obligatory worker emergency insurance, travel insurance and reinsurance. As of December 31, 2024, Freedom Life had 973,827 active contracts, as compared to 616,301 active contracts as of March 31, 2024. As of December 31, 2024, Freedom Life had total assets of approximately $510.1 million and total liabilities of approximately $417.4 million, as compared to total assets of approximately $371.5 million and total liabilities of approximately $290.0 million as of March 31, 2024.

Freedom Insurance operates in the "general insurance" industry and is the leader in online insurance in Kazakhstan and offers various general insurance products in property (including automobile), casualty, civil liability, personal insurance and reinsurance. As of December 31, 2024, Freedom Insurance had 567,931 active contracts, as compared to 190,872 active contracts as of March 31, 2024. As of December 31, 2024, Freedom Insurance had total assets of approximately $154.3 million and total liabilities of approximately $95.3 million, as compared to total assets of approximately $158.0 million and total liabilities of approximately $112.8 million as of March 31, 2024.

As of December 31, 2024, we had 56 offices and 994 employees, including 955 full-time employees and 39 part-time employees, providing consumer life and general insurance services in Kazakhstan.

Other Segment

As of December 31, 2024, in our Other segment we had 68 offices and 2,679 employees, including 2,503 full-time employees and 134 part-time employees, providing a range of services including payment processing, entertainment ticketing sales, online air and railway ticket purchase aggregation and an online retail trade and e-commerce services. In addition, we have recently established subsidiaries in Kazakhstan to operate a telecommunications business and a media business, each of which is in the developmental stage. The revenue of this segment is currently mainly derived from provision of payment processing services, retail online ticket sales and online aggregation of purchasing air and railway tickets.

Digital Fintech Ecosystem and Product Expansion

Operating under the "Freedom" brand, our comprehensive suite of digital products and services enables our customers to engage in electronic trading and to monitor their accounts. Our flagship online trading platform Tradernet is designed for a wide range of investors featuring a comprehensive and user-friendly interface and secure infrastructure. The platform allows users to trade a diverse array of financial instruments, including stocks, options, and ETFs from major global exchanges such as the KASE, AIX, NYSE, Nasdaq, ATHEX, the London Stock Exchange, the Chicago Mercantile Exchange, the Hong Kong Stock Exchange and Deutsche Börse.

In addition to trading capabilities, we have expanded our digital solutions to include mortgages, auto loans, and insurance products. We also operate Ticketon Events LLP ("Ticketon"), the largest online ticket sales company in

Kazakhstan and Paybox platform, the digital payment aggregator which enables our customers to accept payments from buyers using a wide range of payment methods, including bank cards, online banking, electronic money, and more.

In April 2024, Freedom Bank KZ launched its mobile application, SuperApp, marking a significant milestone in the Kazakhstan financial technology sector. This innovative app consolidates all essential financial services into one platform, offering clients a seamless and convenient way to manage their finances. With SuperApp, clients can easily check their account balances, review transaction histories, make transfers and payments, open and manage deposits, obtain and repay loans, get access to investment, insurance, lifestyle and other products and services. The app also provides real-time portfolio monitoring, along with access to analytical reports and recommendations, empowering users to make well-informed investment decisions. SuperApp's payment services enable users to pay utility and internet bills, mobile phone charges, and other expenses effortlessly. SuperApp not only enhances the user experience but also aligns with our strategic goals. Customer satisfaction is improved through easy access to all banking and investment services in a single app, coupled with an intuitive interface and personalized recommendations.

Going forward, we are prioritizing the further development of our digital fintech ecosystem by integrating our online and mobile brokerage services, banking offerings, insurance products, payment processing systems, and online commercial ticketing services. Our strategic objective is to provide customers with a comprehensive and user-centric digital experience, offering them convenient access to a wide array of financial products and services through a single platform. When achieving our strategic objectives, we rely heavily on information technology and its continuous development and innovation to offer our users a seamless customer interaction, meet their diverse needs, and ensure stringent adherence to regulatory requirements and information security standards.

In alignment with our digital fintech ecosystem strategy, we are expanding our business by entering the telecommunications market in Kazakhstan and regional media industry in Central Asia. We are seeking to establish a new independent telecommunications operator in Kazakhstan to provide a diverse range of telecommunications and telecommunications-related services to customers which may include, among others, high-quality internet connectivity, mobile virtual network operator (MVNO) services, WiFi access, over-the-top (OTT) streaming, internet protocol television (IPTV), traffic transit for operators and cloud solutions, subject to obtaining applicable licenses, acquisitions of telecom assets or entering into partnerships where required. Our new telecommunications business is operated by Freedom Telecom, a wholly-owned subsidiary of Freedom Holding Corp. incorporated under the laws of the AIFC. Pursuing further development of our telecom business, on September 17, 2024 we completed the acquisition of a 100% interest in SilkNetCom LLP for a purchase price of approximately $23.9 million and on October 17, 2024 we completed the acquisition of a 100% interest in EliteCom LLP for a purchase price of approximately $3.0 million.SilkNetCom LLP is a company specializing in provider services, IT and construction of telecommunications networks in private and public sectors. EliteCom LLP specializes in telecommunications services, including Internet access, telephone services and cable television for individuals (B2C), provision of Internet access services for legal entities (B2B). See Note 22 "Acquisitions of subsidiaries" to the condensed consolidated financial statements included in this quarterly report on Form 10-Q. Our strategy and budget for Freedom Telecom are currently being reassessed and are subject to revisions, which may be material. During fiscal 2024, we established Freedom Media LLP ("Freedom Media") as a subsidiary of Freedom Telecom that is intended to become a national media platform in Kazakhstan offering tailored streaming services to the Kazakhstan and broader Central Asia markets. This platform is expected to provide unlimited access to a diverse collection of TV shows, movies, documentaries, and exclusive content across multiple genres.

Credit Ratings

On December 12, 2024, S&P Global Ratings affirmed the long-term credit rating of Freedom Holding Corp. at the "B-" level and upgraded the long-term credit ratings of Freedom KZ, Freedom EU, Freedom Global and Freedom Bank KZ from "B" to "B+" level. The short-term credit ratings of Freedom KZ, Freedom EU, Freedom Global and Freedom Bank KZ have been affirmed at "B" level. The ratings of Freedom KZ and Freedom Bank KZ on the national scale were increased from "kzBBВ-" to "kzBBВ". The stable outlooks on Freedom Holding Corp. and its core operating subsidiaries Freedom KZ, Freedom EU, Freedom Global and Freedom Bank KZ reflect S&P's expectations of stable business and financial profiles over the next 12 months, benefiting from reduced economic and industry risks and enhanced regulatory oversight in Kazakhstan. S&P also factor in the group's ongoing measures to strengthen its risk management and compliance, and planned moderation of growth rates, which should support capitalization.

On July 2, 2024, S&P Global Ratings revised its ratings outlook on Freedom Life to stable from negative. At the same time, S&P Global Ratings affirmed their 'BB' long-term issuer credit and financial strength ratings on Freedom Life. S&P Global Ratings also raised the Kazakhstan national scale rating on Freedom Life to 'kzAA-' from 'kzA+'. S&P Global Ratings consider that Freedom Life remains a strategically important subsidiary of the Group. This is based on Freedom Life's increasing importance to the Group's operations and track record of collaboration with other Group members. S&P

Global Ratings continue to view Freedom Life as an insulated entity due to strong regulatory oversight and its operational independence from the parent.

Key Factors Affecting Our Results of Operations

Our operations have been, and may continue to be, affected by certain key factors as well as certain historical events. For additional information on these factors and other risks that may affect our financial condition and results of operations, see “Management's Discussion and Analysis of Financial Condition and Results of Operations” in Part II Item 7 of the 2024 Form 10-K and “Risk Factors” in Part I, Item 1A, of the 2024 Form 10-K.

FINANCIAL HIGHLIGHTS

The highlights of our consolidated results for the three months ended December 31, 2024 are as follows:

We had total revenues, net of $655.2 million for the three months ended December 31, 2024, as compared to $418.6 million for the three months ended December 31, 2023. The increase between the two quarters was primarily attributable to the following:

• Our insurance underwriting income for the three months ended December 31, 2024 was $177.5 million, an increase of $98.5 million or 125%, compared to the three months ended December 31, 2023. The increase was driven by the expansion of our insurance operations such as in the pension annuity and accident insurance between the two quarters.
• We had a net gain on trading securities of $89.6 million for the three months ended December 31, 2024, as compared to a net loss on trading securities of $5.1 million for the three months ended December 31, 2023. The majority of the net gain for the three months ended December 31, 2024 was attributable to the increase in the market prices of Kazakhstan sovereign bonds held in our proprietary portfolio during the quarter.
• Our 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. The increase was mainly attributable to an increase in fee and commission income from brokerage services and banking services.
• We had 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 gain for the three months ended June 30, 2024 was due to revaluation of currency swaps.

