FRHC 10-K & 10-Q changes, risk factors and insider trading

•Our financial results dependare onimpacted by changes in interest rate volatility.rates.

•Our business and operations may be materially adversely affected by the ongoing Russia-Ukraine conflict.conflict, the war involving Iran and corresponding political and economic instability in the Middle East.

•We are subject to extensive regulation, and the failure to comply with laws and regulations could subject us to monetary penalties or regulatory sanctions.

•We are subject to risks related to potentiallitigation, litigationarbitration and arbitration.regulatory actions.

•OECD'sOECD Inclusive Framework'sFramework agreement on Pillar-TwoPillar solutionsTwo impactsmay affect our business.

•If we or our controlling shareholder, Timur Turlov, sold, or there is a perception that hewe or Timur Turlov may sell, large amounts of shares of our common stock, this could cause the market price of our common shares to decline.

Our relatively limited operational history hasand coincidedour withhistorical sustainedgrowth market growth, whichtrends may not be predictive of future operating results.

Our legacy brokerage operations were merged into our holding company, which is a Nevada-incorporated company, in several stages between November 2015 and 2017, and we have grown rapidly over the last several years. For example, our total revenue, net (after presenting our former Russian subsidiaries as discontinued operations) was $799.1$1,647.3 million for the fiscal year ended March 31, 2023,2024, $1,666.4$2,004.2 million for the fiscal year ended March 31, 20242025 and $2,050.5$2,191.3 million for the fiscal year ended March 31, 2025.2026. Although we have sustained growth over several years, ourthe operationalrate lifeof such growth has beenvaried relativelyover limitedtime comparedand may continue to longer-termfluctuate, marketincluding andslowing, macroeconomicceasing cycles.altogether, Ouror operatingbecoming history has coincided with a period of general growthnegative in the U.S. equity markets, as well as growth in the financial services and technology industries in which we operate. We therefore have not experienced any prolonged downturn or slowdown in macroeconomic or industry growth or any significant downturn in U.S. equity markets and cannot assure that we will be able to respond effectively to any such downturn or slowdown in the future. In addition, our results have been positively affected by net gains on trading securities, primarily driven by increases in market prices of Kazakhstan sovereign and quasi-sovereign debt securities held in our proprietary portfolio. As such, our recent growth should not be considered indicative of our future performance.periods.

ThereWe canhave beexperienced noa assurancerapid thatgrowth in our business over recent years. Specifically, our number of total retail brokerage customer accounts increased from approximately 530,000 as of March 31, 2024 to approximately 683,000 as of March 31, 2025 and to approximately 858,000 as of March 31, 2026. Our total number of employees increased from 6,197 employees as of March 31, 2024 to 8,764 employees as of March 31, 2025 and to 11,846 employees as of March 31, 2026. Our total assets increased by 33% to $13.2 billion as of March 31, 2026 from $9.9 billion as of March 31, 2025 and by 58% from $8.3 billion as of March 31, 2024. In addition, we willhave made a number of significant acquisitions in recent years, including the acquisitions of Freedom Cloud Holding (formerly, Astel Group Ltd.) in April 2025 and SilkNetCom in September 2024, and we may not be able to achieve a positive return on the investments we make in the expansion of our business. Moreover, our overall growth has required and will continue to require significant allocation of capital and management resources, further development of our financial, internal control processes, information technology systems and cybersecurity measures, continued upgrading and streamlining of our risk management systems and additional training and recruitment of management and other key personnel. At the same time, we must maintain a consistent level of customer services and current operations to avoid loss of business or damage to our reputation. If we fail to adequately manage growth, such failure may have a material adverse effect on our business, financial condition, results of operations and cash flows.

Acquisitions have been, and continue to be, a significant component of our growth strategy. However, there can be no assurance that we willmay not be able to continue to grow our business through acquisitions as we have done historically, thatand businesses acquired willmay not perform in accordance with our expectationsexpectations, or thatand business judgments concerning the value, strengths and weaknesses of businesses acquired willmay not prove to be correct.

In addition, there are substantial risks associated with acquisitions and expansion into new business areas, including the risk that (i) our unfamiliarity with new lines of business may adversely affect the success of such acquisitions, (ii) revenue from such activities might not be sufficient to offset the development, regulatory and other implementation costs, (iii) competing products and services and shifting market preferences might affect the profitability of such activities, and (iv) our internal controls might be inadequate to manage the risks associated with new activities. There isWe also incur substantial cost and time expended to complete post-closing integration of acquisitions, including human resource training, data and technology systems and operational processes, and implementation of cybersecurity measures. We may also incur potential dilution of our brand, assumption of known and unknown liabilities, indemnities and potential disputes with the sellers. Any such difficulties could disrupt our ongoing business, distract our management and employees, increase our expenses and can also result in IT, information security andsecurity, data protection and AI incidents and adversely affect our results of operations. Furthermore, we cannot provide any assurance that we will realize the anticipated benefits and/or synergies of any such acquisition or investment.

During the fiscal year ended March 31, 20252026 the Group incurred advertising and sponsorship expense from Kazakhstan Chess Federation in the amount of $11,222$10,026 thousand. 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 fiscal year ended March 31, 2025,2026, 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.

Related party transactions and arrangements we enter into subject us to certain risks. In particular, related party transactions are generally regarded as increasing the risk of misstatements or omissions in financial reporting, the risk of transactions being done on other than arm's length terms due to the close ties between the parties involved and the risk of regulatory non-compliance. In addition, related-party transactions present potential conflicts of interest that could result in decisions that prioritize the economic interests of certain individuals over those of our company and its stockholders. In the event of a dispute under any related-party agreement, the interests of affiliated parties may not align with ours, and the resolution of such disputes may be less favorable than what we might achieve in a transaction with an unaffiliated third party. In addition, related-party transactions are generally regarded as increasing the risk of misstatements or omissions in financial reporting, the risk of transactions being done on other than arm’s length terms due to the close ties between the parties involved and the risk of regulatory non-compliance.

We face intense competition in each of the markets where we offer our services. We compete with international, regional and local brokerage, banking, and financial services firms that offer an array of financial products and services. Many of the firms with which we currently compete, or may compete in the future, are larger, provide additional and more diversified services and products, provide access to more international markets, and have greater technical,technical and financial resources. In addition, when developing new business lines, we face competition with existing market players and other competitions that may enter such markets. For example, in developing our telecommunications and media business in Kazakhstan, we expect to compete with various established telecommunications operators and other participants in the telecommunications market and with various media providers, respectively. Our ability to compete successfully in these areas will depend on attracting and retaining customers as well as obtaining licenses or entering into partnerships. If we fail to compete effectively with other firms and participants in any of the markets in which we operate, or with potential new entrants to such markets, this could have a material adverse effect on our business, financial condition, results of operations and cash flows.

We planexpect to incur losses in our new telecommunications and media businesses.

We recently have expanded into the telecommunications and media sectors through our subsidiaries Freedom Telecom and Freedom Media. Our telecommunications subsidiary Freedom Telecom has been and is currently expected to be loss-making for the first several years of its operations, based on assumptions included in our current financial model.projections. Such losses, andtogether with increased debt service costs associated with funding theour expansion into the telecommunication sector, will have an adverse effect on our consolidated net income in the relevant periods. Our plans and budget for Freedom Telecom may be reassessed and be subject to revisions, which may be material. In addition, we currently project that our recently established Freedom Media subsidiary will incurincurred losses in the calendar years fromyear 2025 toand we project losses in calendar year 2026 with profitability forecasted to commence fromin the 2027 calendar yearyear. onwards,These expectations are based on assumptions includedunderlying inour current financial projections, which are subject to significant uncertainty. Such businesses may not be able to achieve profitability within such anticipated timeframe or at all. If these businesses incur greater or more prolonged losses than currently expected, or require additional capital to support their operations or growth, our financial model.condition, results of operations, and cash flows could be materially adversely affected.

