Jefferies Financial Group Inc.

Jefferies Financial Group Inc. is a U.S.-headquartered global investment banking and capital markets firm. Its largest subsidiary, Jefferies LLC, a U.S. broker-dealer, was founded in 1962, and its first international operating subsidiary, Jefferies International Limited, a U.K. broker-dealer, was established in 1986. The firm operates in two business segments: Investment Banking and Capital Markets, and Asset Management. The Investment Banking and Capital Markets segment provides underwriting, financial advisory, capital markets services, prime brokerage, equity finance, and research across the Americas, Europe and the Middle East, and Asia-Pacific, and also includes the corporate lending joint venture Jefferies Finance and the commercial real estate finance joint venture Berkadia. The Asset Management segment provides alternative investment management services globally through directly owned and affiliated managers, and also holds investments in public securities, private companies, and consolidated subsidiaries involved in real estate development, online foreign exchange trading, and telecommunications.

All aspects of Jefferies' business are intensely competitive. The firm competes primarily with large global bank holding companies that engage in investment banking and capital markets activities and have greater capital and resources, as well as with other broker-dealers, asset managers, and boutique firms. The principal factors driving competitiveness include the ability to provide differentiated insights, attract and retain skilled professionals, deliver a competitive breadth of high-quality service offerings, a vast global footprint, depth and breadth of capabilities in Investment Banking and Capital Markets, and a flat, nimble, and entrepreneurial culture built on immediacy and client service.

Jefferies generates revenue through investment banking advisory and underwriting fees, principal transactions, commissions and other fees, asset management fees and investment returns, interest revenue, and other revenue. The revenue mix is a combination of transactional income from advisory, underwriting, and trading activities, and recurring income from asset management fees and interest spreads. Primary customer segments include public companies, private companies, sponsors and owners, institutional investors, and government entities. The firm's platform is enhanced by a strategic alliance with SMBC Group, which owns 15.7% of Jefferies' common stock on an as-converted basis and 14.3% on a fully-diluted, as-converted basis as of November 30, 2025.

The Investment Banking and Capital Markets segment provides a full range of financial advisory, equity underwriting, and debt underwriting services. Advisory services include mergers and acquisitions, debt advisory and restructuring, and private capital advisory. Equity underwriting capabilities include initial public offerings, follow-on offerings, rights issues, block trades, accelerated book builds, equity-linked products, and corporate derivative solutions. Debt underwriting includes investment grade debt, high yield bonds, leveraged loans, municipal debt, emerging market debt, global structured notes, preferred stock, and mortgage-backed and other asset-backed debt. The Equities business provides research, sales and trading, electronic trading, equity derivatives, convertibles, prime services, corporate access, and wealth management. The Fixed Income business makes markets in a wide range of fixed income securities, loans, and derivative instruments, covering credit products including loans, high yield and distressed debt, investment grade securities, municipal securities, structured finance, emerging markets, and securitized markets. Jefferies is designated as a Primary Dealer for U.S. government securities and in similar capacities for several European countries. The segment also includes Jefferies Finance, a 50/50 joint venture with Massachusetts Mutual Life Insurance Company that structures, underwrites, and syndicates primarily senior secured loans, and Berkadia Commercial Mortgage Holding LLC, a commercial real estate finance and investment sales joint venture with Berkshire Hathaway, Inc.

The Asset Management segment provides alternative investment management services to institutional investors globally, including pension funds, insurance companies, sovereign wealth funds, and endowments. Investment products range from multi-manager products to niche equity long/short strategies to credit strategies. The segment often seeds or provides additional strategic capital in the strategies offered by its affiliated asset managers. Other investments within this segment include the legacy merchant banking portfolio comprising Stratos Group International, LLC (online foreign exchange trading), Tessellis S.p.A. (telecommunications), HomeFed LLC (real estate), investments in certain public equity securities, and other investments in private and public companies and asset management funds.

In September 2025, Jefferies announced a Memorandum of Understanding with SMBC Group to establish a joint venture in Japan to conduct the principal aspects of the wholesale Japanese equity research, sales and trading, and equity capital markets business, anticipated to begin in January 2027. The strategic alliance with SMBC Group is also expanding joint coverage of larger sponsors and implementing joint origination, underwriting, and execution for syndicated loans in Europe and the Middle East. In September 2025, Jefferies agreed to allow SMBC Group to increase its economic ownership to 20% (on an as-converted and fully diluted basis), while maintaining less than 5% voting interest. During fiscal 2025, Jefferies purchased a total of 0.7 million of its common shares for $58.5 million, or an average price of $79.57 per share, in connection with net-share settlements under its equity compensation plan. The Board of Directors has authorized the repurchase of common stock up to $250.0 million under a share repurchase program, though no shares were purchased under this program during 2025. Dividends paid per common share were $0.40 per quarter in each of the four quarters of fiscal 2025, compared to $0.30 in the first two quarters and $0.35 in the last two quarters of fiscal 2024.