We had total expense of $556.9 million, for the three months ended December 31, 2024, as compared to $307.0 million for the three months ended December 31, 2023. The increase was mainly attributable to increases in fee and commission expense, insurance claims incurred (net of reinsurance), payroll and bonuses, general and administrative expense, advertising expense and stock based compensation expense.

We had net income of $78.1 million for the three months ended December 31, 2024, as compared to $96.1 million for the three months ended December 31, 2023. Our Brokerage, Banking, Insurance, and Other segments contributed net income of $102.3 million, net income of $34.5 million and net loss of $5.2 million and net loss of $53.4 million, respectively, to our total net income for the three months ended December 31, 2024.

Our total assets increased to $9.1 billion as of December 31, 2024 from $8.3 billion as of March 31, 2024.

We had approximately 618,000 total retail brokerage customers as of December 31, 2024 as compared to approximately 530,000 as of March 31, 2024. We had approximately 1,407,000 banking customers at our Freedom Bank KZ subsidiary as of December 31, 2024 as compared to approximately 904,000 as of March 31, 2024.

The operating results for any period are not necessarily indicative of the results that may be expected for any future period.

RESULTS OF OPERATIONS

Comparison of the Three-month Periods Ended December 31, 2024 and 2023

The following comparison of our financial results for the three-month periods ended December 31, 2024 and 2023 is not necessarily indicative of future results.

Revenue

The following table sets out information on our total revenue, net for the periods presented.

• Percentage of total revenue, net.

Fee and commission income

The following table sets forth information regarding our fee and commission income for the periods presented.

The following table sets out the components of our fee and commission income as a percentage of total fee and commission income, net for the periods presented.

For the three months ended December 31, 2024, total fee and commission income was $143.4 million, an increase of $23.3 million, or 19%, as compared to fee and commission income of $120.2 million for the three months ended December 31, 2023.

Fee and commission income from brokerage services for the three months ended December 31, 2024 was $118.8 million, representing a 19% increase as compared to $99.8 million for the three months ended December 31, 2023. This increase was primarily due to an increase in the number of retail brokerage customers from 458,000 as of December 31, 2023 to 618,000 as of December 31, 2024. The increase in the number of customers was attributable in part to the migration of customers from our affiliate FST Belize to brokerage companies within our Group between the two quarters. The increase was offset in part by a decrease in fee and commission income from brokerage services generated from FST Belize between the two quarters, as our omnibus brokerage account arrangement with FST Belize was wound down and customers of FST Belize closed their accounts at FST Belize and opened accounts with brokerage companies within our Group. During the three months ended December 31, 2024, we earned fee and commission income from a market maker customer at our Freedom Global subsidiary in an amount of $77.4 million, representing 54% of our total fee and commission income for that quarter.

Fee and commission income from payment processing decreased to $7.1 million for the three months ended December 31, 2024 from $9.0 million for the three months ended December 31, 2023. The decrease is attributable to a decrease in transaction volumes between the two quarters, which was in turn due to the cessation of operations of one of our counterparties, which previously contributed a substantial transaction volume.

Fee and commission income from banking services increased to $8.4 million in the three months ended December 31, 2024 from $1.3 million in the three months ended December 31, 2023. The increase in fee and commission income from banking services between the two quarters was primarily due to increase in commissions generated on transfer and payment processing, which was a result of an increase in the volume of transfer and payment processing transactions and an increase of cash operations income, by attracting new clients.

Fee and commission income from underwriting and market-making activities decreased by 54% to $1.5 million for the three months ended December 31, 2024 from $3.3 million for the three months ended December 30, 2023, driven by a lower volume of underwriting transactions for the three months ended December 31, 2024 as compared to the three months ended December 31, 2023.

Net gain on trading securities

We had a net gain on trading securities of $89.6 million for the three months ended December 31, 2024, an increase of $94.7 million as compared to a net loss of $5.1 million for the three months ended December 31, 2023. The following table sets forth information regarding our net gains on trading activities during the three months ended December 31, 2024 and 2023:

During the three months ended December 31, 2024, we had a realized gain on trading securities of $15.0 million, which is attributable to Kazakhstan sovereign bonds sold during the three months ended December 31, 2024. Also, we recognized an unrealized net gain of $74.6 million during the same period due to an increase in the value of securities positions we held as of December 31, 2024. The majority of the unrealized net gain is attributable to Kazakhstan sovereign bonds.

During the three months ended December 31, 2023, we had a realized gain on trading securities of $9.4 million, which is mainly attributable to debt securities of the Kazakhstan Sustainability Fund JSC sold during the three months ended December 31, 2023. We had an unrealized net loss in amount of $14.4 million in the three months ended December 31, 2023 due to securities positions we continued to hold at December 31, 2023. The majority of the unrealized net loss arose from the securities of Kazakhstan Sustainability Fund JSC, primarily as a consequence of price declines.

Interest income

The following tables set forth information regarding our revenue from interest income for the periods presented.

For the three months ended December 31, 2024, we had interest income of $224.7 million, representing a decrease of $1.8 million, or 1%, compared to the three months ended December 31, 2023. The increase in interest income was primarily attributable to the increase of the income from margin loans to customers by $9.7 million, or 19% due to an increase in the usage of margin loans for trades by our clients between the two periods, partially offset by the decrease in interest income on trading securities by $17.2 million, or 15%, as a result of a decrease in the total size of our trading portfolio and a decrease in the amount of bonds we held as a percentage of our total trading portfolio between the two periods.

Additionally, the interest income on securities available-for-sale increased by $3.5 million, or 47%, compared to the three months ended December 31, 2023. Such increase was due to the increase of volume of available-for-sale securities which is attributable to the purchase of debt securities of the Ministry of Finance of the Republic of Kazakhstan.

The following table provides a summary of the monthly average balances and average interest rates for the major categories of our interest-earning assets for the three months ended December 31, 2024 and 2023.

Interest income on margin loans to customers includes income accrued on off-balance sheet arrangements, the monthly average balance of which is not included in the table above. These off-balance sheet arrangements mainly included repurchase agreements of our brokerage clients. As of December 31, 2024 and 2023, the monthly average balance of off-balance sheet arrangements were and $788.2 million, respectively, and the weighted average interest rate was 0.0%, and 11.7%, respectively.

The following table sets forth the effects of changing rates and volumes on interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate), The net column represents the sum of the prior columns. Changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on changes due to rate and the changes due to volume.

Net gain on foreign exchange operations

For the three months ended December 31, 2024, we realized a net gain on foreign exchange operations of $3.9 million compared to a net gain of $38.8 million for the three months ended December 31, 2023. The net gain for the three months ended December 31, 2024, is primarily attributable to a $23.2 million gain from foreign currency transactions, partially offset by a $19.2 million translation loss. The decrease compared to the prior-year period was mainly driven by a 9.1% depreciation of the Kazakhstan tenge against the U.S. dollar, which led to increased foreign exchange currency losses for our subsidiaries operating in Kazakhstan.

Net gain on derivatives

For the three months ended December 31, 2024, we had net gain on derivatives of $11.9 million compared to a net loss of $42.6 million for the three months ended December 31, 2023. The increase in the amount of net gain was primarily attributable to our subsidiary, Freedom Bank KZ, which had a realized net gain of $10.6 million for the three months ended December 31, 2024, as compared to a realized net loss of $41.8 million for the three months ended December 31, 2023. Such change between the two periods was mainly due to a positive revaluation of currency swaps for the three months ended December 31, 2024. Freedom Bank KZ engages in currency swaps to diversify its funding and liquidity sources.

Insurance underwriting income

For the three months ended December 31, 2024, we had insurance underwriting income of $177.5 million, an increase of $98.5 million, or 125%, as compared to the three months ended December 31, 2023. The increase was primarily attributable to a $99.3 million, or 128%, increase in insurance underwriting income from written insurance premiums for the three months ended December 31, 2024, as compared to the three months ended December 31, 2023, due to the expansion of our insurance operations such as in the pension annuity and accident insurance between the two quarters. This increase in income from written insurance premiums was partially offset by a $1.9 million decrease in reinsurance premiums ceded for the three months ended December 31, 2024, as compared to the three months ended December 31, 2023. The following table sets out information on our insurance underwriting income for the periods presented.

