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Quarterly Record Combined Investment Banking Advisory and Underwriting Net Revenues, as well as Quarterly Record Equities Net Revenues
NEW YORK--(BUSINESS WIRE)--Jefferies Financial Group Inc. (NYSE: JEF)
Q2 Financial Highlights
$ in thousands, except per share amounts
Quarter End
Year-to-Date
2Q26
2Q25
2026
2025
Net earnings attributable to common shareholders
$
226,234
$
88,017
$
382,161
$
215,955
Diluted earnings per voting common share
$
1.02
$
0.40
$
1.70
$
0.97
Return on adjusted tangible shareholders' equity1
12.8
%
5.5
%
12.2
%
6.9
%
Total net revenues
$
2,206,451
$
1,634,447
$
4,223,581
$
3,227,466
Investment banking net revenues
$
1,206,820
$
766,307
$
2,224,113
$
1,466,999
Capital markets net revenues
$
799,292
$
704,155
$
1,578,048
$
1,402,439
Asset management net revenues
$
187,718
$
154,621
$
407,980
$
346,336
Pre-tax earnings
$
315,549
$
134,901
$
527,765
$
285,966
Book value per common share
$
51.95
$
49.96
$
51.95
$
49.96
Adjusted tangible book value per fully diluted share3
$
34.55
$
32.84
$
34.55
$
32.84
Quarterly Cash Dividend and Stock Buyback Activity
The Jefferies Board of Directors declared a quarterly cash dividend equal to $0.40 per Jefferies common share, payable on August 28, 2026 to record holders of Jefferies common shares on August 18, 2026.
During the quarter, we repurchased 4.0 million shares of common stock for $197 million, or an average price of $49.83 per share. Our Board of Directors has increased our share buyback authorization back to a total of $250 million.
Management Comments
"Our strong second quarter net revenues of $2.21 billion, net earnings attributable to common shareholders of $226 million, diluted earnings per voting common share of $1.02 and return on adjusted tangible shareholders' equity of 12.8% reflect the momentum and market position we have been building at Jefferies.
"The continued acceleration in our core businesses during the second quarter drove record first half net revenues in Advisory, total Investment Banking, Equities, total Capital Markets and combined Investment Banking and Capital Markets. We expect to build further on this momentum in coming periods.
“Investment Banking net revenues were $1.21 billion, up 57% from the prior year quarter. Growth was driven by continued market share gains and a growing addressable market in our Advisory and Equity Underwriting businesses and represent a balanced performance, as no single outsized fee drove our results. We continue to make progress in building our corporate M&A business, while staying focused on our historical areas of strength in sponsor-led activity and had very strong performance during the quarter with corporates particularly in the healthcare, industrials and energy sectors. The new issue market remains resilient. We continue to be optimistic about the second half of 2026, given the strength of our current backlog and new business bookings.
"Capital Markets net revenues were $799 million, up 14% from the prior year quarter. Equities delivered record net revenues of $601 million, up 14% from the prior year quarter. Our continued growth in Equities is being driven by market share gains in cash and electronic trading in EMEA, Asia and the Americas, as well as growth in prime services where we have become an increasingly important strategic partner to some of the most significant, well diversified, hedge funds in the world. While the growth of client-related prime brokerage balances has added to our overall balance sheet size, it has added a layer of high quality, consistent revenues that supports a more durable earnings profile. Additionally, our equity derivatives business continues to expand in sync with our investment banking business, and has allowed Jefferies to support some of our corporate clients' most important transactions with strategic derivative solutions. The shape and scale of growth in our Equities business is translating to higher overall equities operating margins after we invested the past few years in infrastructure to support meaningfully larger global volumes. Fixed Income net revenues were $199 million, up 12%, from the prior year quarter, reflecting strong performance in our distressed, municipal and emerging markets businesses.
"Asset management fees and investment return revenues were $46 million, down 35% compared to the prior year quarter due to weaker performance across several fund strategies, as well as the impact of our strategy to reposition the business by reducing capital allocated to certain funds in line with the announcement we made last fall when we disclosed our intent to acquire 50% of Hildene. In the short term, this has resulted in modestly lower investment return until we close our investment in Hildene, which we are targeting to complete in our third quarter, and should be immediately accretive to results."
