Freedom Holding: revenue up 40% but profit fell on insurance and other segment losses

On August 10, Freedom Holding Corp. (FRHC) reported results for the first quarter of fiscal 2027 (quarter ended June 30, 2026). Revenue rose 40% year-on-year to $732.5 million, but net income fell to $31.7 million from $37.4 million a year earlier. The main reason was losses in the insurance and other segments, which offset growth in brokerage and banking. At the current price, the shares look neutral: revenue and customer base growth is impressive, but falling profits and a high LTM P/E of 68.5 limit appeal.

Key takeaways

— Revenue grew 40% on brokerage and banking, but net income fell due to losses in insurance and other segments

— Brokerage segment revenue rose 60% and contributed $133.6 million in net income, over 400% of total net income

— Insurance segment posted a $19.2 million loss and other segments a $86.5 million loss, together exceeding profits from brokerage and banking

— Banking segment revenue grew 54% but net income was only $3.7 million due to high expenses and lower fee income

— Customer base grew to 8.74 million, while insurance customers fell 17% due to changes in Kazakhstan insurance law

— Company raised $300 million in July through a share offering and completed the acquisition of a Turkish bank for $33.4 million, expanding into new markets

— At LTM P/E of 68.5 and ROE of 8.4%, the stock is valued above historical levels, and the portal model indicates only 1% upside

Attractiveness

Key figures, USD bn

Revenue grew 40% on brokerage and banking, but net income fell due to losses in insurance and other segments

Total revenue in the first quarter of fiscal 2027 was $732.5 million, up 40% from $524.0 million a year earlier. The main contributors were the brokerage and banking segments, which increased revenue by 60% and 54% respectively. However, net income fell to $31.7 million from $37.4 million, as the insurance and other segments posted losses.

The insurance segment recorded a loss of $19.2 million, and other areas a loss of $86.5 million. These losses outweighed the brokerage segment's profit of $133.6 million and banking's $3.7 million. Thus, business diversification did not prevent a decline in the bottom line.

Brokerage segment revenue rose 60% and contributed $133.6 million in net income, over 400% of total net income

Brokerage segment revenue grew 60% to $282.6 million, the largest contribution to overall growth. The segment also posted net income of $133.6 million, more than four times the company's total net income. This means other segments combined operated at a loss.

The brokerage segment's revenue growth was driven by higher fee and commission income, interest income, and foreign exchange operations. The number of retail brokerage customers rose to 874,000 from 858,000 as of March 31, 2026.

Insurance segment posted a $19.2 million loss and other segments a $86.5 million loss, together exceeding profits from brokerage and banking

The insurance segment recorded a net loss of $19.2 million with revenue declining 8% to $150.9 million. The decline was due to lower insurance volumes from changes in Kazakhstan's insurance law and lower trading income. The number of insurance customers fell to 924,000 from 1,117,000 as of March 31, 2026.

Other areas, including telecommunications, online supermarket Arbuz, and payment services, posted a loss of $86.5 million despite revenue doubling to $73.9 million. The loss may be related to investments in these areas, but the exact reason is not disclosed in the report.

Banking segment revenue grew 54% but net income was only $3.7 million due to high expenses and lower fee income

Banking segment revenue grew 54% to $225.2 million, but net income was only $3.7 million. Revenue growth was driven by higher foreign exchange operations, trading income, and interest income. However, fee and commission income declined due to active use of the SuperApp cashback program, which reduced banking service revenue.

The number of banking clients rose to 5,447,000 from 5,026,000 as of March 31, 2026. Despite customer base growth, the segment showed low profit, which may indicate high operating expenses or one-off factors.

Customer base grew to 8.74 million, while insurance customers fell 17% due to changes in Kazakhstan insurance law

Total customers grew to 8,743,000 from 8,100,000 as of March 31, 2026. Growth came from brokerage, banking, and other segments. However, the insurance customer base shrank to 924,000 from 1,117,000, a 17% decline.

The decline in insurance customers is due to changes in Kazakhstan's insurance law, which led to lower insurance volumes. This negatively affected the insurance segment's revenue and profit.

Company raised $300 million in July through a share offering and completed the acquisition of a Turkish bank for $33.4 million, expanding into new markets

On July 10, 2026, FRHC completed an offering of 2,374,356 shares, raising a total of $300 million. The offering was made to non-U.S. persons under Regulation S. The proceeds may be used to finance acquisitions and business development.

On July 31, 2026, the company completed the acquisition of approximately 99.32% of Turkish Bank A.Ş. for $33.4 million. This step expands FRHC's presence in the Turkish market. Additionally, on June 1, 2026, ChessBase GmbH was acquired to strengthen the digital ecosystem.

At LTM P/E of 68.5 and ROE of 8.4%, the stock is valued above historical levels, and the portal model indicates only 1% upside

The LTM P/E multiple is 68.5, significantly above historical levels for the company. Return on equity (ROE) is 8.4%, which does not justify such a high multiple. The portal model, based on comparing ROE and P/B, indicates only 1% upside to fair value.

The company's market capitalisation is $9.95 billion. At the current valuation, the shares look neutral: on one hand, the business is growing and diversifying; on the other, profits are falling and multiples are high. A sustained profit recovery is needed to improve the valuation.

Valuation on the latest reported figures

Bottom line

Freedom Holding showed strong revenue growth of 40%, but net income fell due to losses in insurance and other segments. The brokerage business remains the main profit driver, but its contribution does not offset losses elsewhere. The company is actively expanding through acquisitions and raising capital, which may support future growth, but the current valuation (P/E 68.5) already reflects these expectations. At the current price, the shares look neutral: upside is limited, and risks of profit decline remain.