AThe componentcore of our business strategy is to buildcontinue building a digital fintech ecosystem through which our products and services can be provided to our customers in an interconnected manner. See "Our Business Strategy" in "Overview" in Part I Item 1 "Business" of this annual report. Our ability to execute this strategy could be affected by a number of factors, including the factors described in this annual report on Form 10-K for the fiscal year ended March 31, 2025.2026.

Pursuing the development of a digital fintech ecosystem involves significant risks. These include, among others, the possibility that (i) our limited experience with certain new business lines (e.g., telecommunications and media businesses, as discussed below, which are intended to complement our financial offerings) may adversely affect the success of our initiatives,acquisitions or expansion into new business areas, (ii) we face costs of integrating the revenuescomponents generatedof fromthe theseecosystem and risks in attracting and retaining new activities may be insufficient to cover associated development, regulatory,customers, and operational costs, (iii) changing consumer preferences and strong competition may impact the viability and profitability of our offerings, and (iv) our existing internal controls may not be adequate to address the risks posed by these new operations.offerings. Additionally, we may face increased regulatory risks as evolving legal and compliance requirements could delay or constrain our ability to launch, integrate or scale our services. We are also exposed to infrastructure integration risks,risks aswhere the complexity of connecting diverse systems may lead to operational inefficiencies, security vulnerabilities, or service disruptions. If any such expansions into new product markets are not successful, there could be a material adverse effect on our business, financial condition, and results of operations.

In particular, we canmay givenot nobe assurance as to our future abilityable to successfully develop our telecommunications business in Kazakhstan in a timely fashion or on profitable terms. Our ability to do so will depend on, among other things, our ability to construct a backbone network, obtain frequency licenses or enter into partnerships with incumbent operators and acquire smaller companies in the sector. Our ability to accomplish our goals in this business area on schedule and within budget, achieve our revenue targets or realize acceptable returns, is subject to a number of risks as a result of factors over which we have no control, including the need for regulatory approvals, the availability of equipment and labor, equipment breakdowns or accidents, adverse weather conditions, social unrest, IT, information security andsecurity, data protection and AI incidents, unforeseen or uncontrollable cost increases and other risks associated with the deployment of new telecommunications infrastructure. We can give no assurance as to the commercial viability of our planned backbone network or our ability to overcome any obstacles we may encounter during theirits construction or to complete them,it, or as to our ability to finance our capital expenditures in connection with theirits establishment. Our ability to operate our telecommunications business successfully and profitably will also depend on a number of factors, many of which are beyond our control. Similarly, we canmay givenot nobe assurance as to our future abilityable to develop a media business in Kazakhstan in a timely fashion or on profitable terms.

Our loan portfolio may be impacted by global, regional and local macroeconomic and market dynamics, including prolonged weakness in GDP, significant market uncertainty, including uncertainty caused by regional conflicts, trade policies and tariffs, reductions in consumer spending, decreases in property values or market corrections, growing levels of consumer debt, rising or high unemployment rates, changes in foreign exchange or interest rates, widespread health crises or pandemics, severe weather conditions, and the effects of climate change. Economic or market stresses generally have negative effect on the business landscape and financial markets. Decreases in property values or market adjustments may increase the likelihood of borrowers or counterparties failing to meet their obligations to us, potentially leading to an increase in credit losses.

TheA mainsubstantial share of our customer loan portfolio is represented by digital mortgage loans issued within the framework of state support programs, funded from the funds of quasi statequasi-state organizations. As of March 31, 2026, our digital mortgage loans constituted $581 million. We participate in the government mortgage program in which the Kazakhstan government provides funding in the amount of approved mortgages and buys out the mortgages after disbursement with a recourse to the bank in case of default by a borrower. We mitigate our credit risk exposure in this case by our security interest in the financed real estate property. As such, a significant rate of mortgage defaults in Kazakhstan could adversely affect our banking operations and the ultimate success of our digital mortgage product.

We reserve for potential credit losses in the future by recording a provision for credit losses in our income statement. This includes an allowance for credit losses based on management's estimates of current expected credit losses over the life of the respective credit exposures. These estimates are based on a review of past events, current conditions, and reasonable forecasts of future economic situations that might influence the recoverability of our loans. Our approach to determining these allowances involves both quantitative methods and a qualitative framework. Within this framework, management uses its judgment to evaluate internal and external risk factors. However, such judgments are inherently subject to the risk of misjudging these factors or misestimating their effects. We cannot guarantee that charge-offsCharge-offs related to our credit exposures willcan notoccur happenand in the future. Marketmarket and economic changes could lead to higher default and delinquency rates, adversely affecting our loan portfolio's quality and potentially resulting in higher charge-offs. While our estimates account for current conditions and anticipated changes during the portfolio's lifetime, actual outcomes could be worse than expected, significantly impacting our business, financial condition, results of operations and cash flows.

We extend margin loans to our brokerage customers. As of March 31, 2025,2026, we had margin lending receivables in the amount of approximately $3.3$4.7 billion and $1.7$3.3 billion as of March 31, 2024.2025. We also enter into margin loans for our own account. When we purchase securities on margin, enter into securities repurchase agreements or trade options or futures, we are subject to the risk that we, or our customers, may default on those obligations when the value of the securities and cash in our own proprietary or in the customers' accounts falls below the amount of the indebtedness. Abrupt changes in securities valuations and the failure to meet margin calls could result in substantial financial losses. Margin loans advanced to customers are collateralized by cash and securities in the customers' accounts. The risks associated with margin credit increase during periods of rapid market movements, or in cases where collateral is concentrated and market movements occur. During such times, customers who utilize margin loans and who have collateralized their obligations with securities may find that the securities have a rapidly depreciating value and may not be sufficient to cover their obligations in the event of a liquidation. We are also exposed to credit risk when our customers execute transactions, such as short sales of equities that can expose them to risk beyond their invested capital. Because we indemnify and hold harmless our clearing houses and counterparties from certain liabilities or claims, the use of margin loans and short sales may expose us to significant off-balance-sheet risk in the event that collateral requirements are not sufficient to fully cover losses that customers may incur and those customers fail to satisfy their obligations. While we have a real-time margin compliance monitoring and undertake mitigation measures, the amount of risk to which we are exposed from the margin lending we extend to our customers and from short sale transactions by our customers is potentially unlimited and not quan tifiable,quantifiable, as the risk is dependent upon analysis of a potential significant and undeterminable increase or fall in stock prices.

Furthermore, we have exposure to credit risk associated with our proprietary investments. We rely on the use of credit arrangements as a significant component of our trading strategy. Our investments are subject to price fluctuations as a result of changes in the financial markets' assessment of credit quality. Loss in securities value can negatively affect our financial performance and earnings if our management determines that such securities are other-than-temporarily-impaired ("OTTI"). The evaluation of whether OTTI exists is a matter of judgment, which includes the assessment of several factors. If our management determines that a security is OTTI, the cost basis of the security may be adjusted, and a corresponding loss may be recognized in current earnings. Deterioration in the value of securities held in our proprietary portfolio could result in the recognition of future impairment charges. Even if a security is not considered OTTI, if we were forced to sell the security sooner or at a lower price than intended, we may have to recognize an unrealized loss at that time.