Richard Handler, CEO, and Brian Friedman, President
Financial Summary (Unaudited)
$ in thousands
Three Months Ended
Six Months Ended
May 31,
2026
February 28,
2026
May 31,
2025
May 31,
2026
May 31,
2025
Net revenues by source:
Advisory
$
674,118
$
527,128
$
457,860
$
1,201,246
$
855,640
Equity underwriting
370,691
305,969
122,366
676,660
250,886
Debt underwriting
160,186
181,858
205,363
342,044
404,725
Other investment banking
1,825
2,338
(19,282
)
4,163
(44,252
)
Total Investment Banking
1,206,820
1,017,293
766,307
2,224,113
1,466,999
Equities
600,751
558,488
526,244
1,159,239
935,302
Fixed income
198,541
220,268
177,911
418,809
467,137
Total Capital Markets
799,292
778,756
704,155
1,578,048
1,402,439
Total Investment Banking and Capital Markets Net revenues5
2,006,112
1,796,049
1,470,462
3,802,161
2,869,438
Asset management fees and revenues6
15,169
69,910
20,766
85,079
109,396
Investment return
31,037
88,992
50,404
120,029
44,770
Allocated net interest4
(22,935
)
(22,238
)
(19,144
)
(45,173
)
(36,365
)
Other investments, inclusive of net interest
164,447
83,598
102,595
248,045
228,535
Total Asset Management Net revenues
187,718
220,262
154,621
407,980
346,336
Other
12,621
819
9,364
13,440
11,692
Total Net revenues by source
$
2,206,451
$
2,017,130
$
1,634,447
$
4,223,581
$
3,227,466
Non-interest expenses:
Compensation and benefits
$
1,188,245
$
1,085,890
$
854,839
$
2,274,135
$
1,695,966
Compensation ratio13
53.9
%
53.8
%
52.3
%
53.8
%
52.5
%
Non-compensation expenses
$
702,657
$
719,024
$
644,707
$
1,421,681
$
1,245,534
Non-compensation ratio13
31.8
%
35.6
%
39.4
%
33.7
%
38.6
%
Total Non-interest expenses
$
1,890,902
$
1,804,914
$
1,499,546
$
3,695,816
$
2,941,500
Net earnings before income taxes
$
315,549
$
212,216
$
134,901
$
527,765
$
285,966
Income tax expense
$
65,571
$
52,870
$
43,506
$
118,441
$
57,722
Income tax rate
20.8
%
24.9
%
32.3
%
22.4
%
20.2
%
Net earnings
$
249,978
$
159,346
$
91,395
$
409,324
$
228,244
Net losses attributable to noncontrolling interests
(5,440
)
(15,858
)
(7,668
)
(21,298
)
(14,651
)
Preferred stock dividends
29,184
19,504
11,046
48,461
26,940
Net earnings attributable to common shareholders
$
226,234
$
155,700
$
88,017
$
382,161
$
215,955
Results Discussion
* * * *
Amounts herein pertaining to May 31, 2026 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Quarterly Report on Form 10-Q with the Securities and Exchange Commission (“SEC”). More information on our results of operations for the three and six months ended May 31, 2026 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC, which we expect to file on or about July 9, 2026.
This press release contains certain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current views and include statements about our future and statements that are not historical facts. These forward-looking statements are usually preceded by the words “should,” “expect,” “intend,” “may,” “will,” "would," or similar expressions. Forward-looking statements may contain expectations regarding revenues, earnings, operations, and other results, and may include statements of future performance, plans, and objectives. Forward-looking statements may also include statements pertaining to our strategies for future development of our businesses and products. Forward-looking statements represent only our belief regarding future events, many of which by their nature are inherently uncertain. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors, including Risk Factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in reports we file with the SEC. You should read and interpret any forward-looking statement together with reports we file with the SEC. We undertake no obligation to update or revise any such forward-looking statement to reflect subsequent circumstances.
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s).
