Jefferies Booked Record Investment Banking and Equities Revenue in Its August Quarter, With Equity Underwriting Up 69% and Fixed Income Down 26%; Nine-Month Earnings Already Top All of Fiscal 2025

by Bisi Oyelaran · October 2, 2026

Equities Reporter, US Market Current

Jefferies Financial Group reported net revenue of $2.22 billion for its fiscal third quarter ended Aug. 31, up from $2.05 billion a year earlier, with net earnings attributable to common shareholders of $261 million, or $1.08 per diluted share, against $224 million and $1.01 in the same quarter of 2025, according to the results release the firm furnished to the SEC on Sept. 28. Investment banking net revenue of $1.33 billion and equities net revenue of $626 million were both quarterly records, the firm said, and the release's subtitle leads with exactly that: "Quarterly Record Investment Banking and Equities Net Revenues."

The investment bank's composition is the story inside the headline. Advisory revenue reached $818 million, which Jefferies called its best quarter on record and 25% above the prior-year quarter, "driven by market share gains across multiple sectors." Equity underwriting revenue was $306 million, up from $181 million a year earlier, a 69% increase per the management commentary. Debt underwriting went the other way, falling to $177 million from $250 million, which the firm attributed "primarily to lower industry volumes." Combined advisory and underwriting revenue of $1.30 billion was 20% higher than a year ago.

Capital markets net revenue of $802 million was up 11% from the prior-year quarter, but the two halves diverged sharply. Equities rose 29% to $626 million, which Jefferies attributed to "higher global trading volumes driving stronger results across most of our businesses, particularly within cash and electronic trading, equity options and corporate derivatives," plus continued expansion in prime services. Fixed income fell 26% to $176 million from $237 million, "due to ongoing lower industry volumes." Over nine months, fixed income is down 15%, and the release notes the securitized products business carries "a mark-to-market loss associated with Market Financial Solutions."

Asset management was the weak segment. Total asset management net revenue fell to $86 million from $177 million a year earlier. Within that, asset management fees and investment return combined were $34 million against $84 million, which the release attributed to "weaker performance from across several fund strategies, including Point Bonita." Point Bonita is a fund Jefferies advises and holds an equity interest in; it also produced a $30 million pre-tax markdown in the firm's fiscal fourth quarter of 2025, according to the Jan. 7 results release.

Chief Executive Richard Handler and President Brian Friedman, in the joint management commentary, said the quarter reflected "record quarterly results in Investment Banking and Equities, offset by a more subdued market for Fixed Income and a more challenging backdrop for certain funds in our Asset Management business." On the deal pipeline, they wrote: "We are very optimistic about the balance of 2026 and our momentum heading into 2027, supported by the breadth and strength of our current backlog and new business activity." The firm said its M&A expansion was "led by strong sponsor-led activity during the quarter particularly in the healthcare, industrials and energy sectors."

Pre-tax earnings were $351 million, up from $332 million, on total non-interest expense of $1.87 billion. The compensation ratio was 53.7% of net revenue, versus 52.9% a year earlier, and non-compensation expense of $678 million was higher "primarily due to increased brokerage and clearing fees associated with increased equities trading volumes, and increased technology and communication expenses." The effective tax rate was 24.8% against 26.9%. Return on adjusted tangible shareholders' equity, the firm's preferred profitability measure, was 13.5%, essentially flat with 13.6% a year earlier.

For context, Jefferies is a New York-based investment bank and capital markets firm whose fiscal year ends Nov. 30. For all of fiscal 2025 it reported net revenue of $7.34 billion, net earnings attributable to common shareholders of $631 million and diluted EPS from continuing operations of $2.85, according to the Jan. 7 release. Nine months into fiscal 2026, net revenue stands at $6.45 billion, net earnings at $640 million and diluted EPS at $2.79, so the firm has already earned more in three quarters than in all of last year, with return on adjusted tangible equity of 12.9% year-to-date against 10.1% from continuing operations for fiscal 2025. Diluted EPS has not yet caught up: the nine-month $2.79 is below last year's full-year $2.85.

Two numbers in the release complicate the record-quarter framing. Book value per common share was $46.55 at Aug. 31, down from $50.60 a year earlier, even as adjusted tangible book value per fully diluted share rose to $35.21 from $33.38. A footnote attributes the lower book value per share "primarily due to the inclusion of non-voting common shares issued in connection with SMBC's conversion of preferred shares to non-voting common shares during the third quarter of 2026." Separately, the release notes that nine-month other expenses were lifted by "the write-down of goodwill associated with the expected sale of Tessellis," which a footnote sizes at $35.5 million after tax, and the management commentary refers to continuing to "wind down the remainder of our legacy merchant banking investments." The firm expects to file its Form 10-Q, which will carry the balance sheet detail, on or about Oct. 9, and it cautions that the Aug. 31 figures are preliminary estimates that "may be revised" in that filing.

The second is the shareholder structure. Jefferies said Sumitomo Mitsui Banking Corp. "has increased its equity ownership in Jefferies to approximately 20% to become our largest shareholder," a step the firm described as expected. The two are planning a joint venture in Japan combining SMBC and SMBC Nikko's domestic franchise with Jefferies' equities platform, which the release says is "expected to begin serving clients in January 2027." Handler and Friedman wrote that they expect the venture "to become a template for other ways to work together globally with our partners at SMBC."

Capital return continued at a measured pace. Jefferies repurchased 1.3 million shares for $70 million in the quarter at an average price of $52.34, bringing year-to-date buybacks to 8.3 million shares for $441 million at an average $53.25. The board restored the buyback authorization to $250 million and declared a quarterly dividend of $0.40 per share, payable Nov. 25 to holders of record Nov. 16. The firm had 189.1 million voting common shares outstanding and 250.9 million on a fully diluted basis at quarter-end.

The firm's own view of what its results say about the broader market is worth separating from the numbers. The commentary describes "a strong market opportunity" and "higher global trading volumes" in equities, alongside "ongoing slowness in market activity" in fixed income and lower industry debt underwriting volumes. Those are Jefferies' characterizations of the environment during June, July and August; the release does not cite industry-wide figures, and the firm's own share gains, which it repeatedly invokes, mean its revenue lines are not a clean proxy for the market.

Jefferies shares closed at $47.13 on Sept. 28, the day of the release, which the SEC accepted at 4:18 p.m. ET, after the close. The stock closed at $46.52 on Sept. 29 and $45.25 on Oct. 1, according to Yahoo Finance historical data; it had closed as high as $55.72 on Sept. 8. The release does not address the share price, and the average buyback price of $52.34 in the quarter sits above where the stock finished September.

What comes next is the 10-Q around Oct. 9, which should detail the Tessellis write-down, the merchant-banking wind-down and the share-count changes behind the book-value decline, and the fiscal fourth quarter covering September through November, which the firm reported last year on Jan. 7. The release does not quantify the backlog it describes as strong, does not give revenue or margin guidance, and does not say when the Tessellis sale is expected to close or at what price.