Jefferies Announces First Quarter 2026 Financial Results
NEW YORK--( BUSINESS WIRE)--Jefferies Financial Group Inc. (NYSE: JEF)
Q1 Financial Highlights
$ in thousands, except per share amounts
Quarter End
1Q26
1Q25
Net earnings attributable to common shareholders
$
155,700
$
127,793
Diluted earnings per common share from continuing operations
$
0.70
$
0.57
Return on adjusted tangible shareholders' equity 1
10.9
%
8.0
%
Total net revenues
$
2,017,130
$
1,593,019
Investment banking net revenues
$
1,017,293
$
700,692
Capital markets net revenues
$
778,756
$
698,284
Asset management net revenues
$
220,262
$
191,715
Pre-tax earnings from continuing operations
$
212,216
$
151,065
Book value per common share
$
51.91
$
49.48
Adjusted tangible book value per fully diluted share 3
$
34.24
$
32.57
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 May 29, 2026 to record holders of Jefferies common shares on May 18, 2026.
Repurchased 3.0 million shares of common stock for $174 million, or an average price of $58.18 per share. Our Board of Directors has increased our share buyback authorization back to a total of $250 million.
Management Comments
"Our first quarter net revenues were $2.02 billion, net earnings attributable to common shareholders were $156 million, diluted earnings per common share from continuing operations were $0.70 and return on adjusted tangible shareholders' equity was 10.9%. Net earnings attributable to common shareholders for the current quarter reflects a $36 million, non-cash, after-tax write-down of goodwill associated with the announced sale of Tessellis (the final component of our original investment in Linkem which was divested in 2024). In addition, we have $17 million of losses related to Market Financial Solutions and First Brands after adjusting for compensation and taxes. Our direct exposure to First Brands is now zero.
"We delivered first quarter record net revenues from overall Investment Banking Advisory and Equity and Debt Underwriting revenues, as well as from Equities, with net revenues increasing 40% and 37%, respectively, versus the first quarter of 2025. These results underscore both the strength of our franchise and the durability of our strategy.
"We made progress in the further wind-down of our legacy merchant banking portfolio, with the announced sale of Tessellis. We expect this transaction to close in the first quarter of 2027. Going forward, our financial results will increasingly reflect our core business activities.
"Over the last six months, our businesses have been operating exceptionally well, in fact setting a best-ever record in first quarter net revenues in our largest two businesses, as mentioned above. Management is disappointed and takes full responsibility for the losses already recognized and that may be absorbed over time in respect of First Brands, all of which are manageable.
“Investment Banking net revenues were $1.02 billion, up 45% from the prior year quarter. Growth was driven by improved Advisory and Equity Underwriting net revenues on market share gains and a stronger overall market for our services, supported by robust activity across both corporate and sponsor clients, as well as improved performance at Jefferies Finance. Our investment banking business is diversified, global and well-positioned and our team is doing an excellent job helping clients navigate the current environment.
"Capital Markets net revenues were $779 million, up 12% from the prior year quarter. Equities net revenues increased 37%, driven by market share gains, higher global trading volumes, and continued strength across our equity options, corporate derivatives and global electronic trading businesses. Fixed Income net revenues were $220 million, despite the mark-to-market loss associated with Market Financial Solutions, reflecting a slower market environment compared to the prior year quarter but improved activity relative to recent quarters.
"Asset management fees and investment return revenues were $159 million, up 91% compared to the prior year quarter. Investment return increased significantly from the prior year quarter due to improved performance across fund strategies.
"The world is challenging, but the acceleration in core business momentum that started in the second half of 2025 has continued through our first quarter of 2026 and into our second quarter. Our goal is to build upon this momentum throughout the rest of fiscal 2026 and beyond."
