Jefferies Financial Group Inc. Q2 FY26 Results

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.

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.