We have derived a significant portion of our fee and commission income from trading activity of certain institutional market maker customers with whom we execute trades on behalf of our customers. Prior to the end of fiscal 2024, we had such an arrangement indirectly with an institutional market maker customer of our former affiliate FST Belize, and since approximately the beginning of fiscal 2024 we have had such an arrangement directly with an institutional market maker customer of our Freedom Global subsidiary. We receive a commission from such institutional market maker customers for executing their trades, including short positions and in the past we earned such commissions indirectly through commissions we received from FST Belize. For the fiscal years ended March 31, 20252026 and March 31, 2024,2025, we earned fee and commission income from the market maker customer at our Freedom Global subsidiary in an amount of $284.7$345.5 million and $196.7$284.7 million, respectively, representing 56%71% and 45%56% of our total fee and commission income for those fiscal years, and we earned interest income from margin loans to customers from such customer in an amount of approximately $32.8$21.4 million and $99.6$32.8 million, respectively, representing 15%8% and 57%15% of our total interest income from margin loans to customers for those fiscal years.

In addition, a substantial part of our revenue is derived from our major customers.customer. The aggregate revenue from such customers amounted to $317.5$367.0 million, $296.3$317.5 million, and $48.4$296.3 million in fiscal 2026, 2025, and 2024, and 2023, representing 15%,17%, 18%15% and 6%18% of our total revenue for the same periods, respectively. These concentrations of our revenues means that our results of operation and financial condition are, in part, dependent on the continuation or increase of our revenues from these particular sources. Our business, financial condition, and results of operations could be adversely affected by changes to, or the termination of, our relationships with, market maker institutions or major customers with whom we conduct a substantial amount of business or adverse developments with regard to the debt securities from which we have derived a substantial amount of trading income. Our ability to maintain close relationships with these customers is essential to the sustainability, growth and profitability of our business. The agreements we enter into with these customers do not grant us any exclusivity and do not contain any minimum service conditions.

A significant amount of our brokerage business relates to trading in U.S.-listed securities by our brokerage customers. Our PrimeExFCM subsidiary in the United States is not a licensed clearing firm. When executing trades directly in the U.S. market, we rely on the services of a limited number of third-party U.S.-registered securities broker dealer and clearing firms. We also routinely evaluate opportunities to establish relationships with other U.S.-registered securities broker-dealer and clearing firms. While partwe ofare our strategy is to considerconsidering acquiring an ownership interest in a self-clearing company in the United States in the future on an opportunistic basis in order to provide us additional access to the U.S. stock markets, there can be no assurance that we will ultimately do so. Damage to or the loss of our relationships with the U.S. registered securities broker-dealer and clearing firms on which we currently rely could impair our ability to continue to provide our customers access to the U.S. markets at the volumes and in the manner to which they are accustomed and could result in higher transaction costs for us or our customers, any of which could have a material adverse impact on our business, financial condition, results of operations and cash flows.

The majority of our non-USnon-U.S. customer brokerage transactions are executed through over-the-counter (OTC) arrangements with one non-U.S. market maker customer. All such transactions are carried out under margin-trading principles. These transactions are typically internalized and settled on a cash basis through a prime broker and clearing firms. Under this margin-account settlement process, the securities are credited to the purchaser and, where necessary, borrowed by a market maker customer within the prime broker's and clearing firm’s custody, thereby eliminating any external delivery or locate requirement at execution. Relevant short positions are sufficiently collateralized by securities and cash in the market maker customer's margin account. We use the services of third-parties,third parties, including some U.S.-registered securities broker dealer and clearing firms to execute our trades. While these models are appropriate within their respective regulatory environments, theyThese may differ from U.S.-based clearing practices and settlement practices, including those utilizing centralized depositories or real-time custody transfers. As a result, not all aspects of our brokerage model do not necessarily conform tofollow the operational norms orand protections typical of U.S. retail broker-dealers. WeInstead, we maintain risk management procedures consistent with the nature and jurisdiction of the activity,applicable activity. See also, "We are subject to extensive regulation, and wethe continuefailure to enhancecomply transparencywith laws and customerregulations disclosurecould subject us to alignmonetary expectationspenalties accordingly.or regulatory sanctions." below.

Practices involving arrangements with market makers for order flow have drawn heightened scrutiny from the U.S. Congress, the SEC, U.S. state regulators, regulators in the European Union and other regulatory and legislative authorities. Our competitors may adopt different business practices that could affect our market position. Any negative publicity surrounding practices involving arrangements of the type we utilize with market maker customers generally, or our implementation of these practices, could harm our brand and reputation. If our customers or potential customers believe that they might get better execution quality (including better price improvement) directly from stock exchanges or from our competitors that have different execution arrangements, or if our customers perceive our arrangements with our market maker customers to create a conflict of interest between us and them, or if they begin to disfavor the specific market maker customers with which we do business due to, among other things, any negative media attention regarding our arrangements, they might come to have an adverse view of our business model and might decide to limit or cease the use of our services. Some customers might prefer to invest through our competitors that do not engage in these arrangements or engage in them differently than we do. We are also exposed to the risk of regulatory action taken against us as a result of heightened scrutiny or changing regulatory rules by relevant authorities. Any such loss of customer engagement as a result of any negative publicity or regulatory action associated with our market maker customer arrangements could adversely affect our business, financial condition, results of operations and cash flows.

The proportion of our funding represented by customer term deposits and current accounts has been increasing, and we intend for this proportion to continue to increase going forward as part of our funding strategy. We obtain term deposits and customer accounts directly from retail and commercial customers and through brokerage firms that offer our term deposit and current account products to their customers. However, customer term deposits and current accounts are subject to fluctuation due to certain factors outside our control, such as increasing competitive pressures for retail or corporate customer term deposits and current accounts, changes in interest rates and returns on other investment classes, or a loss of confidence by customers in us or in the banking sector generally, any of which could result in a significant outflow of term deposits and current accounts within a short period of time. To the extent there is heightenedHeightened competition among Kazakh banks for retail customer term deposits and current accounts,accounts this competition may increaseincreases the cost of procuring new term deposits and current accounts and/or retaining existing term deposits and current accounts, and otherwise negatively affect our ability to grow our term deposit and current accounts base. An inability to grow, or any material decrease in, our term deposits and current accounts could have a material adverse effect on our ability to satisfy our liquidity needs. Some of the foregoing risks may have occurred in the past, may currently be occurring to a limited extent, or may be recurring from time to time, but have not historically resulted in, and may not necessarily result in, a material adverse effect. However, there can be no assurance that any such risks will not worsen, recur more frequently, or result in material adverse effects in the future.

To satisfy or refinance existing obligations, support the development of our business, adapt to changing business conditions or carry out our growth strategy through acquisitions, we may require additional cash resources. If our existing resources are insufficient to satisfy our cash requirements, we may seek to sell additional equity or debt securities or obtain other borrowings, and we cannot be certain that such additional financing would be available on terms acceptable to us or at all. For example, our strategy to develop a telecommunications business and the AI data center that we are considering to develop will require significant financing which will require us to raise significant capital. Any financing arrangements we may pursue or assume may require us to grant certain rights, take certain actions or agree to certain restrictions that could negatively impact our business, financial condition, and results of operations.

The sale of additional equity securities could result in dilution to our stockholders and adversely impact the price of our stock, and additionalany such equity financing could be at prices that are lower than current or then-current trading prices. Additional indebtedness would result in increased debt service costs and obligations and could impose operating and financial covenants that would further restrict our operations.operations, and any such debt financing may also not be on favorable terms, may impose restrictive covenants that limit how we manage our business and investments, and may limit our ability to pay dividends or make other distributions to shareholders. See also "If we or our controlling shareholder, Timur Turlov, sold, or there is a perception that we or Timur Turlov may sell, large amounts of shares of our common stock, this could cause the market price of our common shares to decline" below.

