0000096223-26-000017
SEC filingRevenue growth driven by Investment Banking and Equities, partially offset by Fixed Income weakness, with net earnings up 21.8%.
For the three months ended February 28, 2026, Jefferies reported net revenues of $2.02 billion, a 26.6% increase from $1.59 billion in the prior year quarter. The growth was primarily fueled by strong performance in Investment Banking and Equities. Earnings from continuing operations before income taxes rose 40.5% to $212.2 million, while net earnings attributable to common shareholders increased 21.8% to $155.7 million. The effective tax rate surged to 24.9% from 9.4% due to the resolution of certain state and local tax matters in the prior year, partially offsetting earnings growth. Non-interest expenses grew 25.2% to $1.80 billion, with compensation and benefits up 29.1% to $1.09 billion, representing 53.8% of net revenues (vs 52.8% a year ago). Non-compensation expenses as a percentage of revenues improved to 35.6% from 37.7%.
Investment Banking and Capital Markets net revenues increased 28.4% to $1.80 billion, accounting for 89.1% of total revenues. Investment Banking revenues surged 45.2% to $1.02 billion, driven by a 32.5% increase in advisory ($527 million) and a 138.1% jump in equity underwriting ($306 million), reflecting market share gains and higher deal volumes. Debt underwriting slipped 8.8% to $182 million. Capital Markets revenues rose 11.5% to $778.8 million, with Equities up 36.5% to a record $558 million, driven by higher trading volumes in equity options, corporate derivatives, and global electronic trading. Fixed Income fell 23.8% to $220 million, impacted by challenging credit markets and a $42.8 million mark-to-market loss from Market Financial Solutions. Asset Management net revenues increased 14.9% to $220 million. Asset management fees and revenues declined 21.1% to $69.9 million due to lower performance fees, particularly from Point Bonita, partially offset by higher revenue from strategic affiliates. Investment return swung to a gain of $89 million from a loss of $5.6 million, benefiting from improved returns across fund strategies with long equity bias. Other investments, including Stratos and HomeFed, decreased 33.6% to $83.6 million. The segment recorded a $58.2 million goodwill impairment related to the pending sale of Tessellis.
Management highlighted a strong investment banking backlog, though realization timing remains uncertain. The company expects to close the sale of Tessellis in the first quarter of 2027. The impact of tariffs and geopolitical tensions remains a watchpoint. No specific quantitative guidance was provided.