For the fiscal year ended November 30, 2025, Jefferies reported total net revenues of $7.424 billion, compared to $7.423 billion in fiscal 2024. Net earnings applicable to common shareholders were $1.009 billion, or $4.88 per diluted common share, compared to $1.003 billion, or $4.73 per diluted common share, in the prior year. The results reflect relatively stable overall revenue and earnings, with growth in investment banking and asset management fees offset by lower principal transactions revenue and higher non-interest expenses.

A key growth vector is the expansion of the strategic alliance with SMBC Group. In September 2025, Jefferies announced a Memorandum of Understanding to establish a joint venture in Japan to conduct the principal aspects of the wholesale Japanese equity research, sales and trading, and equity capital markets business, which is anticipated to begin in January 2027. Additionally, the alliance is expanding joint coverage of larger sponsors and implementing joint origination, underwriting, and execution for syndicated loans in Europe and the Middle East. In September 2025, Jefferies agreed to allow SMBC Group to increase its economic ownership to 20% (on an as-converted and fully diluted basis), while maintaining less than 5% voting interest.

Another growth vector is the continued investment in the investment banking business, with the firm having continually invested over several decades, consistently expanding its professional talent base and increasing its presence globally. The Asset Management segment is also a focus, with the firm seeking to grow its credit and alternative asset management platforms, often seeding or providing additional strategic capital in the strategies offered by its affiliated asset managers.

The filing does not contain specific margin or cost outlook targets.

The filing does not contain a specific operational outlook regarding supply chain, manufacturing capacity, or headcount strategy.0 million authorization. Dividends paid per common share were $0.40 per quarter in fiscal 2025, and in January 2026, the Board declared a quarterly cash dividend of $0.40 per common share to be paid on February 27, 2026.

The filing identifies several headwinds and constraints. A credit-rating agency downgrade could significantly impact the business by increasing borrowing costs and decreasing demand for debt securities. The cost and availability of financing are impacted by credit ratings, and a downgrade could require additional collateral to counterparties. Abrupt changes in market and general economic conditions, including a potential recession, high inflation, and declines in consumer confidence, could lead to a decline in transaction volumes and investment banking revenues. The firm also faces risks from unforeseen or catastrophic events, including pandemics, cybersecurity incidents, terrorist attacks, war, trade policies, military conflict, and climate-related incidents, which could create economic and financial disruptions.

The filing identifies regulatory and legislative changes as a significant constraint. Extensive regulation in the U.S. and internationally, including the Dodd-Frank Act, EMIR, MiFID II, and various privacy laws such as GDPR, imposes significant compliance and operational costs. Changes in tax laws in key jurisdictions could materially increase tax expense. The firm also faces risks from legal liability, employee misconduct, and the inability to attract and retain highly skilled professionals in a competitive labor market.

Jefferies faces significant credit risk from counterparty nonperformance in its execution, settlement, and financing activities, which are collateralized but still expose the firm to potential losses if market values change or counterparties default before collateral is adjusted. The firm is exposed to substantial market risk from its principal trading and investment activities, where adverse movements in interest rates, equity prices, foreign exchange rates, and credit spreads can result in losses, particularly given the firm's inventory positions and large block trades. A credit-rating downgrade could significantly increase borrowing costs, decrease demand for debt securities, and require additional collateral to counterparties, adversely affecting liquidity and competitive position. The firm's business is highly correlated to general economic conditions, and a market downturn, recession, or high inflation could reduce transaction volumes and investment banking revenues. The firm also faces operational risks from cyber attacks and information security breaches, which could disrupt operations, expose the firm to liability, and harm its reputation, with the firm and its third-party service providers having been targets of such attacks.

Management's message emphasizes the firm's strategy of driving momentum in the investment banking business, bringing value to clients, executing in capital markets sales and trading businesses, and growing credit and alternative asset management platforms. The tone is forward-looking, highlighting the continued expansion of the strategic alliance with SMBC Group, including the planned joint venture in Japan anticipated to begin in January 2027 and the agreement to allow SMBC Group to increase its economic ownership to 20%. Key strategic priorities include maintaining a flat, nimble, and entrepreneurial culture, focusing on client service, and investing in talent and global presence to compete effectively against larger global bank holding companies.