Each of Freedom KZ, Freedom Europe,EU, Freedom Global and Freedom Bank KZ currently holds long-term issuer credit rating of "В+" and short-term issuer credit rating of "В" from S&P Global Ratings.Ratings with positive outlook. On the Kazakhstan national scale, Freedom KZ and Freedom Bank KZ hold long-term issuer credit rating of "kzBBB kzBBВ+". FRHC holds long-term issuer credit rating of "B-". Aswith ofstable theoutlook. dateOn ofMarch this17, report,2026, Freedom LifeBank hasKZ long-termwas issuerassigned creditBa3 local and financialforeign strengthcurrency deposit ratings of "BB" with a "Stable" outlook and a "kzAA-" long-term issuer credit rating on the Kazakhstan national scale from S&P Global Ratings. Freedom Insurance has "BB-" long-term issuer credit and financial strength ratings with a "Stable" outlook and a "kzA-" Kazakhstan national scale rating from S&P GlobalMoody’s Ratings As of the date of this report, Freedom Life has a "BB" long-term issuer credit and financial strength rating on the international scale and a "kzAA-" long-term rating on the Kazakhstan national scale from S&P Global Ratings with a "Positive" outlook. Freedom Insurance has a "BB-" international scale rating and a "kzA-" Kazakhstan national scale rating from S&P Global Ratings with a "Stable" outlook.agency.

We use a significant portion of our capital to engage in a variety of investment activities for our own account, as well as in our exchange-based market making activities. As of March 31, 2025,2026, our assets included $2.3 billion in trading securities, of approximately 35.5%33.9% of which consisted of corporate debt securities and approximately 56.4%57.2% of non-U.S. sovereign debt securities. We have relied on leverage, including by entering into reverse repurchase agreements, repurchase agreements, securities borrowed and securities loaned transactions, to increase the size of our proprietary securities portfolio. As a result, we may face risks of illiquidity, loss of principal and revaluation of assets. The companies in which we invest may concentrate on markets which are or may be disproportionately impacted by pressures in the sectors on which they focus, and their existing business operations or investment strategies may not perform as projected. Such pressures may include or be exacerbated by the Russia-Ukraine conflict, the war involving Iran, recent tariff increases and trade tensions. As a result, we may suffer losses from our investment activities. Our proprietary portfolio is concentrated in sovereign debt instruments outside the USU.S. and debt of a number of companies. 97%As of March 31, 2026, 92% of sovereign bonds we hold have been issued by the Republic of Kazakhstan, while the remaining sit across Central Asian and European countries. A consequence of this investment strategy is that ourOur investment returns could be materially and adversely affected if these investments do not perform as anticipated or if the market performs differently than we forecast. Moreover, because we rely on leverage in our portfolio, when an investment does not perform within the time horizon we project, we face the risk of either having to close the position at a time when the market price or liquidity might be unfavorable, or extending financing arrangements beyond the time frame initially anticipated, which can result in paying higher financing costs than projected. If a significant investment such as this fails to perform as anticipated our return on investment, liquidity, cash flow, financial condition and results of operations could be materially negatively affected, and the magnitude of the loss could be significant.

Substantially all of our investing and market-making positions are marked-to-market on a daily basis, and declines in asset values directly impact our earnings. Although we may take measures to manage market risk, such as employing position limits, hedging and using quantitative risk measures, we may incur significant losses from our trading activities due to leverage, market fluctuations, currency fluctuations and volatility. To the extent that we own assets, i.e., have long positions, a downturn in the value of those assets or markets could result in losses. Conversely, to the extent we have sold assets we do not own, i.e., have short positions, an upturn in those markets could expose us to potentially large losses as we attempt to cover our short positions by acquiring assets in a rising market. Our investing and market-making strategies may not be effective or profitable. For example, an increase in interest rates, a general decline in debt or equity markets, an inability to properly and cost effectively hedge,hedge our positions, economic slowdowns, including as a consequence of global trade policies and tariffs, delays in timing of anticipated events, an inability to identify and engage suitable counterparties, or other market conditions adverse to entities or investments of the type in which we invest or for which we make markets, or other world events, such as wars, including the Russia-Ukraine conflict,conflict and the war involving Iran, natural disasters or the outbreak of a pandemic, could result in a decline in the value of our investments. Additionally, changes in existing laws, rules or regulations, or judicial or administrative interpretations thereof, or new laws, rules or regulations could have an adverse impact on our investments.

Depending on the reliability of the instrument used to secure the repurchase transaction, the KASE has established the size of the discount for securities. The discount is a decreasing coefficient that sets the maximum borrowing amount for repurchase transactions in relation to each individual instrument. In the event of unexpected changes in the terms of the discount, we may incur financial losses associated with the need to sell securities to cover liquidity at a cost disadvantageous to us, or due to the need to borrow necessary funds at higher rates.

Our risk management framework is designed to identify, assess, and mitigate risks across our operations, including credit, market, liquidity, operational, IT, information security, data protection, AI, legal, regulatory, reputational and ESG risks. We cannot guarantee that ourOur risk management framework willmay alwaysnot be effective, asfor example due to unforeseen circumstances or misjudgments could arise.misjudgments. If our framework fails to address a particular risk effectively, we could face losses that would negatively impact our business, financial condition, and results of operations. Regulatory bodies in the jurisdictions where we operate might also impose adverse consequences.

The following discussion and analysis is intended to assist you in understanding the results of operations and present financial condition of Freedom Holding Corp. ("FRHC") and its consolidated subsidiaries in Part II Item 8 of this annual report as well as the information set forth in Part I Item 1 "Business" of this annual report. Except where the context otherwise requires or where otherwise indicated, references herein to the "Company," "Freedom," "we," "our," and "us" mean Freedom Holding Corp.FRHC together with its consolidated subsidiaries. This discussion contains certain forward-looking statements that involve known and unknown risks, uncertainties, and other factors as described under the heading "Special Note About Forward-Looking Information" in this annual report. Actual results could differ materially from those projected in any forward-looking statements. For additional information regarding these risks and uncertainties, see the disclosure under the heading "Risk Factors" in Part I Item 1A of this annual report.

Freedom Holding Corp.FRHC is organized under the laws of the State of Nevada and acts as a holding company for all of our operating subsidiaries. Our subsidiaries engage in a broad range of activities including securities brokerage, securities dealing for customers and for our own account, underwriting, market making activities, investment research, investment counseling, retail and commercial banking, insurance products, payment services, and information processing services. We also own several ancillary businesses which complement our core financial services businesses, including telecommunications and media businesses in Kazakhstan that are in a developmental stage.

Our principal executive office is in New York, United States. We have subsidiaries or otherwise maintain a presence in Kazakhstan, Uzbekistan, Kyrgyzstan, Cyprus, Germany, the United Kingdom, Greece, Spain, France, Poland, Lithuania, Austria, Bulgaria, Italy, Netherlands, Belgium,Portugal, the United States, Turkey,Türkiye, Armenia, Azerbaijan, Tajikistan, and the United Arab Emirates. We divested our Russian subsidiaries in February 2023. Our subsidiaries in the United States include an SEC- and FINRA-registered broker dealer. As of March 31, 2025,2026, we had 8,76411,846 employees, 202230 offices (of which 4932 offered brokerage services, 5663 offered insurance services, 309 offered banking services and 67126 offered other financial and non-financial services).

◦Our interest income for fiscal 20252026 was $864.5$882.5 million, representing an increase of $36.2$18.0 million, or 4%,2%, compared to fiscal 2024.2025. The increase was primarily driven by increased usage of margin loans by customers and continued expansion of Freedom Bank KZ's customer loan portfolio. This was partially offset by lower interest income from trading securities due to a strategic reductionshift in interest-bearingour instruments.investment portfolio in response to increased market volatility and rising interest rates, which adversely impacted reinvestment decisions.