Richard Handler, CEO, and Brian Friedman, President
Financial Summary (Unaudited)
$ in thousands
Three Months Ended
February 28,
2026
November 30,
2025
February 28,
2025
Net revenues by source:
Advisory
$
527,128
$
634,203
$
397,780
Equity underwriting
305,969
339,799
128,520
Debt underwriting
181,858
215,757
199,362
Other investment banking
2,338
(1,784
)
(24,970
)
Total Investment Banking
1,017,293
1,187,975
700,692
Equities
558,488
485,869
409,058
Fixed income
220,268
206,045
289,226
Total Capital Markets
778,756
691,914
698,284
Total Investment Banking and Capital Markets Net revenues 5
1,796,049
1,879,889
1,398,976
Asset management fees and revenues 6
69,910
15,602
88,630
Investment return
88,992
65,018
(5,634
)
Allocated net interest 4
(22,238
)
(21,130
)
(17,221
)
Other investments, inclusive of net interest
83,598
127,508
125,940
Total Asset Management Net revenues
220,262
186,998
191,715
Other
819
1,966
2,328
Total Net revenues by source
$
2,017,130
$
2,068,853
$
1,593,019
Non-interest expenses:
Compensation and benefits
$
1,085,890
$
1,080,779
$
841,127
Compensation ratio 13
53.8
%
52.2
%
52.8
%
Non-compensation expenses
$
719,024
$
734,866
$
600,827
Non-compensation ratio 13
35.6
%
35.5
%
37.7
%
Total Non-interest expenses
$
1,804,914
$
1,815,645
$
1,441,954
Net earnings from continuing operations before income taxes
$
212,216
$
253,208
$
151,065
Income tax expense
$
52,870
$
37,537
$
14,216
Income tax rate
24.9
%
14.8
%
9.4
%
Net earnings from continuing operations
$
159,346
$
215,671
$
136,849
Net losses from discontinued operations, net of income taxes
—
(4,374
)
—
Net losses attributable to noncontrolling interests
(15,858
)
(3,738
)
(6,983
)
Preferred stock dividends
19,504
24,145
16,039
Net earnings attributable to common shareholders
$
155,700
$
190,890
$
127,793
Highlights
Three Months Ended February 28, 2026 Versus February 28, 2025
Investment Banking and Capital Markets
Asset Management
Non-interest Expenses
* * * *
Amounts herein pertaining to February 28, 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 months ended February 28, 2026 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC, which we expect to file on or about April 7, 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 February 28,
2026
2025
Revenues
Investment banking
$
1,018,284
$
729,510
Principal transactions
487,498
407,230
Commissions and other fees
367,604
288,300
Asset management fees and revenues
67,362
85,408
Interest
813,119
845,171
Other
117,398
117,245
Total revenues
2,871,265
2,472,864
Interest expense
854,135
879,845
Net revenues
2,017,130
1,593,019
Non-interest expenses
Compensation and benefits
1,085,890
841,127
Brokerage and clearing fees
133,132
109,436
Underwriting costs
31,383
17,846
Technology and communications
159,858
139,475
Occupancy and equipment rental
33,860
30,199
Business development
75,422
72,291
Professional services
76,944
72,466
Depreciation and amortization
56,865
30,988
Cost of sales
29,920
41,568
Other expenses
121,640
86,558
Total non-interest expenses
1,804,914
1,441,954
Earnings before income taxes
212,216
151,065
Income tax expense
52,870
14,216
Net earnings
159,346
136,849
Net losses attributable to noncontrolling interests
(15,858
)
(6,983
)
Preferred stock dividends
19,504
16,039
Net earnings attributable to common shareholders
$
155,700
$
127,793
Financial Data and Metrics (Unaudited)
Three Months Ended
February 28,
2026
November 30,
2025
February 28,
2025
Other Data:
Number of trading days
61
63
61
Number of trading loss days 7
1
3
4
Average VaR (in millions) 8
$
9.78
$
9.50
$
13.13
In millions, except other data
February 28,
2026
November 30,
2025
February 28,
2025
Financial position:
Total assets
$
74,380
$
76,012
$
70,219
Cash and cash equivalents
11,963
14,044
11,176
Financial instruments owned
28,079
27,723
26,087
Level 3 financial instruments owned 9
849
738
781
Goodwill and intangible assets, net 14
1,979
2,040
2,038
Total equity
10,662
10,642
10,268
Total shareholders' equity
10,611
10,575
10,204
Tangible shareholders' equity 10
8,632
8,535
8,166
Other data and financial ratios:
Leverage ratio 11
7.0
7.1
6.8
Tangible gross leverage ratio 12
8.4
8.7
8.3
Number of employees at period end
7,596
7,787
7,701
Number of employees excluding Tessellis and Stratos at period end
6,221
6,194
5,994
Components of Numerators and Denominators for Earnings Per Common Share
$ in thousands, except per share amounts
Three Months Ended
February 28,
2026
2025
Numerator for earnings per common share:
Net earnings
$
159,346
$
136,849
Less: Net losses attributable to noncontrolling interests
(15,858
)
(6,983
)
Allocation of earnings to participating securities
(19,504
)
(16,039
)
Net earnings attributable to common shareholders for basic earnings per share
$
155,700
$
127,793
Net earnings attributable to common shareholders for diluted earnings per share
$
155,700
$
127,793
Denominator for earnings per common share:
Weighted average common shares outstanding
206,093
206,046
Weighted average shares of restricted stock outstanding with future service required
(2,147
)
(2,200
)
Weighted average restricted stock units outstanding with no future service required
11,761
10,690
Weighted average basic common shares
215,707
214,536
Stock options and other share-based awards
5,152
5,287
Senior executive compensation plan restricted stock unit awards
2,411
2,625
Weighted average diluted common shares
223,270
222,448
Earnings per common share:
Basic
$
0.72
$
0.60
Diluted
$
0.70
$
0.57
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
February 28,
2026
2025
Net earnings attributable to common shareholders (GAAP)
$
155,700
$
127,791
Intangible amortization and impairment expense, net of tax 15
42,433
7,073
Adjusted net earnings to common shareholders (non-GAAP)
198,133
134,864
Preferred stock dividends
19,504
16,039
Adjusted net earnings to total shareholders (non-GAAP)
$
217,637
$
150,903
Adjusted net earnings to total shareholders (non-GAAP) 1
$
870,548
$
603,612
November 30,
2025
2024
Shareholders' equity (GAAP)
$
10,574,696
$
10,156,772
Less: Goodwill and intangible assets, net
(2,040,147
)
(2,054,310
)
Less: Deferred tax asset, net
(459,052
)
(497,590
)
Less: Weighted average impact of dividends and share repurchases
(106,532
)
(94,936
)
Adjusted tangible shareholders' equity (non-GAAP)
$
7,968,965
$
7,509,936
Return on adjusted tangible shareholders' equity (non-GAAP) 1
10.9
%
8.0
%
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
February 28, 2026
February 28, 2025
Book value (GAAP)
$
10,610,845
$
10,204,228
Stock options (1)
114,939
114,939
Goodwill and intangible assets, net (2)
(1,978,652
)
(2,037,906
)
Adjusted tangible book value (non-GAAP)
$
8,747,132
$
8,281,261
Common shares outstanding (GAAP)
204,423
206,250
Preferred shares
27,563
27,563
Restricted stock units ("RSUs")
16,746
13,950
Stock options (1)
5,065
5,065
Other
1,671
1,459
Adjusted fully diluted shares outstanding (non-GAAP) (3)
255,468
254,287
Book value per common share outstanding
$
51.91
$
49.48
Adjusted tangible book value per fully diluted share outstanding (non-GAAP)
$
34.24
$
32.57
(1)
Stock options added to book value are equal to the total number of stock options outstanding as of February 28, 2026 and 2025 of 5.1 million multiplied by the exercise price of $22.69 on February 28, 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