Consolidated Statements of Earnings (Unaudited)
$ in thousands, except per share amounts
Three Months Ended May 31,
Six Months Ended May 31,
2026
2025
2026
2025
Revenues
Investment banking
$
1,209,625
$
789,269
$
2,227,909
$
1,518,779
Principal transactions
488,666
338,507
976,164
745,737
Commissions and other fees
400,614
353,233
768,218
641,533
Asset management fees and revenues
9,788
20,076
77,150
105,484
Interest
853,962
878,025
1,667,081
1,723,196
Other
155,542
115,205
272,940
232,450
Total revenues
3,118,197
2,494,315
5,989,462
4,967,179
Interest expense
911,746
859,868
1,765,881
1,739,713
Net revenues
2,206,451
1,634,447
4,223,581
3,227,466
Non-interest expenses
Compensation and benefits
1,188,245
854,839
2,274,135
1,695,966
Brokerage and clearing fees
147,446
129,745
280,578
239,181
Underwriting costs
26,858
14,525
58,241
32,371
Technology and communications
162,860
146,198
322,718
285,673
Occupancy and equipment rental
34,499
30,711
68,359
60,910
Business development
89,108
80,070
164,530
152,361
Professional services
98,707
77,768
175,651
150,234
Depreciation and amortization
47,328
52,253
104,193
83,241
Cost of sales
31,253
42,961
61,173
84,529
Other expenses
64,598
70,476
186,238
157,034
Total non-interest expenses
1,890,902
1,499,546
3,695,816
2,941,500
Earnings before income taxes
315,549
134,901
527,765
285,966
Income tax expense
65,571
43,506
118,441
57,722
Net earnings
249,978
91,395
409,324
228,244
Net losses attributable to noncontrolling interests
(5,440
)
(7,668
)
(21,298
)
(14,651
)
Preferred stock dividends
29,184
11,046
48,461
26,940
Net earnings attributable to common shareholders
$
226,234
$
88,017
$
382,161
$
215,955
Financial Data and Metrics (Unaudited)
Three Months Ended
Six Months Ended
May 31,
2026
February 28,
2026
May 31,
2025
May 31,
2026
May 31,
2025
Other Data:
Number of trading days
63
61
63
124
124
Number of trading loss days7
0
1
13
1
17
Average VaR (in millions)8
$
10.31
$
9.78
$
11.89
$
10.05
$
12.50
In millions, except other data
May 31,
2026
February 28,
2026
May 31,
2025
Financial position:
Total assets
$
79,540
$
74,380
$
67,285
Cash and cash equivalents
14,315
11,963
11,260
Financial instruments owned
28,038
28,079
25,570
Level 3 financial instruments owned9
839
849
763
Goodwill and intangible assets, net14
1,974
1,979
2,060
Total equity
10,607
10,662
10,382
Total shareholders' equity
10,567
10,611
10,305
Tangible shareholders' equity10
8,593
8,632
8,245
Other data and financial ratios:
Leverage ratio11
7.5
7.0
6.5
Tangible gross leverage ratio12
9.0
8.4
7.9
Number of employees at period end
7,371
7,596
7,671
Number of employees excluding Tessellis and Stratos at period end
6,236
6,221
5,949
Non-GAAP Reconciliations
The following tables reconcile our non-GAAP financial measures to their respective U.S. GAAP financial measures. Management believes such non-GAAP financial measures are useful to investors as they allow them to view our results through the eyes of management, while facilitating a comparison across historical periods. These measures should not be considered a substitute for, or superior to, measures prepared in accordance with U.S. GAAP.
Return on Adjusted Tangible Equity Reconciliation
$ in thousands
Three Months Ended
May 31,
Six Months Ended
May 31,
2026
2025
2026
2025
Net earnings attributable to common shareholders (GAAP)
$
226,234
$
88,017
$
382,161
$
215,955
Intangible amortization and impairment expense, net of tax15
1,682
5,824
48,170
13,093
Adjusted net earnings to common shareholders (non-GAAP)
227,916
93,841
430,331
229,048
Preferred stock dividends
29,184
11,046
48,461
26,940
Adjusted net earnings to total shareholders (non-GAAP)
$
257,100
$
104,887
$
478,792
$
255,988
Adjusted net earnings to total shareholders (non-GAAP)1
$
1,028,400
$
419,548
$
957,584
$
511,976
February 28,
November 30,
2026
2025
2025
2024
Shareholders' equity (GAAP)
$
10,610,845
$
10,204,228
$
10,574,696
$
10,156,772
Less: Goodwill and intangible assets, net
(1,978,652
)
(2,037,906
)
(2,040,147
)
(2,054,310
)
Less: Deferred tax asset, net
(493,427
)
(507,452
)
(459,052
)
(497,590
)
Less: Weighted average impact of dividends and share repurchases
(112,340
)
(67,343
)
(244,489
)
(157,540
)
Adjusted tangible shareholders' equity (non-GAAP)
$
8,026,426
$
7,591,527
$
7,831,008
$
7,447,332
Return on adjusted tangible shareholders' equity (non-GAAP)1
12.8
%
5.5
%
12.2
%
6.9
%
Adjusted Tangible Book Value and Fully Diluted Shares Outstanding Reconciliation
Reconciliation of book value (shareholders' equity) to adjusted tangible book value and common shares outstanding to fully diluted shares outstanding:
$ in thousands, except per share amounts
May 31, 2026
May 31, 2025
Book value (GAAP)
$
10,566,996
$
10,305,025
Stock options(1)
114,939
114,939
Goodwill and intangible assets, net(2)
(1,974,240
)
(2,060,018
)
Adjusted tangible book value (non-GAAP)
$
8,707,695
$
8,359,946
Voting common shares outstanding (GAAP)
194,145
206,272
Non-voting common shares outstanding (GAAP)
9,247
—
Preferred shares
27,563
27,563
Restricted stock units ("RSUs")
14,251
14,099
Stock options(1)
5,064
5,064
Other
1,758
1,566
Adjusted fully diluted shares outstanding (non-GAAP)(3)
252,028
254,564
Book value per common share outstanding
$
51.95
$
49.96
Adjusted tangible book value per fully diluted share outstanding (non-GAAP)
$
34.55
$
32.84
(1)
Stock options added to book value are equal to the total number of stock options outstanding as of May 31, 2026 and 2025 of 5.1 million multiplied by the exercise price of $22.69 on May 31, 2026 and 2025.