◦Our net insurance underwriting incomerevenue for fiscal 20252026 was $617.6$402.4 million, anrepresenting increasea decrease of $353.4$168.8 millionmillion, or 134%,29%, compared to fiscal 2024.2025. TheThis increasedecrease was primarily driven by thelower expansion of ourwritten insurance operationspremiums, suchreflecting asregulatory pensioncaps annuityon agent commissions for bank and accidentmicrofinance insuranceloan classesproducts, and increaseby inhigher thedeferred numberprofit ofliability customersissuance from 534,000 as of March 31, 2024 to 1,170,000 as of March 31, 2025.expense.

•We had net income of $84.5$153.3 million for fiscal 2025,2026, as compared to $375.0$76.2 million for the fiscal year ended March 31, 2024.2025.

◦Our investment securities portfolio decreasedincreased by 38%19% to $2,275.3$3,342.6 million as of March 31, 20252026 from $3,688.6$2,814.7 million as of March 31, 2024,2025, which reflects a strategic shift in response to increased market volatility and rising interest rates.

Changes in economic and political conditions, including economic output levels, interest and inflation rates, employment levels, prices of commodities including oil and gas, exogenous market events, consumer confidence levels, tariffs, fiscal and monetary policy can affect market conditions. While many global financial markets have shown signs of improvement in recent years, uncertainty remains. A period of sustained downturns and/or volatility in the securities markets, and/or prolonged levels of increasing interest rates, could lead to a return to increased credit market dislocations, reductions in the value of real estate, and other negative market factors which could significantly impact our revenues and profitability.

Financial markets may also be impacted by armed conflicts, political and civil unrest occurring in the Middle East, Eastern Europe, Russia and Ukraine, South America and Asia. Hostilities between Russia and UkraineUkraine, war involving Iran and the corresponding political and economic instability in the Middle East, including blockage of crucial transportation routes, have created global uncertainties around the spread of the conflict and have impacted global supply chains of energy supplies and food supplies throughout the world. These issues could have unforeseen and negative impacts upon the financial markets and our company and its operations.

Over the past few years, we have significantly expanded our customer base across brokerage, banking, and insurance by building a unified digital ecosystem. At the core of this growth is the launch of our SuperApp, which brings together essential financial services, including banking, insurance and lifestyle services in a single application. The addition of attractive loyalty and referral programsprograms, improvement and further diversification of our offerings within our SuperApp during fiscal 2026 has further supported customer adoption, increasing overall engagement within the ecosystem. Our mission is to provide our customers with the most convenient, seamless, and beneficial experience possible, engaging them across a broad range of digital products, each offered on terms designed to deliver maximum value and ease of use.

We actively pursue non-organic growth through targeted acquisitions as part of our broader strategy to develop and expand our integrated digital fintech ecosystem. These acquisitions enable us to quickly enhance existing services, enter complementary markets and gain new technological capabilities, significantly influencing our business and financial performance. Additionally, consistent with our strategic vision, we havecontinue in recent years initiated expansionexpanding into new business sectors, including telecommunications and media content in Kazakhstan. OurIn telecomline business,with Freedomour Telecom,expectations, willour require significant capital investmentsoperations in networkthese infrastructure,sectors licenses,are incurring losses and targetedwe acquisitions,expect and is expectedthem to incur operating losses in its initial years, transitioning to profitability over the medium term. Similarly, our newly established subsidiary, Freedom Media, will deliver a broad portfolio of digital media content to our customers, alsocontinue incurring initial losses before becoming profitable within the next several years. While these new ventures are anticipated to enhance long-term growth prospects, they will initially increase capital expenditures, elevate our debt service obligations, and negatively impact consolidated net income during the early stages of implementation.

OurAdditionally, relatedas partypart transactions in the fiscal years 2025 and 2024 primarily include margin lending receivables from brokerage services, deposits held at Freedom Bank KZ, prepayments related toof our potentialcommunity acquisitionsengagement and certain consumer loans purchased from FFIN Credit, an entity controlled by Mr. Turlov. Additionally,initiatives, we have continued to financially support the Kazakhstan Chess Federation -Federation, an organization in which Mr. Turlov holds a management positionposition, -and the Freedom Youth Football League of Kazakhstan, which is fully owned by Turlov Private Holding, in which Mr. Turlov holds 99.9% of the shares, as part of our community engagement initiatives. For additional information regarding our related party transactions see Note 2324 "Related Party Transactions" in the notes to our consolidated financial statements contained in Part II Item 8 of this annual report.

We have derived a significant portion of our fee and commission income and interest income from margin loans to customers from trading activity of certain institutional non-US market maker customers with whom we internalize the execution of trades of our brokerage customers by accepting short sales from this institutional market maker, which match our customers’ purchase orders. Since around the beginning of fiscal 2024, we utilize such an arrangement with an institutional market maker customer of our Freedom Global subsidiary. All such transactions are carried out under margin-trading principles. These transactions are typically executed and settled on a cash basis through a prime broker and clearing firms. Under this margin-account settlement process, the securities are credited to the purchaser and, where necessary, borrowed by a market maker customer within the prime broker's and clearing firm’s custody, thereby eliminating any external delivery or locate requirement at execution. Relevant short positions are sufficiently collateralized by securities and cash in the market maker customer's margin account. We use the services of third-parties, including some U.S.-registered securities broker dealer and clearing firms to execute our trades. We earn fee and commission income from such market maker customers for executing trades as well as commissions paid by them for order flow, which is net compensation received from firms to which our broker-dealer subsidiaries send equity and options orders, and fees for outstanding short sale positions. We also earn interest income on margin loans we grant to them. Our arrangements with such market maker customers have provided us and our customers with substantial liquidity for trading, including reduced settlement costs for us and enabling faster execution of trades for our customers. Prior to the end of fiscal 2024, we had such an arrangement indirectly with an institutional market maker customer of our former affiliate FST Belize, and since approximately the beginning of fiscal 2024 we have had such an arrangement with an institutional market maker customer of our Freedom Global subsidiary. We receive a commission from such institutional market maker customers for executing their trades, and in the past we earned such commissions indirectly through commissions we received from FST Belize.trades. For thefiscal year2026 ended March 31,and 2025, we earned fee and commission income from the market maker customer at our Freedom Global subsidiary of $345.5 million and $284.7 million, representing 71% and 56% of our total fee and commission income for fiscal 2026 and 2025. For thefiscal years ended March 31, 20252026 and 2024,2025, we earned interest income from margin lending from the market maker customer at our Freedom Global subsidiary of approximately $32.8$21.4 million and $99.6$32.8 million, respectively, representing 15%8% and 57%,15%, respectively, of our total interest income from margin lending for fiscal 2026 and 2025.

Our earnings are and will be affected by the monetary, fiscal and foreign policies of the governments of the jurisdictions in which we operate, in particular Kazakhstan, Armenia, the European Union and the United States. The monetary policies of these countries may have a significant effect upon our operating results. It is not possible to predict the nature and impact of future changes in monetary and fiscal policies.

Fee and commission income as a percentage of our total revenue was 25%22% and 26%25% in the fiscal years ended, March 31, 20252026 and 20242025 respectively. Retail brokerage service fee and commission income as a percentage of our total fee and commission income was 85%103% and 76%85% in the fiscal years ended March 31, 20252026 and 2024,2025, respectively.