Expense

The following table sets out information on our total expense for the periods presented.

• Percentage of total expense.

Fee and commission expense

The following table sets forth information regarding our fee and commission expense for the periods presented.

The following table sets out the components of our fee and commission expense as a percentage of total fee and commission expense, net for the periods presented.

Fee and commission expense increased by $51.1 million or 119% in the three months ended December 31, 2024, as compared to the three months ended December 31, 2023. The increase is mainly attributable to an increase of agency fees expense of $44.7 million or 149% compared to the three months ended December 31, 2023. The increase in agency fees expenses was due to an increase in insurance products sales by Freedom Life, which are outsourced to outside agents. The increase in brokerage services, from $4.5 million to $9.4 million, was primarily due to heightened client activity within our brokerage services. This growth in client transactions led to a corresponding increase in associated commission costs. Additionally, other commission expenses rose as a result of higher bank commissions, driven by increased business activity.

Interest expense

During the three months ended December 31, 2024, total interest expense remained relatively flat compared to the same period in 2023. However, its composition changed due to shifts in funding sources and interest rate dynamics.

There was a decrease in interest expense on securities repurchase agreement obligations, driven by a 15% decline in the average balance, from $2.9 billion during the three months ended December 31, 2023 to $2.4 billion during the three months ended December 31, 2024. Additionally, the average interest rate applied to these obligations decreased from 16% to 15%, further contributing to the reduction in costs. This decline reflects adjustments in our short-term funding strategy and a shift towards more stable, long-term financing sources.

At the same time, interest expense related to customer liabilities increased as the average balance of customer deposits and brokerage account liabilities grew 43% year-over-year, rising from $1.1 billion to $1.6 billion. This increase was caused by a higher average interest rate, which rose from 6% to 7%, reflecting both market-driven adjustments and an expanded customer deposit base.

Additionally, interest expense on debt securities issued increased, primarily due to a rise in the average balance, from $131.3 million to $423.6 million. The average interest rate on these instruments also increased, from 5% to 10%, reflecting a shift toward long-term financing at higher prevailing market rates. This increase in debt issuance aligns with our broader funding strategy to support business expansion and strengthen liquidity reserves.

The following table provides a summary of the monthly average balances and average interest rates for the major categories of interest-bearing liabilities for the three months ended December 31, 2024 and 2023.

(1) Average balance, average rates, and interest expense relates to interest-bearing deposits.

The following table sets forth the effects of changing rates and volumes on interest. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects

attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the prior columns. Changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on changes due to rate and the changes due to volume.

Insurance claims incurred, net of reinsurance

For the three months ended December 31, 2024, we had a $63.5 million, or 155%, increase in insurance claims incurred, net of reinsurance, as compared to the three months ended December 31, 2023. The increase was primarily attributable to the general expansion of our insurance operations between the two quarters.

Payroll and bonuses

For the three months ended December 31, 2024, we had payroll and bonuses expense of $77.4 million, representing an increase of $32.3 million or 72% compared to payroll and bonuses expense of $45.1 million for the three months ended December 31, 2023. The increase in payroll and bonus expenses is primarily attributable to increased salary and bonus amounts between the two quarters. The increase was also due to the expansion of our workforce through acquisitions, establishment of new subsidiaries and hiring.

Professional services

For the three months ended December 31, 2024, our professional services expense was $11.0 million, representing a increase by $4.7 million, or 76%, compared to $6.2 million for the three months ended December 31, 2023. There was an increase in certain professional services expenses, including expenses for auditing services rendered by our external auditors and legal fees and consulting services, attributable to the overall growth of our company organically and through acquisitions between the two periods.

Stock compensation expense

For the three months ended December 31, 2024, our stock compensation expense was $13.4 million, representing an increase of $12.4 million compared to stock compensation expense of $1.0 million for the three months ended December 31, 2023. The increase is attributable to new stock grants awarded in October 2024 and to the partial amortization of stock grants which were awarded during fiscal 2025.

Advertising expense

Advertising expense for the three months ended December 31, 2024, was $21.5 million, representing an increase of $10.4 million, or 94%, compared to $11.1 million for the three months ended December 31, 2023. The increase is primarily attributable to an increase in advertising expenses by Freedom Europe of $7.6 million attributable to marketing campaigns that were initiated during fiscal 2024 and continued in the three months ended December 31, 2024. This increase consisted of an increase of approximately $4.1 million on advertising and an increase of $3.8 million on influencer and affiliates advertising. There was also an increase of $2.1 million attributable to Freedom Advertising, an advertising company, out of which $1.8 million was paid to advertising contractors for advertisement placement and promotion. There was also an increase of $1.4 million of advertising expenses attributable to FRHC due to its focus on brand visibility and enhanced marketing efforts.

General and administrative expense

General and administrative expense for the three months ended December 31, 2024, was $73.4 million, representing an increase of 41.3 million or 129% compared to general and administrative expense of $32.1 million for the three months ended December 31, 2023. The main factors contributing to the increase was in charity and sponsorship. Our charity and sponsorship expense increased by $31.4 million due to several charitable contributions through our subsidiaries during the three months ended December 31, 2024. The most significant contributions were made to the Kazakhstan Chess Federation, Junior Football League of Kazakhstan, Tennis Federation of the Olympic Committee, and organization of a chess tournament in the USA. Taxes, other than income tax, increased by $2.3 million, mainly due to the general growth of the Group, including the addition of new subsidiaries.

Provision for allowance for expected credit losses

We recognized provision for allowance for credit losses in the amount of $30.6 million for the three months ended December 31, 2024, as compared to recovery of provision for allowance for credit losses of $3.5 million for the three months ended December 31, 2023. The increase between the two periods is mostly attributable to increased provisions for uncollateralized bank customer loans and right of claim for purchased retail loans, driven by a change of estimate for forward-looking information as a result of currency depreciation occurred prior reporting date.

Income tax expense

We had income before income tax of $98.3 million and $111.6 million for the three months ended December 31, 2024, and December 31, 2023, respectively. Income tax expense for the three months ended December 31, 2024, and December 31, 2023 was $20.2 million and $15.5 million, respectively. While there have been a decrease in our income before income tax between the two quarters, the increase in the income tax expense was primarily due to the change in our effective tax rate. Such rate during the three months ended December 31, 2024, increased to 20.5%, from 13.9% during the three months ended December 31, 2023, as a result of changes in the composition of the revenues we realized from our operating activities, the tax treatment of those revenues in the various jurisdictions where our subsidiaries operate, and the incremental U.S. GILTI tax.

Net income

As a result of the foregoing factors, for the three months ended December 31, 2024, we had net income of $78.1 million compared to $96.1 million for the three months ended December 31, 2023, a decrease of 19%. Our Brokerage, Banking, Insurance, and Other segments contributed net income of $102.3 million, net income of $34.5 million and net loss of $5.2 million and net loss of $53.4 million, respectively, to our total net income for the three months ended December 31, 2024.

Non-controlling interest

As of December 31, 2024, FRHC held a 94.73% ownership interest in Arbuz and a 90.0% ownership interest in ReKassa. The remaining 5.27% of the ownership interest in Arbuz and 10.0% of the ownership interest in ReKassa are recognized as non-controlling interests in our Condensed Consolidated Balance Sheets, Condensed Consolidated Statements of Operations and Statements of Other Comprehensive Income, Condensed Consolidated Statements of Shareholders’ Equity and Condensed Consolidated Statements of Cash Flows.

Net loss attributable to non-controlling interest was $0.1 million and $0.3 million for the three months ended December 31, 2024 and December 31, 2023, respectively.

Foreign currency translation adjustments, net of tax

Due to a 9.1% depreciation of the Kazakhstan tenge against the U.S. dollar during the three months ended December 31, 2024, we realized a foreign currency translation loss of $101.2 million for the three months ended December 31, 2024

since most of our companies use the Kazakhstan tenge as their functional currency, as compared to a foreign currency translation gain of $28.1 million for the three months ended December 31, 2023.

Comparison of the Nine-month Periods Ended December 31, 2024 and 2023

Revenue

The following table sets out information or our total revenue, net for the periods presented.

• Percentage of total revenue, net.

Fee and commission income

The following table sets forth information regarding our fee and commission income for the periods presented.

The following table sets out the components of our fee and commission income as a percentage of total fee and commission income, net for the periods presented.

