Jefferies Financial Group Inc. — Form 10-Q Summary
Reporting period: Fiscal third quarter and nine months ended August 31, 2026. Comparisons are with the corresponding 2025 periods unless stated otherwise. Jefferies is a global investment banking and capital markets firm with Investment Banking and Capital Markets and Asset Management segments.
Financial performance
| Metric | Three months ended Aug. 31, 2026 | Year-over-year change | Nine months ended Aug. 31, 2026 | Year-over-year change |
|---|---|---|---|---|
| Total revenues | $3.23 billion | +11.1% | $9.22 billion | +17.1% |
| Net revenues | $2.22 billion | +8.5% | $6.45 billion | +22.2% |
| Earnings before taxes | $351 million | +5.8% | $879 million | +42.3% |
| Net earnings | $288 million | +18.9% | $698 million | +48.2% |
| Net earnings attributable to common shareholders | $284 million | +26.7% | $662 million | +50.4% |
| Diluted EPS, voting common shares | $1.18 | vs. $1.01 | $2.88 | vs. $1.98 |
| Effective tax rate | 17.9% | vs. 26.9% | 20.6% | vs. 23.8% |
Quarterly pretax margin on net revenues was approximately 15.8%, compared with 16.2% a year earlier; nine-month margin was approximately 13.6%, versus 11.7%. Non-interest expenses increased 9.1% in the quarter and 19.5% year to date. Compensation and benefits were 53.7% of net revenues in the quarter and 53.8% year to date, slightly above the prior-year ratios.
Business and segment trends
- Investment Banking and Capital Markets: Segment net revenues rose 14.8% in the quarter and 25.5% year to date. Advisory revenue reached a quarterly record of $818 million; equity underwriting and equities also grew strongly. Fixed-income revenue fell 25.6% in the quarter and 15.5% year to date amid less favorable market conditions and challenging credit markets.
- Asset Management: Segment reported a pretax loss of $79 million for the quarter, compared with a $16 million loss a year earlier; year-to-date pretax loss was $133 million versus $98 million. Quarterly results reflected lower investment returns and weaker results from certain legacy investments. Aggregated AUM was $33.7 billion, up from $30.8 billion at November 30, 2025.
Cash flow, balance sheet and liquidity
- Operating cash flow was positive $2.45 billion for the nine months, compared with negative $3.46 billion in the prior-year period; the filing’s cash-flow figures include substantial movements in trading and secured-financing balances.
- Cash, cash equivalents and restricted cash totaled $18.06 billion at August 31, 2026, up from $14.96 billion at November 30, 2025. Jefferies reported $19.90 billion in cash and other identified liquidity sources, equal to 24.5% of total assets.
- Total assets were $81.30 billion, up 7.0% from fiscal year-end. Total equity was $10.75 billion. Long-term debt was $18.46 billion and short-term borrowings were $1.47 billion. The leverage ratio was 7.6x, compared with 7.1x at year-end; tangible gross leverage was 9.1x versus 8.7x.
- Management reported surplus long-term cash capital and sufficient excess liquidity to meet modeled contingent outflows for at least 30 days without reducing the balance sheet. Regulated subsidiaries were in compliance with applicable capital requirements and debt covenants.
Material changes, outlook and risks
- Management said the investment-banking backlog remains strong, but cautioned that timing and realization are uncertain and transactions may change or be cancelled. The filing provides no quantified earnings or revenue guidance.
- In the quarter, Jefferies repurchased 1.3 million shares under its announced program. For the nine months it repurchased 8.3 million shares for $441 million, including tax-withholding purchases. In September, the board authorized up to an additional $250 million of repurchases. A $0.40-per-share dividend was declared for November 2026.
- Post-closing tax adjustments reduced tax expense by $24.2 million for both the quarter and nine-month periods. Compared with figures previously reported in a September 28, 2026 Form 8-K, the adjustments increased common-shareholder earnings by $23.3 million for the quarter and $22.1 million year to date.
- Jefferies recorded a $58.2 million goodwill impairment related to Tessellis, which is classified as held for sale; its sale is expected to close in the first quarter of 2027. After quarter-end, subsidiary Stratos agreed to sell substantially all its assets and operations, with migration expected over approximately 120 days.
- The filing describes significant uncertainty around Point Bonita’s trade-finance exposures: First Brands’ bankruptcy proceedings involve alleged receivables fraud, and recovery prospects are described as highly uncertain; Jefferies values its direct investment related to First Brands at zero. Certain other receivables involving Radiant and Sapphire also defaulted, and litigation is underway. Apex-managed CLOs hold approximately $52 million of First Brands term loans.
- Other risks include market and credit volatility, geopolitical conflict and tariffs, potential credit-rating downgrades, litigation and regulatory matters, and valuation uncertainty for Level 3 assets. The company reported $891 million of Level 3 assets, up from $738 million at fiscal year-end. Management said no legal matter was then expected to have a material adverse effect, while noting that tax examination resolutions could materially affect results in the period resolved.
- The planned acquisition of a 50% interest in Hildene Holding Company, involving a $340 million cash contribution plus other contributed interests, is targeted to close in the first quarter of 2027, subject to customary approvals.
Important facts for investors to verify
- Whether strong advisory and equity-market activity persists, and how much of the reported backlog converts to revenue.
- The sustainability of expense growth, compensation ratios and tax benefits, including the effect of the post-closing adjustments.
- Cash-flow and liquidity trends after accounting for trading-related balance-sheet movements, alongside higher leverage and debt issuance.
- Recoveries and further exposures associated with Point Bonita, First Brands, Radiant and Sapphire.
- Completion, proceeds and accounting effects of the Tessellis and Stratos disposals, and the timing, funding and terms of the Hildene transaction.
- The effect of share repurchases, the additional authorization and dividends on capital levels and per-share results.