(2)
Includes goodwill and intangible assets related to Tessellis which were reclassified to assets held for sale during the first quarter of 2026.
(3)
Fully diluted shares outstanding include vested and unvested RSUs as well as the target number of RSUs issuable under the senior executive compensation plans until the performance period is complete. Fully diluted shares outstanding also include all stock options and the impact of convertible preferred shares if-converted to common shares.
Notes
Return on adjusted tangible shareholders' equity represents a non-GAAP financial measure and is based on full year or annualized amounts. Refer to schedule on page 8 for a reconciliation to U.S. GAAP amounts. Shares outstanding on a fully diluted basis (a non-GAAP financial measure) is defined as common shares outstanding plus preferred shares, restricted stock units, stock options and other shares. Refer to schedule on page 9 for a reconciliation to U.S. GAAP amounts. Adjusted tangible book value per fully diluted share (a non-GAAP financial measure) is defined as adjusted tangible book value (a non-GAAP financial measure) divided by shares outstanding on a fully diluted basis (a non-GAAP financial measure). Refer to schedule on page 9 for a reconciliation to U.S. GAAP amounts. Allocated net interest represents an allocation to Asset Management of certain of our long-term debt interest expense, net of interest income on our Cash and cash equivalents and other sources of liquidity. Allocated net interest has been disaggregated to increase transparency and to present direct Asset Management revenues. We believe that aggregating Allocated net interest would obscure the revenue results by including an amount that is unique to our credit spreads, debt maturity profile, capital structure, liquidity risks and allocation methods. Allocated net interest is not separately disaggregated for Investment Banking and Capital Markets. This presentation is aligned to our Investment Banking and Capital Markets internal performance measurement. Asset management fees and revenues include management and performance fees from funds and accounts managed by us, revenue from strategic affiliated asset managers where we are entitled to portions their operating revenues and income based on our ownership interests in the affiliates. Number of trading loss days is calculated based on trading activities in our Investment Banking and Capital Markets and Asset Management business segments, excluding certain Other investments. VaR estimates the potential loss in value of trading positions due to adverse market movements over a one-day time horizon with a 95% confidence level. For a further discussion of the calculation of VaR, see "Value-at-Risk" in Part II, Item 7A "Quantitative and Qualitative Disclosures About Market Risk" in our Annual Report on Form 10-K for the year ended November 30, 2025. Level 3 financial instruments represent those financial instruments classified as such under Accounting Standards Codification 820, accounted for at fair value and included within Financial instruments owned. Tangible shareholders' equity (a non-GAAP financial measure) is defined as shareholders' equity less Intangible assets and goodwill. We believe that tangible shareholders' equity is meaningful for valuation purposes, as financial companies are often measured as a multiple of tangible shareholders' equity, making these ratios meaningful for investors. Leverage ratio equals total assets divided by total equity. Tangible gross leverage ratio (a non-GAAP financial measure) equals total assets less goodwill and intangible assets divided by tangible shareholders' equity. The tangible gross leverage ratio is used by rating agencies in assessing our leverage ratio. Compensation ratio equals total compensation expense divided by total net revenues. Non-compensation ratio equals total non-compensation expense divided by total net revenues. Includes goodwill and intangible assets related to Tessellis which were reclassified to assets held for sale during the first quarter of 2026. Includes a $35.5 million after-tax write-down of goodwill associated with Tessellis for the six months ended May 31, 2026. More News From Jefferies Financial Group Inc.
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