For the nine months ended December 31, 2024, total fee and commission income was $380.0 million, an increase of $49.4 million, or 15%, as compared to fee and commission income of $330.6 million for the nine months ended December 31, 2023.

Fee and commission income from brokerage services for the nine months ended December 31, 2024 was $319.4 million, representing a 33% increase as compared to $239.6 million for the nine months ended December 31, 2023. This increase was primarily due to an increase in the number of retail brokerage customers from 458,000 as of December 31, 2023 to 618,000 as of December 31, 2024. The increase in the number of customers was attributable in part to the migration of customers from FST Belize to brokerage companies within our Group between the two periods. The increase was offset in part by a decrease in fee and commission income from brokerage services generated from FST Belize between the two periods, as our omnibus brokerage arrangement with FST Belize was wound down and customers of FST Belize closed their accounts at FST Belize and opened accounts with brokerage companies within our Group. During the nine months ended December 31, 2024, we earned fee and commission income from a market maker customer at our subsidiary Freedom Global of $213.6 million, representing 56% of our total fee and commission income for that period.

Fee and commission income from payment processing decreased to $21.7 million for the nine months ended December 31, 2024 from $37.3 million for the nine months ended December 31, 2023. The $15.6 million decrease is attributable to a significant reduction in transaction volumes between the two periods, which was in turn due to the cessation of operations of one of our counterparties, which previously contributed a substantial transaction volume.

Fee and commission income from banking services decreased by $10.7 million to $12.7 million during the nine months ended December 31, 2024. The decrease in fee and commission income from banking services between the two periods was primarily due to decrease in commissions generated on transfer and payment processing, which was a result of a lower volume of transfer and payment processing transactions between two periods.

Fee and commission income from underwriting and market-making activities decreased by $7.6 million in the nine months ended December 31, 2023 or 51% to $7.5 million, driven by a lower volume of underwriting transactions for the nine months ended December 31, 2024, as compared to the nine months ended December 31, 2023.

Other fee and commission income increased by 24% to $18.7 million for the nine months ended December 31, 2024 as compared to $15.1 million for the nine months ended December 31, 2023, due to an increase in agency fees generated by our online travel ticket aggregator subsidiary between the two periods, which was in turn due to an increase in usage and demand of such services.

Net gain on trading securities

We had a net gain on trading securities of $105.8 million for the nine months ended December 31, 2024, an increase of $28.3 million as compared to a net gain of $77.5 million or the nine months ended December 31, 2023. The following table sets forth information regarding our net gains and losses on trading activities during the nine months ended December 31, 2024 and 2023:

During the nine months ended December 31, 2024, we had a realized gain on trading securities of $30.3 million, which is attributable to Kazakhstan sovereign bonds sold during the nine months ended December 31, 2024. Also, we recognized an unrealized net gain of $75.5 million during the same period due to the increase in the value of securities positions we held as of December 31, 2024. The majority of the unrealized net gain is attributable to Kazakhstan sovereign bonds, as a consequence of market price increase.

During the nine months ended December 31, 2023, we had a realized gain on trading securities of $61.3 million, which is attributable to debt securities of the Ministry of Finance of the Republic of Kazakhstan sold during the nine months ended December 31, 2023. We had an unrealized net gain in the nine months ended December 31, 2023, due to securities positions we held at December 31, 2023, having appreciated by $16.2 million. The majority of the unrealized net gain was attributable to appreciated debt securities of the Ministry of Finance of the Republic of Kazakhstan, which appreciation was primarily due to a decline in the National Bank of the Republic of Kazakhstan's base interest rate during the nine months ended December 31, 2023.

Interest income

The following tables set forth information regarding our revenue from interest income for the periods presented.

For the nine months ended December 31, 2024, we had interest income of $661.0 million, representing an increase of $72.2 million, or 12%, compared to the nine months ended December 31, 2023. The increase in interest income was primarily attributable to increases in interest income on margin loans to customers, loans to customers and securities available-for-sale. Interest income on margin loans to customers increased by $42.0 million, or 38%, due to an increase in the usage of margin loans for trades by our clients between the two periods. For the nine months ended December 31, 2024, we earned interest income from margin lending from a market maker customer at our Freedom Global subsidiary in an amount of approximately $29.5 million, representing 4% of our total interest income from margin lending for that period.

For the nine months ended December 31, 2024, interest income on loans to customers increased by $29.1 million, or 24%, compared to the nine months ending December 31, 2023 due to the growth of Freedom Bank KZ's customer loan portfolio between the two periods.

The following table provides a summary of the monthly average balances and average interest rates for the major categories of our interest-earning assets for the nine months ended December 31, 2024 and 2023.

Interest income on margin loans to customers includes income accrued on off-balance sheet arrangements, the monthly average balance of which is not included in the table above. These off-balance sheet arrangements mainly included repurchase agreements of our brokerage clients. As of December 31, 2024 and 2023, the monthly average balance of off-balance sheet arrangements were $688.8 million and $569.0 million, respectively, and the weighted average interest rate was 8%, and 12%, respectively.

The following table sets forth the effects of changing rates and volumes on interest income. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate), The net column represents the sum of the prior columns. Changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on changes due to rate and the changes due to volume.

Net gain on foreign exchange operations

For the nine months ended December 31, 2024, we realized a net gain on foreign exchange operations of $18.5 million compared to a net gain of $54.4 million for the nine months ended December 31, 2023. The net gain for the nine months ended December 31, 2024, is primarily attributable to a $52.7 million gain from foreign currency transactions, partially offset by a $34.2 million translation loss. The decrease compared to the prior-year period was mainly driven by an 18% depreciation of the Kazakhstan tenge against the U.S. dollar, which led to increased foreign exchange currency losses for our subsidiaries operating in Kazakhstan.

Net gain on derivatives

For the nine months ended December 31, 2024, we had net gain on derivatives of $30.7 million compared to a net loss of $71.8 million for the nine months ended December 31, 2024. The change was primarily attributable to our subsidiary Freedom Bank KZ, which had a realized net gain of $24.1 million for the nine months ended December 31, 2024, as compared to a realized net loss of $72.0 million for the nine months ended December 31, 2023. Such change between the two periods was mainly due to a positive revaluation of currency swaps for the nine months ended December 31, 2024. Freedom Bank KZ engages in currency swaps to diversify its funding and liquidity sources.

Insurance underwriting income

For the nine months ended December 31, 2024, we had insurance underwriting income of $467.2 million, an increase of $285.3 million, or 157%, as compared to the nine months ended December 31, 2023. The increase was primarily attributable to a $302.9 million, or 158%, increase in insurance underwriting income from written insurance premiums for the nine months ended December 31, 2024, as compared to the nine months ended December 31, 2023, due to the expansion of our insurance operations such as pension annuity and accident insurance classes between the two periods. This increase in income from written insurance premiums was partially offset by a $4.2 million decrease in reinsurance premiums ceded for the nine months ended December 31, 2024, as compared to the nine months ended December 31, 2023. The following table sets out information on our insurance underwriting income for the periods presented.

Expense

The following table sets out information on our total expense for the periods presented.

• Percentage of total expense.

Fee and commission expense

The following table sets forth information regarding our fee and commission expense for the periods presented.

The following table sets out the components of our fee and commission expense as a percentage of total fee and commission expense, net for the periods presented.

Fee and commission expense increased by $161.8 million or 157% in the nine months ended December 31, 2024, as compared to the nine months ended December 31, 2023. The increase is mainly attributable to an increase of agency fees

expense of $145.0 million, or 212%, compared to the nine months ended December 31, 2023 and other commission expenses of $13.4 million, compared to the nine months ended December 31, 2023. The increase in agency fees expenses was due to an increase in insurance products sales by Freedom Life, which are outsourced to outside agents. The increase in other commission expenses is attributable to increased commissions associated with Paybox is consistent with the growth of its business activities between the two periods, following our acquisition of Paybox in the fourth quarter of fiscal 2023.

Interest expense

During the nine months ended December 31, 2024, total interest expense remained relatively flat compared to the same period in 2023. However, its composition changed due to shifts in funding sources and interest rate dynamics.

There was a decrease in interest expense on securities repurchase agreement obligations, driven by a 2% decline in the average balance, from $2.6 billion during the nine months ended December 31, 2023 to $2.5 billion during the nine months ended December 31, 2024. Additionally, the average interest rate applied to these obligations decreased from 16% to 14%, further contributing to the reduction in costs. This decline reflects adjustments in our short-term funding strategy and a shift towards more stable, long-term financing sources.