The Company enters into various derivative financial instruments, including forwards and swaps, in the foreign exchange markets. These financial instruments are held for trading and are initially recognized at fair value. Fair value is determined based on quoted market prices or valuation models that consider the current market and contractual values of the relevant underlying instruments, along with other factors. Derivative financial instruments with a positive fair value are recorded as assets, while those with a negative fair value are recorded as liabilities. Gains and losses on these instruments are recognized in the Consolidated Statements of Operations and Statements of Other Comprehensive Income as net gain/(loss)/gain on derivatives.

The functional currencies of our operating subsidiaries are the Kazakhstan tenge, the euro, the U.S. dollar, the UzbekistanUzbekistani som,sum, Kyrgyzstani som, the Azerbaijani manat, the Armenian dram, the British pound sterling, the Turkish lira, the Tajikistani somoni and the United Arab Emirates dirham. Our reporting currency is the U.S. dollar. Pursuant to U.S. GAAP, we are required to revalue our assets from our functional currencies to our reporting currency for financial reporting purposes.

Net (Loss)/Income Attributable to Non-controlling Interest

Net (loss)/income attributable to non-controlling interest includes our net (loss)/income attributable to our non-controlling interests in ReKassa. As of March 31, 2025, we held 90% of the ownershipentities interestdescribed in ReKassa. The remaining 10.00% ownership interest in ReKassa is considered as non-controlling interests in our Consolidated Statements of Operations and Statements of Other Comprehensive Income.below.

As of March 31, 2024, FRHC held a 94.73% ownership interest in Arbuz, with the remaining 5.27% recognized as non-controlling interests in our Consolidated Statements of Operations and Other Comprehensive Income, Consolidated Statements of Shareholders' Equity, and Consolidated Statements of Cash Flows. During fiscal 2025, we acquired the remaining 5.27% ownership interest in Arbuz. As of March 31, 2025, we held 90% of the ownership interest in Comrun LLP. The remaining 10.00% ownership interest in Comrun LLP is considered as non-controlling interests in our Consolidated Statements of Operations and Statements of Other Comprehensive Income.

Comparison of Fiscal Years Ended March 31, 20252026 and 20242025

The following comparison of our financial results for the fiscal years ended March 31, 20252026 and 20242025 is not necessarily indicative of future results. Prior period presentations and disclosures for fiscal 20242025 were reclassified to provide comparability with current period classifications. The comparison of our financial results for the fiscal years ended March 31, 20242025 and 20232024 can be found in "Management's Discussion and Analysis of Financial Condition and Results of Operations - Results of Operations - Comparison of Fiscal Years Ended March 31, 2024, 20232025 and 2022”2024" in Part II, Item 7 of our annual report on Form 10-K for the fiscal year ended March 31, 20242025 filed with the SEC on June 14,13, 2024.2025.

Fee and commission income for the fiscal year ended March 31, 20252026 amounted to $505.0$489.8 million, reflecting ana increasedecrease of $64.7$15.3 million or 15%3% compared to $440.3$505.0 million in the fiscal year ended March 31, 2024.2025. This increasedecrease was driven by multiple factors, including the factors discussed below.

Fee and commission income from brokerage services generated $430.1$504.3 million, representing a 29%17% increase from $333.4$430.1 million in fiscal 2024.2025. This growth was primarily due to an increase in the number of retail brokerage customers from 530,000 in 2024 to 683,000 in 2025.2025 to 858,000 in 2026. During the fiscal year 2025,2026, we earned fee and commission income from a market maker customer at our subsidiary Freedom Global of $284.7$345.5 million, representing 56%71% of our total fee and commission income for that period.

Fee and commission income from banking services decreased by $11.8$87.7 million tofrom income of $13.3 million duringin fiscal 2025,2025 despiteto a significantloss increaseof $74.3 million in transactionfiscal volume following the successful launch of SuperApp in April 2024.2026. The decrease was primarily driven by the launch and active use of a cashback-based loyalty program. As a result, the growth in transaction volumes and customer activity during fiscal 2026 was more than offset by higher cashback incentives recognized within fee and commission income. As part of our strategic approach, we do not prioritize revenue generation from banking service commissions. Instead, the loyalty program is leveraged to effectively reduce transaction costs for customers, supporting customer base expansion and increased engagement across the ecosystem.

Net gain/(loss)/gain on trading securities

We had a net lossgain on trading securities of $57.8$158.8 million for the fiscal year ended March 31, 2025,2026, a decreaseincrease of $191.7$216.6 million as compared to $133.9$57.8 million for the fiscal year ended March 31, 2024.2025. The following table sets forth information regarding our net gains and losses on trading securities for fiscal 20252026 and 2024.2025.

For the fiscal year ended March 31, 2025,2026, we had a realized gain on trading securities of $65.9$164.0 million, which is mostly attributable to Kazakhstan sovereign bondsand corporate debt securities sold during the fiscal 2025.2026. Also, we recognized a temporaryan unrealized net loss of $123.7$5.1 million during the same period due to thea decrease in the value of securities positions we held as of March 31, 2025.2026. The majorityunrealized of this unreal izednet loss is relatedattributable to Kazakhstan sovereign bonds, which experienced a negative revaluation following an increasedecrease in the basefair interestvalue rateof securities positions remaining in Kazakhstanour duringportfolio Marchat 2025.period-end.

DuringFor thefiscal year ended March 31, 2024,2025, we had a realized gain on trading securities of $38.1$65.9 million, which is attributable to Kazakhstan sovereign bondsdebt securities sold during thefiscal year2025. endedAlso, Marchwe 31,recognized 2024.a We had antemporary unrealized net gainloss of $123.7 million due to the decrease in the yearvalue ended March 31, 2024, due toof securities positions we held atas of March 31, 2024, having appreciated by $95.7 million.2025. The majority of thethis unrealized netloss gainis was attributablerelated to appreciated Kazakhstan sovereign bonds, which appreciation was primarily due toexperienced a declinenegative revaluation following an increase in the National Bank of the Republic of Kazakhstan's base interest rate in Kazakhstan during the year ended March 31, 2024.2025.

For the fiscal year ended March 31, 2025,2026, we had interest income of $864.5$882.5 million, representing an increase of $36.2$18.0 million, or 4%,2%, compared to the fiscal year ended March 31, 2024.2025. The increase in interest income was primarily attributable to increases in interest income on loans to customers, margin loans to customers, loansheld-to-maturity to customerssecurities and securities available-for-sale.available-for-sale, which was partially offset primarily by a decrease in interest income on trading securities and interest income on reverse repurchase agreements and amounts due from banks.

As of DecemberJune 31,30, 2025,2026, there have been no material changes from the risk factors previously disclosed in response to Item 1A toof Part I of our 20252026 Form 10-K.

This quarterly report on Form 10-Q contains, and any related discussions containsmay contain, forward-looking statements within the meaning of Sectionthe 21E of thePrivate Securities ExchangeLitigation Reform Act of 1934,1995. asForward-looking amendedstatements (thegenerally "Exchangerelate Act"),to whichfuture involveevents substantialor risksour andfuture uncertainties.financial or operating performance. 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," "mission," "plan," "potential," "predict," "project," "should," "strategy," "will," "would," and other similar expressions and their negatives. Forward-looking statements generally relate to future events or our future financial or operating performance. All statements, other than statements of historical fact, included herein and in the documents incorporated by reference in this quarterly report on Form 10-Q are forward-looking statementsstatements, within the meaning of Section 21E of the Exchange Act, including, without limitation,including statements regarding our aims, goals, andstrategic goals, priorities, plans and objectives, includingplans to obtain licenses; key prospective markets; business missionstrategy, including our strategy for expansion of business and strategy,entry into new business areas, such as the telecommunications, media and health sectors in Kazakhstan; our plans with respect to Freedom Media; the development of our digital fintech ecosystem development, features and performance of; our products and services,services and expected operations, including Tradernet, Freedom SuperApp and Freedom Business mobile applications, our plans for expansion into telecommunication, media and other markets,; expected capital expenditures and plans to finance such capital expenditures,expenditures; our artificial intelligence ("AI") data center development project; the expected impact of changes in tax laws, credit loss exposure, credit ratings and outlook, the expected impact of new accounting pronouncements,pronouncements; prospectsacquisitions relatedand tobusiness expansions in various regions or jurisdictions; treasury policy; regulatory investigations, including their preliminary determinations and potential outcomes, the Kazakhstanpotential Sovereign AI Hub development, compliance, information security, acquisitions, paymentoutcome of cash dividends on our common stock, treasury policy, statements with respect to legal proceedings, our plans for expanding our banking segment,proceedings; and other non-historical statement.statements.

