Jefferies Financial Group Inc. Quarterly Report (Form 10-Q)

Condition and Results of Operations

Executive Summary Three Months Ended February 28, 2025 Versus February 29, 2024

Consolidated Results:

• Net revenues were $1.59 billion, down 8.4% compared to $1.74 billion for the prior year quarter, reflecting a more challenging environment due to uncertainties around U.S. policy and geopolitical events.
• Earnings from continuing operations before income taxes were $151.1 million, down 31.4% compared to $220.2 million for the prior year quarter. The results reflect strength in Investment Banking advisory and underwriting, and Equities, offset by a decline in investment return in Asset Management and a decline in Fixed Income.

Business Results:

• Investment banking net revenues were $700.7 million, down 3.6% compared to $727.0 million for the prior year quarter. Advisory net revenues were $397.8 million, up 17.5% compared to $338.6 million, primarily due to market share gains and increased transaction levels. Total underwriting net revenues were $327.9 million, down 3.1% compared to $338.5 million, as strong debt underwriting was offset by a slowdown in equity underwriting.
• Equities net revenues were $409.1 million, up 10.0% compared to $371.8 million, attributable to stronger results across several equities business lines.
• Fixed income net revenues were $289.2 million, down 17.9% compared to $352.5 million, due to a more challenging market compared to the prior year quarter.
• Asset management net revenues were $191.7 million compared to $273.4 million for the prior year quarter. Asset management fees and revenues increased due to higher performance fee income, but investment return decreased due to a challenging investment environment.

Non-interest Expenses:

• Compensation and benefits expenses were $841.1 million, a decrease of 9.3% compared to $926.9 million for the prior year quarter. Non-compensation expenses were $600.8 million, slightly higher compared to $591.3 million.

Headcount:

• At February 28, 2025, we had 7,701 employees globally, a decrease of 121 employees from November 30, 2024.

Revenues by Source

• Investment banking net revenues, including advisory, equity underwriting, and debt underwriting, totaled $700.7 million, down 3.6% compared to the prior year quarter.
• Equities net revenues were $409.1 million, up 10.0% compared to the prior year quarter.
• Fixed income net revenues were $289.2 million, down 17.9% compared to the prior year quarter.
• Asset management fees and revenues were $88.6 million, up 49% compared to the prior year quarter. Investment return was a negative $5.6 million, compared to $117.6 million in the prior year quarter.

Investment Banking Revenues

• Advisory net revenues were $397.8 million, up 17.5% compared to the prior year quarter, primarily due to market share gains and increased transaction levels.
• Total underwriting net revenues were $327.9 million, down 3.1% compared to the prior year quarter, as stronger debt underwriting was offset by a slowdown in equity underwriting.
• Other investment banking net revenues were negative $25.0 million, compared to net revenues of $49.9 million in the prior year quarter, and include mark-to-market net losses.

Equities Net Revenues

• Equities net revenues were $409.1 million, up 10.0% compared to the prior year quarter, driven by stronger results in the prime services, electronic trading, and equity options businesses.

Fixed Income Net Revenues

• Fixed income net revenues were $289.2 million, down 17.9% compared to the prior year quarter, as a result of a more challenging market compared to the prior year.

Asset Management

• Asset management fees and revenues were $88.6 million, up 49% compared to the prior year quarter, due to higher performance fee income.
• Investment return was a negative $5.6 million, compared to $117.6 million in the prior year quarter, due to a challenging investment environment.
• Assets under management were $30.5 billion at February 28, 2025, up from $28.0 billion at November 30, 2024.

Non-interest Expenses

• Compensation and benefits expenses decreased 9.3% to $841.1 million, compared to $926.9 million in the prior year quarter.
• Non-compensation expenses were $600.8 million, slightly higher compared to $591.3 million in the prior year quarter.

Headcount

• Headcount decreased by 121 employees to 7,701 at February 28, 2025 from 7,822 at November 30, 2024.