At the same time, interest expense related to customer liabilities increased as the average balance of customer deposits and brokerage account liabilities grew 9% year-over-year, rising from $1.0 billion to $1.1 billion. This increase was caused by a higher average interest rate, which rose from 7% to 9%, reflecting both market-driven adjustments and an expanded customer deposit base.

Additionally, interest expense on debt securities issued increased, primarily due to a rise in the average balance, from $86.4 million to $318.5 million. The average interest rate on these instruments also increased, from 5% to 10%, reflecting a shift toward long-term financing at higher prevailing market rates. This increase in debt issuance expense aligns with our broader funding strategy to support business expansion and strengthen liquidity reserves.

The following table provides a summary of the monthly average balances and average interest rates for the major categories of interest-bearing liabilities for the nine months ended December 31, 2024 and 2023.

(1) Average balance, average rates, and interest expense relates to interest-bearing deposits.

The following table sets forth the effects of changing rates and volumes on interest. The rate column shows the effects attributable to changes in rate (changes in rate multiplied by prior volume). The volume column shows the effects attributable to changes in volume (changes in volume multiplied by prior rate). The net column represents the sum of the

prior columns. Changes attributable to changes in both rate and volume that cannot be segregated have been allocated proportionally based on changes due to rate and the changes due to volume.

Insurance claims incurred, net of reinsurance

For the nine months ended December 31, 2024, we had a $122.0 million, or 126%, increase in insurance claims incurred, net of reinsurance, as compared to the nine months ended December 31, 2023. The increase was primarily attributable to the general expansion of our insurance operations between the two periods.

Payroll and bonuses

For the nine months ended December 31, 2024, we had payroll and bonuses expense of $201.1 million, representing an increase of $84.4 million or 72% compared to payroll and bonuses expense of $116.7 million for the nine months ended December 31, 2023. The increase in payroll and bonus expenses is primarily attributable to increased salary and bonus amounts between the two periods. The increase was also due to the expansion of our workforce through acquisitions, establishment of new subsidiaries and hiring.

Professional services

For the nine months ended December 31, 2024, our professional services expense was $26.5 million, representing an increase by $1.7 million, or 7%, compared to $24.8 million for the nine months ended December 31, 2023. The increase was attributable to the overall growth of our company organically and through acquisitions between the two periods.

Stock compensation expense

For the nine months ended December 31, 2024, our stock compensation expense was $36.1 million, representing an increase of $32.8 million, or 993%, compared to stock compensation expense of $3.3 million for the nine months ended December 31, 2023. The increase is attributable to new stock grants, the majority of which vested on the date of issuance, during the nine months ended December 31, 2024 as well as the partial amortization of stock grants awarded during fiscal 2024.

Advertising expense

Advertising expense for the nine months ended December 31, 2024, was $58.7 million, representing an increase of $30.9 million, or 111%, compared to $27.8 million for the nine months ended December 31, 2023. The increase is primarily attributable to an increase in advertising expenses by Freedom EU of $23.0 million attributable to marketing campaigns that were initiated during fiscal 2024 and continued in the nine months ended December 31, 2024. This increase consisted of an increase of advertising expense, influencer and affiliates advertising expense, marketing and sponsorship expense. There was also an increase of $4.3 million attributable to Freedom Advertising, an advertising company, due to marketing expenditures to third party contractors. There was also an increase of $3.1 million from FRHC due to the company's focus on the brand visibility and enhanced marketing efforts.

General and administrative expense

General and administrative expense for the nine months ended December 31, 2024, was $171.8 million, representing an increase of $85.6 million, or 99%, compared to general and administrative expense of $86.2 million for the nine months ended December 31, 2023. The main factors contributing to the increase were increases in other operating expenses, charity

and sponsorship, software support, taxes other than income tax, rent expenses. Our charity and sponsorship expense increased by $49.5 million due to several charitable contributions through our subsidiaries during the nine months ended December 31, 2024. The most significant contributions were made to the Kazakhstan Chess Federation, Junior Football League of Kazakhstan, Tennis Federation of the Olympic Committee, sponsorship of construction work in the city of Konayev and a chess tournament in the USA. Other operating expenses increased by $8.2 million, mainly due to an increase of other operating expenses at Freedom Bank KZ from banking and other overhead costs. Software support expenses increased by $4.9 million, mainly due to the support of licensed and other software systems. Taxes, other than income tax, increased by $4.0 million, mainly due to the general growth of the Group, including the addition of new subsidiaries.The expansion of our business operations resulted in higher tax liabilities, reflecting our broader market presence and increased operational scale. The increases of $1.6 million in depreciation and amortization expense and $4.5 million in rent expense were driven by the addition of new subsidiaries between the two periods and the overall growth of our operations.

Provision for allowance for expected credit losses

We recognized allowance for credit losses in the amount of $39.3 million for the nine months ended December 31, 2024, as compared to allowance for credit losses of $15.5 million for the nine months ended December 31, 2023. The increase between the two periods is primarily attributable to increased provisions for uncollateralized bank customer loans and right of claim for purchased retail loans, driven by a change of estimate for forward-looking information as a result of currency depreciation occurred prior reporting date.

Income tax expense

We had income before income tax of $268.4 million and $330.9 million for the nine months ended December 31, 2024, and December 31, 2023, respectively. Income tax expense for the nine months ended December 31, 2024, and December 31, 2023 was $41.5 million and $51.4 million, respectively. The decrease was primarily due to a decrease in our income before income tax between the two periods. In addition, our effective tax rate during the nine months ended December 31, 2024, was 15.5%, the same as during the nine months December 31, 2023. Although our effective tax rate did not change, there were changes in the composition of the revenues we realized from our operating activities, the tax treatment of those revenues in the various jurisdictions where our subsidiaries operate, and the incremental U.S. GILTI tax.

Net income

As a result of the foregoing factors, for the nine months ended December 31, 2024, we had net income of $226.9 million compared to $279.5 million for the nine months ended December 31, 2023, a decrease of 19%. Our Brokerage, Banking, Insurance and Other segments contributed net income of $257.6 million, net income of $51.6 million, net income of $23.4 million and net loss of $105.7 million to our total net income for the nine months ended December 31, 2024, respectively.

Non-controlling interest

As of December 31, 2024, FRHC held a 94.73% ownership interest in Arbuz and a 90.0% ownership interest in ReKassa. The remaining 5.27% of the ownership interest in Arbuz and 10.0% of the ownership interest in ReKassa are recognized as non-controlling interests in our Financial Statements.

Net loss attributable to non-controlling interest was $0.5 million and $0.8 million for the nine months ended December 31, 2024 and December 31, 2023, respectively.

Foreign currency translation adjustments, net of tax

Due to a 18% depreciation of the Kazakhstan tenge against the U.S. dollar during the nine months ended December 31, 2024, we realized a foreign currency translation loss of $187.0 million for the nine months ended December 31, 2024 since most of our Group's companies use the Kazakhstan tenge as their functional currency, as compared to a foreign currency translation loss of $3.6 million for the nine months ended December 31, 2023.

Segment Results of Operations

Business Segment Operations

We report our results of operations through the following four business segments: Brokerage, Banking, Insurance, and Other. These operating segments are based on how our CODM makes decisions about allocating resources and assessing performance.

Comparison of the Three-month Periods Ended December 31, 2024 and 2023

Total revenue, net associated with our segments is summarized in the following table:

For the three months ended December 31, 2024, total revenue, net increased across each of our business segments compared to the three months ended December 31, 2023.

Brokerage Segment

In the three months ended December 31, 2024, in our Brokerage segment we had an increase in total revenue, net, primarily driven by an increase in net gain on trading securities and fee and commission income. The increase in net gain on trading securities was supported by favorable market conditions during the quarter. Fee and commission income in this segment increased, primarily due to a general increase in brokerage activity between the two quarters. Additionally, the revenue increase was attributable to an increase in interest income, net gain on derivatives and a decrease in net loss on foreign currency exchange.

Banking Segment

In the three months ended December 31, 2024, total revenue, net in the Banking segment increased as compared to the three months ended December 31, 2023, mainly attributable to net gain on trading securities, net gain on derivatives and fee and commission income earned in this segment in the three months ended December 31, 2024. These increases were partially offset by net loss on foreign exchange operations compared to a net gain in prior quarter in this segment in the three months ended December 31, 2024.