Forward-looking statements are not guarantees of future performance and involve known and unknown risks and uncertainties, many of which may be beyond our control. Readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date hereof, and actualActual results could differ materially as a result of various factors. The following are some but not all of the factors that could cause actual results or events to differ materially from anticipated results or events:

•economic, political,economic and regulatorypolitical conditions in the regions where we operate or in which we have customers;

•economic sanctions and countersanctions including those that limit movement of funds, restrict access to capital markets, block access to third party technologies and IT services or curtail our ability to service existing or potential new customers;

•the outcome and impact of legal and regulatory actions, proceedings, investigations and disputes;

•the policies and actions of regulatory authorities in the jurisdictions in which we have operations, including changes in U.S. or other countries' trade policies, the imposition of tariffs and retaliatory tariffs, as well as the degree and pace of regulatory changes and new government initiatives generally;

•the impact of rapid technological change, including incorporation of artificial intelligence (AI) technologies into products and processes;

•market risks and fluctuations affecting the value of our proprietary investments;

You should not place undue reliance on forward-looking statements. Forward-looking statements are based on the beliefs of management as well as assumptions made by and information currently available to management and applyare made only as of the date of this quarterly report or the respective dates of the documents from which they incorporateare incorporated by reference. Neither we nor any other person assumes any responsibility for the accuracy or completeness of forward-looking statements. Further, exceptExcept to the extent required by law, we undertake no obligationobligations to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise. We may also make additional forward-looking statements from time to time. All such subsequent forward-looking statements, whether written or oral, made by us or on our behalf, are also expressly qualified by these cautionary statements.

Freedom Holding Corp. ("FRHC") is organized under the laws of the State of Nevada and acts as a holding company for all of our subsidiaries. Our subsidiaries engage in a broad range of activities including securities brokerage, securities dealing for customers and for our own account, market making activities, investment research, investment counseling, retail and commercial banking, and insurance products. We also own several ancillary businesses and lifestyle solutions, which complement our core financial services businesses, including payment and information processing services, entertainment and travel ticketing services, e-commerce business, cloud services, and telecommunications andas well as media businesses in Kazakhstan that are in a developmental stage.

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, Japan, Uzbekistan, Kyrgyzstan, Georgia, Tajikistan, Azerbaijan, Turkey,Türkiye, Bulgaria, Germany, Greece, Lithuania, The Netherlands, SpainPortugal, Spain, Austria, France and wePoland and the Group also havehas arepresentative presenceoffice in Austria, France, Italy, and Poland. We divested our Russian subsidiaries in February 2023.Italy. Our subsidiaries in the United States include an SEC- and FINRA-registered broker dealer. As of DecemberJune 31,30, 2025,2026, we had 11,31112,100 full-time employees and 233264 offices (of which 3634 offered brokerage services, 6172 offered insurance services, 3940 offered banking services and 97118 offered other financial and non-financial services).

During the first quarter of fiscal 2026, the Company'sFRHC's common stock wasis included in the Russell 3000® Index.

Our Banking segment primarily consists of the operations of Freedom Bank KZ and Freedom Bank TJ.

Freedom Bank KZ is a pioneer in digital retail and commercial banking services in Kazakhstan, offering deposits, multi‑currency payment cards, consumer and SME loans, payment and acquiring solutions. The bank extends our capital market heritage into everyday finance, providing the funding, payments and credit backbone of the wider Freedom ecosystem. Our Freedom Bank TJ obtained its banking license on October 15, 2024 and continues the phased rollout of its operations. We are also considering plans for expanding our banking segment to other jurisdictions which is contingent upon, among other factors, prevailing market conditions and obtaining the required regulatory approvals.

As of DecemberJune 31,30, 2025,2026, FreedomBanking Banksegment KZ'scombined assets increased by 13%.12% Into particular,$6,026.1 million, trading portfolio decreasedincreased by 13%,31% to $2,266.8 million, held-to-maturity portfolio increased by 544%,21% to $521.5 million, loan portfolio increaseddecreased by 23%,2% to $1,999.0 million, deposit portfolio increased by 30%,20% into each$3,033.4 casemillion, in comparison with March 31, 2025.2026. The increase in the loandeposit, trading and depositheld-to-maturity portfolios reflects continued customer demand anddemand, growth in our banking services, and increased investment activity, while the decline in tradingthe loan portfolio alignswas withprimarily ourdriven strategicby focusloan onrepayments coreduring bankingthe operations.period.

We have 3940 office locations in KazakhstanKazakhstan, Tajikistan and Tajikistan that provide banking services to our customers.Georgia. As of DecemberJune 31,30, 2025,2026, we had 3,7643,847 employees in our Banking segment, all of which were full-time employees.

WeFRHC haveowns two insurance companiescompanies, both in Kazakhstan, a life insurance company,Kazakhstan: Freedom Life,Life and a direct insurance carrier, excluding life, health and medical, Freedom Insurance.

•Freedom Life. 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 DecemberJune 31,30, 2025,2026, Freedom Life had 329,167291,543 customers and 325,407 active contracts, as compared to 1,038,516279,615 customers and 319,538 active contracts as of March 31, 2025.2026. "Active contracts" refers to insurance policies that are currently in force, meaning they have been issued and are not expired, canceled, or otherwise inactive as of the reporting date. The decrease in active contracts was due to the newly introduced regulatory cap on commissions to insurance agents for policies associated with bank and microfinance loan products, which reduced new business volumes during the first quarter of fiscal 2026. As of DecemberJune 31,30, 2025,2026, Freedom Life had total assets of approximately $597.5$784.3 million and total liabilities of approximately $462.5$681.7 million, as compared to total assets of approximately $554$665.5 million and total liabilities of approximately $465.9$546.5 million as of March 31, 2025.2026.

•Freedom Insurance. Freedom Insurance operates in the "general insurance" industry and is the leader in online insurance in Kazakhstan offering various general insurance products in property (including automobile), casualty, civil liability, personal insurance and reinsurance. As of DecemberJune 31,30, 2025,2026, Freedom Insurance had 1,383,501632,667 customers and 1,032,789 active contracts, as compared to 824,838837,275 customers and 1,299,046 active contracts as of March 31, 2025.2026. The decrease was mainly due to the expiration of Motor Third Party Liability insurance contracts. As of DecemberJune 31,30, 2025,2026, Freedom Insurance had total assets of approximately $222.6$264.9 million and total liabilities of approximately $167.0$165.6 million, as compared to total assets of approximately $157.4$226.7 million and total liabilities of approximately $105.5$133.6 million as of March 31, 2025.2026.

As of DecemberJune 31,30, 2025,2026, we had 6172 offices and 1,0871,289 employees, including 1,0691,267 full-time employees and 1822 part-time employees, providing consumer life and general insurance services in Kazakhstan.