Insurance Segment

In the three months ended December 31, 2024, total revenue, net in the Insurance segment increased mainly due to an increase in insurance underwriting income, net gain on trading securities and net gain on foreign exchange operations due to an appreciation of the U.S. dollar against the Kazakhstan tenge between the two periods.These increases were partially offset by the decrease of other income.

Other Segment

In the three months ended December 31, 2024, total revenue, net in the Other segment increased mostly due to an increase of $18.3 million in net gain on foreign exchange operations mainly from FRHC, which was attributable to an appreciation of the U.S. dollar against the Kazakhstan tenge between the two quarters. There were also increase in other income of newly established subsidiaries which was partially offset by the decrease of net gain on trading securities and fee and commission income.

Total expenses associated with our segments are summarized in the following table:

For the three months ended December 31, 2024, total expenses, net increased across each of our business segments compared to the three months ended December 31, 2023.

Brokerage Segment

In the three months ended December 31, 2024, total expenses, net in our Brokerage segment increased due to $5.1 million increase in fee and commission expense, which was in turn mainly due to brokerage services expense. Additionally, there was $2.8 million increase in payroll and bonuses, reflecting our efforts to attract and retain top talent. Advertising expenses in this segment also increased by $7.5 million as we intensified our marketing efforts to expand our client base. Furthermore, stock compensation expenses increased by $7.6 million, attributable to new stock grants and partial amortization of old stock grants. These increases were partially offset by $3.9 million decrease in interest expense, primarily driven by lower interest costs on securities repurchase agreement obligations, as well as a decrease in general and administrative expenses and provision for allowance for expected credit loses.

Banking Segment

In the three months ended December 31, 2024, total expenses, net in our Banking segment increased primarily due to a $10.4 million increase in payroll and bonuses expense, $35.3 million increase in provision for credit losses/(recoveries) due to revision of the approach to calculating the allowance and $4.1 million increase in general and administrative expenses reflecting the general growth of Freedom Bank KZ's operations between the two quarters.

Insurance Segment

In the three months ended December 31, 2024, total expenses, net in our insurance segment increased mainly attributable to $63.5 million increase in insurance claims incurred, net of reinsurance due to the increase of insurance portfolio, $45.5 million increase in fee and commission expense from agency fees, $1.5 million increase in stock based compensation and $1.7 million increase in allowance for credit losses due to the increase of brokerage and other receivables attributable to the overall growth of our insurance operations between the two quarters.

Other Segment

In the three months ended December 31, 2024, total expenses, net in our Other segment increased by $64.6 million, driven by an increase of $34 million in general and administrative expense. The main factors contributing to the increase was an increase in charity and sponsorship. Our charity and sponsorship expense increased by $31.4 million due to several charitable contributions through our subsidiaries during the three months ended December 31, 2024. The most significant contributions were made to the Kazakhstan Chess Federation, Junior Football League of Kazakhstan, Tennis Federation of the Olympic Committee, and to the organization of a chess tournament in the USA. There were also an increase of $14.0 million in payroll and bonuses attributed to the overall growth of the Company, increase of $8.7 million in interest expense from the debt securities issued by Freedom SPC, and an increase of $3.8 million of professional services.

Comparison of the Nine-month Periods Ended December 31, 2024 and 2023

The following table presents total revenue, net by segment for the nine month periods presented:

For the nine months ended December 31, 2024, total revenue, net increased in the Brokerage, Insurance, Banking and Other segments compared to the nine months ended December 31, 2023.

Brokerage Segment

In the nine months ended December 31, 2024, in our Brokerage segment we had a significant increase in total revenue, net, primarily driven by an increase in fee and commission income. This was largely due to a general increase in brokerage activity between the two periods. Additionally, the revenue increase was attributable by an increase in interest income, net gain on trading securities, and net gain on foreign currency exchange. The increase in interest income was driven by an increase in interest accrued on securities held in our trading portfolio and an increase in interest accrued on margin loans to customers within this segment.

Banking Segment

In the nine months ended December 31, 2024, total revenue, net in the Banking segment increased as compared to the nine months ended December 31, 2023, mainly attributable to increase in interest income, a decrease in net loss on derivatives and an increase in net gain on trading securities in this segment in the nine months ended December 31, 2024. These increases were partially offset by the effects of net loss on foreign exchange operations, and decrease of fee and commission income in this segment in the nine months ended December 31, 2024.

Insurance Segment

In the nine months ended December 31, 2024, total revenue, net in the Insurance segment increased mainly due to a significant increase in insurance underwriting income due to written insurance premiums, and $4.3 million increase in net gain on foreign exchange operations due to an appreciation of the U.S. dollar against the Kazakhstan tenge between the two periods. However, this increase was partially offset by a decrease of other income, net gain on trading securities and interest income due to changes in securities portfolio.

Other Segment

In the nine months ended December 31, 2024, total revenue, net in the Other segment increased mostly due to an increase of $41.7 million in net gain on foreign exchange operations mainly from FRHC, which was attributable to an appreciation of the U.S. dollar against the Kazakhstan tenge between the two periods. There was also an increase of $17.2 million due to the increase in other income. These increases were partially offset by a $12.3 million decrease in fee and commission income attributable to a decrease in Paybox's transaction volumes due to the cessation of operation of a counterparty that contributed significantly to its transaction volume. There was also a decrease in interest income and net gain on derivatives.

Total expenses associated with our segments are summarized in the following table:

For the nine months ended December 31, 2024, total expenses, net increased across each of our business segments compared to the nine months ended December 31, 2023.

Brokerage Segment

In the nine months ended December 31, 2024, total expenses, net in our Brokerage segment increased primarily due to an increase in payroll and bonuses, reflecting our efforts to attract and retain top talent. Additionally, there was an increase in fee and commission expense, which was in turn mainly due to agency fees expense. Advertising expenses in this segment also increased as we intensified our marketing efforts to expand our client base. Furthermore, stock compensation expense increased, attributable to new stock grants and partial amortization of old stock grants. These increases were partially offset by a decrease in general and administrative expenses and provision for allowance for expected credit loses, due to a one-off accrual of allowance in the nine months ended December 31, 2023.

Banking Segment

In the nine months ended December 31, 2024, total expenses, net in our Banking segment increased primarily due to increase in interest expense on securities repurchase agreements within this segment, an increase in general and administrative expense, an increase in payroll and bonuses expense and provision for credit losses/(recoveries), reflecting the general growth of Freedom Bank KZ's operations between the two periods.

Insurance Segment

In the nine months ended December 31, 2024, total expenses, net in our Insurance segment increased mainly due to $148.7 million increase in fee and commission expense from agency fees, $4.3 million increase in stock based compensation, $122.0 million increase of insurance claims incurred, net of reinsurance due to the increase of insurance portfolio,$13.4 million increase in general and administrative expense due to the charity and $12.8 million increase in payroll and bonuses expense due to the increase in headcount and bonuses paid. These increases are attributable to the overall growth of our insurance operations between the two periods. These increases were partially offset by the effects of decrease in interest expense.

Other Segment

In the nine months ended December 31, 2024, total expenses, net in our Other segment increase was driven by increases in general and administrative expenses, payroll and bonuses, interest expense and fee and commission expense. The increase of $59 million in general and administrative expense in the Other segment was attributable to our overall growth and the addition of new subsidiaries. There was a $36 million increase in payroll and bonuses in the Other segment which is mostly attributable to the overall growth of our operations as well as the addition of new subsidiaries. The other main factors contributing to the increase were our charity and sponsorship activities. Our charity and sponsorship expense increased by $31.4 million due to several charitable contributions through our subsidiaries during the nine months ended December 31, 2024. The most significant contributions were made to the Kazakhstan Chess Federation, Junior Football League of Kazakhstan, Tennis Federation of the Olympic Committee, and to the organization of a chess tournament in the USA. Interest expense in the Other segment increased by $19.6 million, mainly attributable to an increase in interest expense from the debt securities issued by Freedom SPC. There was an increase of $9.7 million in fee and commission expense in the Other segment, which is mostly attributable to increased bank commission expense for payment services due to an increase of payment processing operations at certain Paybox subsidiaries. There was also an increase of $8.4 million in advertising expense.

Liquidity and Capital Resources

During the periods covered in this quarterly report, our operations were primarily funded through a combination of existing cash on hand, cash generated from operations, returns generated from our proprietary trading and proceeds from the sale of bonds and other borrowings.

We regularly monitor and manage our leverage and liquidity risk through various committees and processes we have established to maintain compliance with net capital and capital adequacy requirements imposed on securities brokerages and banks in jurisdictions where we do business. We assess our leverage and liquidity risk based on considerations and assumptions of market factors, as well as other factors, including the amount of available liquid capital (i.e., the amount of cash and cash equivalents not invested in our operating business). A significant portion of our trading securities and cash and cash equivalents are subject to collateralization agreements. This significantly enhances our risk of loss in the event financial markets move against our positions. When this occurs, our liquidity, capitalization and business can be negatively impacted. Certain market conditions can impact the liquidity of our assets, potentially requiring us to hold positions longer than anticipated. Our liquidity, capitalization, projected return on investment and results of operations can be significantly impacted by market events over which we have no control, and which can result in disruptions to our investment strategy for our assets.

We maintain a majority of our tangible assets in cash and securities that are readily convertible to cash, including governmental and quasi-governmental debt and highly liquid corporate equities and debt. Our financial instruments and other asset positions are stated at fair value and should generally be readily marketable in most market conditions. The following table sets out certain information regarding our assets as of the dates presented:

(1) Of the $577.9 million in cash and cash equivalents we held at December 31, 2024, $51.7 million, or approximately 9%, was subject to reverse repurchase agreements. By comparison, at March 31, 2024, we had cash and cash equivalents of $545.1 million, of which $135.0 million, or approximately 25%, was subject to reverse repurchase agreements. The amount of cash and cash equivalents we hold is subject to minimum levels set by regulatory bodies to comply with required rules and regulations, including adequate capital and liquidity levels for each entity.

(2) Principally consists of cash of our brokerage customers which are segregated in a special custody

accounts for the exclusive benefit of our brokerage customers.

(3) Consists of cash and cash equivalents, trading securities, and margin lending, brokerage and other

receivables, net of securities repurchase agreement obligations. It includes liquid assets possessed after deducting securities repurchase agreement obligations.

As of December 31, 2024, and March 31, 2024, we had total liabilities of $7.9 billion and $7.1 billion, respectively, including customer liabilities of $3.8 billion and $2.3 billion, respectively.

We finance our assets primarily from revenue-generating activities and short-term and long-term financing arrangements.

CASH FLOWS

The following table presents information from our statement of cash flows for the periods indicated. Our cash and cash equivalents include restricted cash, which principally consists of cash of our brokerage customers which are segregated in a special custody accounts for the exclusive benefit of our brokerage customers.

Net Cash Flows From Operating Activities

Net cash flow from operating activities during the nine months ended December 31, 2024, was comprised of net change in operating assets and liabilities and net income adjusted for non-cash movements (changes in deferred taxes, unrealized gain on trading securities, net change in accrued interest, change in insurance reserves, and allowance for receivables). Net cash from operating activities resulted primarily from changes in operating assets and liabilities. Such changes included those set out in the following table.

(1) Resulted from increased purchases of securities held in our proprietary account.

(2) Resulted from increased funds in brokerage accounts from new and existing customers.

(3) Resulted primarily from increased volume of margin lending receivables.

(4) Resulted primarily from decreased volume of margin lending payables.

Net cash flows from operating activities in the nine months ended December 31, 2024, were primarily attributable to net cash inflows attributable increase in customer liabilities over that period, which resulted from the increase of customer accounts in our Freedom Global subsidiary, which were partially offset in part by an decrease in margin lending and trade payables, and increases in trading securities. In addition, during the nine months ended December 31, 2024, the Company has provided more margin lending to its customers, which lead to increase in related receivable balance.

Net Cash Flows Used In Investing Activities

During the nine months ended December 31, 2024, net cash used in investing activities was $652.6 million compared to net cash used in investing activities of $593.0 million during the nine months ended December 31, 2023. During the nine months ended December 31, 2024, cash used in investing activities was used for the issuance of loans, net of repayment by customers, in the amount of $341.8 million, and purchase of available-for-sale securities, net of proceeds, in the amount of $234.1 million. During the nine months ended December 31, 2024, cash used for the issuance of loans, net of repayment decreased by $205.9 million compared to the nine months December 31, 2023, due to the decline in the volume of loans issued during the nine months ended December 31, 2024, compared to the nine months ended December 31, 2023. This shift is attributed to substantial growth in the Freedom Bank KZ's loan portfolio over the nine months ended December 31, 2023, driven by new banking products, partnership agreements, and effective advertising campaigns.

Net Cash Flows From Financing Activities

Net cash flows from financing activities for the nine months ended December 31, 2024 was $833.6 million compared to net cash flow from financing activities in amount of $1.9 billion during the nine months ended December 31, 2023. Cash flows from financing activities during the nine months ended December 31, 2024 consisted principally of bank customer deposits received in the amount of $765.7 million, net repayment from obligations under securities repurchase agreements in amount of $157.1 million, proceeds from the issuance, net of repurchase, of debt securities in the amount of 201.7 million, and mortgage loans sold to JSC Kazakhstan Sustainability Fund as the Program Operator, net of repurchase, under the state mortgage program "7-20-25" in the amount of $19.4 million. During the nine months ended December 31, 2024, cash flows from financing activities decreased by $1.1 billion compared to the nine months ended December 31, 2023. This decrease was primarily attributable to a $1.5 billion change in net repayment/proceeds from securities repurchase agreement obligations due to significant growth of the Company's trading portfolio during the nine months ended December 31, 2023, which is mainly financed through the securities repurchase agreements.

CAPITAL EXPENDITURES

On May 10, 2023, our subsidiary Freedom EU signed a contract for the construction of Elysium Tower, a building in Limassol, Cyprus. The building is planned to be a new office building for Freedom EU. Capital expenditures amounted to approximately $8.2 million in fiscal year 2024, with an additional amount of around $2.0 million incurred during the first nine months of fiscal year 2025. The remaining balance of approximately $3.9 million is expected to be incurred in during the 2025 calendar year. We are financing this construction project primarily using our own funds.

On November 27, 2023, our Board of Directors approved a strategic plan to expand our business by entering the telecommunications market in Kazakhstan through our Freedom Telecom subsidiary. Execution of the new plan is expected to require significant capital expenditure, the specific amount of which is currently uncertain. Total capital expenditures for the development of this business area are currently expected to be required for, among other things, construction of network infrastructure, including a backbone network, obtaining frequency licenses or other rights to provide services where required and acquisitions of smaller companies in the sector. Our strategy and budget for Freedom

Telecom are currently being reassessed and are subject to revisions, which may be material. We currently plan to finance our capital expenditures for this business area with a combination of own funds and borrowings, including vendor financing and utilizing the proceeds of a $200 million U.S. dollar domestic bond placement on the AIX that we completed on December 19, 2023. For further information, see "Indebtedness – Long-term" below.

As a further step in implementing our strategy to build a digital fintech ecosystem, on January 25, 2024, Freedom Telecom established a subsidiary, Freedom Media, in Kazakhstan for the purposes of providing media content to customers in Kazakhstan and Central Asia. Total capital expenditures required in connection with Freedom Media over the next five years are currently estimated to be approximately $54 million. We plan to finance our capital expenditures related to Freedom Media primarily using our own funds.

DIVIDENDS

Any payment of cash dividends on our common stock in the future will be at the discretion of our Board of Directors and will depend upon our results of operations, earnings, capital requirements, financial condition, future prospects, contractual and legal restrictions and other factors deemed relevant by our Board of Directors. We currently intend to retain any future earnings to fund the operation, development and expansion of our business, and therefore we do not anticipate paying any cash dividends on our common stock in the foreseeable future.

We did not declare or pay a cash dividend on our common stock during the three months ended December 31, 2024. Any payment of cash dividends on stock will depend upon our results of operations, earnings, capital requirements, financial condition, future prospects, contractual and legal restrictions and other factors deemed relevant by our Board of Directors. We currently intend to retain any future earnings to fund the operation, development and expansion of our business, and therefore we do not anticipate paying any cash dividends on common stock in the foreseeable future.

INDEBTEDNESS

Set forth below is a discussion of our short-term and long-term debt.

Short-term

Our short-term financing is primarily obtained through securities repurchase arrangements conducted through stock exchanges. We use repurchase arrangements, among other things, to finance our liquidity positions. As of December 31, 2024, $2.2 billion, or 64%, of the trading securities held in our proprietary trading account were subject to securities repurchase obligations compared to $2.8 billion, or 75% as of March 31, 2024. The securities we pledge as collateral under repurchase agreements are liquid trading securities with market quotes and significant trading volume. For additional information regarding our securities repurchase agreement obligations see Note 9 "Securities Repurchase Agreement Obligations" to the condensed consolidated financial statements included in this quarterly report on Form 10-Q.

Long-term

On October 21, 2021, our subsidiary Freedom SPC issued U.S. dollar-denominated bonds due 2026, in an aggregate principal amount up to $66 million, which are listed on the AIX. The annual interest rate for such bonds is 5.5%. The bonds are guaranteed by FRHC.

In December 2023, Freedom SPC established a $1,000,000,000 bond program. Bonds, following issuance under the program, are listed on the AIX and guaranteed by FRHC. On December 19, 2023, Freedom SPC issued U.S. dollar-denominated bonds due 2028 under the program in an aggregate principal amount of $200 million. For the first and second years, the annual interest rate for such bonds is 12%, and for subsequent years the interest rate will be fixed and set as the sum of the effective federal funds rate as of December 10, 2025 and a margin of 6.5%. On September 16, 2024, Freedom SPC authorized a series of $200 million bonds due September 16, 2026 under the program, with a 10.5% annual interest rate payable quarterly, all of which were placed (i.e., sold) during the three months ended December 31, 2024.

As of December 31, 2024, there was $466.6 million of Freedom SPC bonds outstanding. The aggregate accrued interest as of December 31, 2024 was $2.2 million.

During the nine months ended December 31, 2024, Freedom Bank KZ established three Kazakhstan law bond programs: (i) a program of up to 100 billion Kazakhstani tenge, of which 7-year bonds for 50 billion Kazakhstani tenge which have been listed on the KASE, with a floating interest rate to be determined following the first trades, (ii) a program of up to 200 billion Kazakhstani tenge, of which 2-year bonds for 36 billion Kazakhstani tenge have been listed on the KASE with a fixed interest rate determined following the first trades, and (iii) a program of up to $300 million, of which 2-

year bonds for $50 million have been listed on the KASE with a fixed interest rate determined following the first trades. None of the bonds within the Freedom Bank KZ's bond programs have been placed to investors. Going forward, Freedom Bank KZ may decide to place any or all of these the bonds as needed to support its liquidity.

NET CAPITAL AND CAPITAL ADEQUACY

A number of our subsidiaries are required to satisfy minimum net capital and capital adequacy requirements to conduct their brokerage, banking and insurance operations in the jurisdictions in which they operate. This is done in part by retaining cash and cash equivalent investments in those subsidiaries or jurisdictions. As a result, such subsidiaries may be restricted in their ability to transfer cash between different jurisdictions and to FRHC. Additionally, transfers of cash between international jurisdictions may have adverse tax consequences that could discourage such transfers.

At December 31, 2024, these minimum net capital and capital adequacy requirements ranged from approximately $0.2 million to $180.9 million and fluctuate depending on various factors. At December 31, 2024, the aggregate net capital and capital adequacy requirements of our subsidiaries was approximately $237.4 million. Each of our subsidiaries that are subject to net capital or capital adequacy requirements exceeded the minimum required amount at December 31, 2024.

Although we operate with levels of net capital and capital adequacy substantially greater than the minimum established thresholds, in the event we fail to maintain minimum net capital or capital adequacy, we may be subject to fines and penalties, suspension of operations, revocation of licensure and disqualification of our management from working in the industry. Our subsidiaries are also subject to various other rules and regulations, including liquidity and capital adequacy ratios. Our operations that require the intensive use of capital are limited to the extent necessary to meet our regulatory requirements.

Over the past several years, we have pursued an aggressive growth strategy both through acquisitions and organic growth efforts. While our active growth strategy has led to revenue growth, it also results in increased expenses and greater need for capital resources. Additional growth and expansion may require greater capital resources than we currently possess, which could require us to pursue additional equity or debt financing from outside sources. We cannot assure that such financing will be available to us on acceptable terms, or at all, at the time it is needed.

We believe that our current cash and cash equivalents, cash expected to be generated from operating activities, and forecasted returns from our proprietary trading, combined with our ability to raise additional capital will be sufficient to meet our present and anticipated financing needs.

Critical Accounting Policies and Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. The following are the accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results.

Allowance for credit losses

The Company has recently adopted a new accounting standard, ASC 326 - Current Expected Credit Losses (CECL), effective April 1, 2023. This standard has introduced significant changes to how we estimate and recognize credit losses for our financial assets. Management estimates and recognizes the CECL as an allowance for lifetime expected credit losses for loans issued. This is different compared to the previous practice of recognizing allowances based on probable incurred losses.

Under CECL, the allowance for credit losses (ACL) primarily consists of two components:

Collective CECL Component: This component is used for estimating expected credit losses for pools of loans that share common risk characteristics.

Individual CECL Component: This component is applied to loans that do not share common risk characteristics and require individual assessment.

The ACL is a valuation account that is subtracted from the amortized cost of total loans and available-for-sale securities to reflect the net amount expected to be collected. Our methodology for establishing the allowance for loan losses is based on a comprehensive assessment that considers relevant and available information from internal and external sources. This assessment takes into account past events, including historical trends in loan delinquencies and charge-offs, current economic conditions, and reasonable and supportable forecasts.

Goodwill

We have accounted for our acquisitions using the acquisition method of accounting. The acquisition method requires us to make significant estimates and assumptions, especially at the acquisition date as we allocate the purchase price to the estimated fair values of acquired tangible and intangible assets and the liabilities assumed. We also use our best estimates to determine the useful lives of the tangible and definite-lived intangible assets, which impact the periods over which depreciation and amortization of those assets are recognized. These best estimates and assumptions are inherently uncertain as they pertain to forward looking views of our businesses, customer behavior, and market conditions. In our acquisitions, we have also recognized goodwill at the amount by which the purchase price paid exceeds the fair value of the net assets acquired.

Our ongoing accounting for goodwill and the tangible and intangible assets acquired requires us to make significant estimates and assumptions as we exercise judgement to evaluate these assets for impairment. Our processes and accounting policies for evaluating impairments are further described in Note 2 "Summary of Significant Accounting Policies" to the condensed consolidated financial statements included in this quarterly report on Form 10-Q. As of December 31, 2024, we had goodwill of $48.2 million.

Income taxes

We are subject to income taxes in both the United States and numerous foreign jurisdictions. These tax laws are complex and subject to different interpretations by the taxpayer and the relevant governmental taxing authorities. Significant judgement is required in determining the provision for income tax. There are many transactions and calculations for which the ultimate tax determination is uncertain. As a result, actual future tax consequences relating to uncertain tax positions may be materially different than our determinations or estimates.

We recognize deferred tax liabilities and assets based on the difference between the Condensed Consolidated Balance Sheet and tax basis of assets and liabilities using the enacted tax rates in effect for the year in which the differences are expected to reverse. The measurement of deferred tax assets is reduced, if necessary, by the amount of any tax benefits that, based on available evidence, are not expected to be realized.

Income taxes are determined in accordance with the laws of the relevant taxing authorities. As part of the process of preparing financial statements, we are required to estimate our income taxes in each of the jurisdictions in which we operate. We account for income taxes using the asset and liability approach. Under this method, deferred income taxes are recognized for tax consequences in future years based on differences between the tax bases of assets and liabilities and their reported amounts in the financial statements at each year-end and tax loss carry forwards. Deferred tax assets and liabilities are measured using enacted tax rates applicable to the differences that are expected to affect taxable income.

We periodically evaluate and establish the likelihood of tax assessments based on current and prior years' examinations, and unrecognized tax benefits related to potential losses that may arise from tax audits in accordance with the relevant accounting guidance. Once established, unrecognized tax benefits are adjusted when there is more information available or when an event occurs requiring a change.

Legal contingencies

We review outstanding legal matters at each reporting date, in order to assess the need for provisions and disclosures in our financial statements. Among the factors considered in making decisions on provisions are the nature of the matter, the legal process and potential legal exposure in the relevant jurisdiction, the progress of the matter (including the progress after the date of the financial statements but before those statements are issued), the opinions or views of our legal advisers, experiences on similar cases and any decision of our management as to how we will respond to the matter.

Non-consolidation of FST Belize

Based on our assessment, we do not consolidate our affiliate FST Belize. See "Non-Consolidation of Freedom Securities Trading Inc." in Note 2 "Summary of Significant Accounting Policies" in the notes to our condensed consolidated financial statements included in this quarterly report on Form 10-Q.

RECENT ACCOUNTING PRONOUNCEMENTS

For details of applicable new accounting standards, see "Recent accounting pronouncements" in Note 2 "Summary of Significant Accounting Policies" in the notes to our condensed consolidated financial statements included in this quarterly report on Form 10-Q.