As of DecemberJune 31,30, 2025,2026, in our Other segment we had 97118 offices and 4,5075,367 employees, including 4,2645,091 full-time employees and 243276 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 the recent years, we have also established subsidiaries in Kazakhstan and UAE with a view to developing a telecommunications business and a media business, each of which is in the developmentalearly stage.stage of development. In our Other segment we also conduct proprietary securities trading activities, which are mainly conducted by FRHC. Revenue in this segment is mainly derived from online retail trade and e-commerce services, provision of payment processing services, retail online ticket sales and online aggregation of purchasing air and railway tickets.

We operate as a single ecosystem that delivers multicurrencyfinancial banking, payments, credit, brokerage, insurance, merchant acquiringservices and selected lifestyle services through one login and interface. Each service is built to interoperate with the others - balances transfer instantly, loyalty rewards accrue across products and customer data is captured only once, so the combined offering is more useful to customers and more efficient for us.

Our operating entities share customer transaction flows, interactions and profile updates to big data that is also enriched by our integration with government services.data. Predictive AI models built on this consolidated record set help us personalize ourpersonalized products and services, adjust credit limits, rank cross-selling offers and screen payments for fraud or sanctions within milliseconds, allowing low‑risk traffic to settle automatically while only exceptional cases move to manual review. Integration with government services reachingenriches the dataset with verified third‑party information, so loan and account forms are pre‑filled and collateral ownership confirmed without paper, reducing onboarding from days to minutes. The combined effect of- smarter targeting, faster fulfillment and fewer manual touch‑points which lowers acquisition cost and raises both customer lifetime value and retention.

The  Freedom SuperApp ("Freedom SuperApp" or "SuperApp") is the Group’sGroup's front end for all retail banking, payment, insurance and lifestyle services. A single sign‑on process and biometric authentication grant access to multi‑currency accounts, credit, investment, card management and lifestyle commerce. All modules are built on a micro‑services architecture with openAPIs (Application Programming Interfaces (APIsInterface) to nearly one hundred government and commercial data sources.

The SuperApp supports accounts and payments in KZT, multiple foreign currencies and Freedom  Currency, an exchange‑traded note linked to the performance of FRHC common stock. Our app provides our customers with a loyalty and referral program, access to a lifestyle marketplace with embedded verticals including ticketing (cinema, concerts via Freedom Ticketon), travel bookings (Freedom Travel), mediastreaming contentservices (Freedom Media), grocery delivery (Arbuz) and, on‑demand home services (Naimi), news feed (Super Journal), health services (My Health), auto accessories and tires (Freedom Drive), mobile phones and electronic devices (Freedom Mobile), e-SIMtravel cards,e‑SIM, a digital pharmacy, motor accident reporting and Europrotocol‑based insurance claim filing without police involvement (DTP.kz), a social‑commerce feed where users publish purchases to earn likes and points that drive enhanced cashback (Freedom Lenta), digital issuance and servicing of voluntary health, motor and financial‑protection insurance policies, and a digitalgovernment pharmacy.e‑services gateway enabling online document processing, tax and fine payments and submission of applications to state agencies. Customers elect to pay in cash, by installment credit or with accumulated loyalty rewards. The app also integrates customer wealth information into a real‑time net‑worth view generating secured‑loan offers where collateral is available. In addition, it enables customers to automatically complete and file certain individual tax declarations required by Kazakhstan law. All our core lending lines operate on the same end‑to‑end digital rail inside the SuperApp, enabling our eligible customers to obtain digital mortgage loans and consumer digital auto loans in a streamlined, automated way.

Our Freedom Business mobile application is a full-featured mobile bank designed for individual entrepreneurs. It provides customers with 24/7 mobile access to financial management tools, including access to current accounts, balance monitoring, account detail viewing, and statement downloads. The app enables customers to perform a full range of transactions, such as payments to counterparties, transfers to the state budget, internal account transfers, and payroll management, including direct transfers to employees. The appapplication also includes advanced acquiring functionalities, such as online ordering of point-of-sale (POS) terminals and corporate cards, accepting payments via QR code, and monitoring sales analytics. In addition, Freedom Business integrates various value-added services, including the AirShop partner marketplace builder which enablesenabling customers to launch an online store within minutes, an AI assistant, access to credit products, and a cashback loyalty program.

In alignment with our digital fintech ecosystem strategy, we are expandingseeking to expand by developing our business by entering the telecommunications marketand cloud services in Kazakhstan and a regional media industrybusiness 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, fixed wireless access (FWA), 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 in Kazakhstan is operated by Freedom Telecom, a wholly-owned subsidiary of Freedom Holding Corp.,FRHC incorporated under the laws of the AIFC. As Freedom Telecom represents a new line of business,business. itsIts strategy and budget are evolving dynamically in response to internal developments and external market factors, which may result in material adjustments.adjustments to this strategy and our plan to develop this business. Our plan is that our telecom services will be offered as a separate product and inas apart of bundle offerings with our other digital products and services and will expand the ecosystem’s reach to areas where traditional banking channels are less efficient. Management expects the FWA grid to evolve into the backbone for a future mobile operator, providing additional distribution capacity for our digital services and generating new data streams that feed our predictive AI models. The combined effect should widen our addressable market, deepen engagement across product lines and further reduce the unit cost of serving each customer. Through entities incorporated under the AIFC laws, we also operate Freedom Cloud thatwhich wasis structured during the third quarter of fiscal 2026 as a standalone business line. Freedom Cloud is an essential component of our digital ecosystem that delivers advanced cloud infrastructure and related services both within the Group and to external clients, including major enterprises and government entities.

In November 2025, the Company entered into a non-binding arrangement with the Kazakhstan Ministry of Artificial Intelligence and Digital Development providing for potential collaboration on the development of a $2 billion Sovereign AI Hub in Kazakhstan. The proposed AI Hub is to utilize NVIDIA’s latest computing architecture and be located at a site in Kazakhstan with 100 MW of available power, with the Company acting as the principal financing and implementation partner. The development of this project will require significant financing. In addition to strengthening Kazakhstan’s position in the global AI landscape, the initiative may enhance the Company’s competitiveness in AI innovation and support its long-term growth strategy.

On June 26,24, 2025,2026, S&P Global Ratings ("S&P") revisedraised its outlook to positive from stable and affirmed its 'B+/B' long- and short-termlong-term issuer credit ratings to 'BB-' from 'B+' on Freedom KZ, Freedom EU, Freedom Global, and Freedom Bank KZ. S&PThe affirmed 'B-' long-term ratingoutlooks on Freedomthese Holdingentities Corp.are and maintained the stable outlook.stable. The ratings of Freedom KZ and Freedom Bank KZ on the national scale were increased from "kzBBВ+" to "kzBBВ+kzA-". The positiveupgrade outlookreflects onFreedom Group's financialthree-year operatingtrack companiesrecord reflects substantial achievements in establishingof consolidated risk management and compliance and strengthening of these functions inat its financial subsidiaries.

Our operations have been, and may continue to be, affected by certain key factors as well as certain historical events. The key factors affecting our business and the results of operations include, in particular: market and economic conditions, expansion of our digital ecosystem, acquisitions and expansion into new business areas and markets, our transactions with related parties, our arrangements with market maker customers, and governmental policies. 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 2026 Form 10-K and "Risk Factors" in Part I, Item 1A, of the 2026 Form 10-K.

The highlights of our consolidated results for the three months ended DecemberJune 31,30, 20252026 are as follows:

We had total revenues, net of $628.6$732.5 million for the three months ended DecemberJune 31,30, 2025,2026, as compared to $664.6$524.0 million for the three months ended DecemberJune 31,30, 2024.2025. The decreaseincrease between the two quarters was primarily attributable to the following: