Jefferies Announces First Quarter 2025 Financial Results
JEF
Jefferies Financial Group Inc. (NYSE: JEF):
Q1 Financial Highlights
$ in thousands, except per share amounts
Quarter End
1Q25
1Q24
Net earnings attributable to common shareholders
$
127,793
$
149,641
Diluted earnings per common share from continuing operations
$
0.57
$
0.69
Return on adjusted tangible shareholders' equity from continuing operations1
8.0
%
9.8
%
Total net revenues
$
1,593,019
$
1,738,203
Investment banking net revenues14
$
700,692
$
727,010
Capital markets net revenues14
$
698,284
$
724,278
Asset management net revenues
$
191,715
$
273,383
Pre-tax earnings from continuing operations
$
151,065
$
220,242
Book value per common share
$
49.48
$
46.13
Adjusted tangible book value per fully diluted share3
$
32.57
$
30.89
Quarterly Cash Dividend
The Jefferies Board of Directors declared a quarterly cash dividend equal to $0.40 per Jefferies common share, payable on May 29, 2025 to record holders of Jefferies common shares on May 19, 2025.
Management Comments
"Our first quarter results reflect strength in Advisory, Debt underwriting and Equities offset by a meaningful decline in asset management investment return compared to the prior year quarter. The capital markets have become increasingly more challenging due to the uncertainties that have arisen around U.S. policy and geopolitical events. There remains strong dialogue around potential investment banking transactions (capital raising and advisory) and our high quality backlog continues to build. Its realization depends on confidence and visibility reemerging, which may be beginning.
"We remain very confident about our strategy, our team and our long-term growth opportunities across our global businesses and we will navigate this period of uncertainty the way we always do, by focusing on our clients and helping them address their challenges and opportunities, while watching our risk, maintaining record liquidity and striving to gain market share across our firm.
"Investment Banking net revenues from Advisory, Equity underwriting and Debt underwriting totaling $726 million for the quarter were up 7% versus the prior year quarter. We had strong performance in Advisory, which was up 17%, largely from market share gains, and Debt underwriting, which was up 54%, tempered by subdued performance in Equity underwriting, which was down 39% as the opportunity in the current year in sectors where we have more meaningful market share was down notably from the prior year's comparable period.
"Capital Markets net revenues of $698 million for the first quarter were down 4% versus the prior year quarter. Equities net revenues of $409 million increased 10% from the prior year quarter, with continued strong global performance across a variety of products. Fixed Income net revenues of $289 million decreased 18% from the prior year's exceptionally strong first quarter, driven by lower volatility translating to lower overall volumes.
"Asset Management fees and investment return revenues of $83 million for the quarter were down 53% from the prior year quarter. We achieved a modest increase in management fees and a significant increase in performance fees from our strong performance in calendar year 2024 that were realized in the first quarter of 2025. This was offset by considerably weaker investment return in the current quarter due to a difficult investment environment for a variety of strategies, particularly those with a long equity bias, compared to particularly strong performance in the prior year quarter across several strategies.
"We would also like to thank our clients and colleagues who came together in January as part of our Doing Good Global Trading Day, to proudly contribute $10 million to a variety of amazing charities to support Los Angeles wildfire relief efforts."
Richard Handler, CEO, and Brian Friedman, President
Financial Summary (Unaudited)
$ in thousands
Three Months Ended
February 28, 2025
November 30, 2024
February 29, 2024
Net revenues by source:
Advisory
$
397,780
$
596,707
$
338,567
Equity underwriting
128,520
191,218
209,303
Debt underwriting
199,362
171,456
129,194
Other investment banking14
(24,970
)
27,443
49,946
Total Investment Banking
700,692
986,824
727,010
Equities14
409,058
410,768
371,800
Fixed income
289,226
240,922
352,478
Total Capital Markets
698,284
651,690
724,278
Total Investment Banking and Capital Markets Net revenues5
1,398,976
1,638,514
1,451,288
Asset management fees and revenues6
88,630
13,752
59,657
Investment return
(5,634
)
101,762
117,640
Allocated net interest4
(17,221
)
(15,104
)
(15,012
)
Other investments, inclusive of net interest13
125,940
214,340
111,098
Total Asset Management Net revenues
191,715
314,750
273,383
Other
2,328
3,338
13,532
Total Net revenues by source
$
1,593,019
$
1,956,602
$
1,738,203
Non-interest expenses:
Compensation and benefits
$
841,127
$
981,626
$
926,871
Compensation ratio15
52.8
%
50.2
%
53.3
%
Non-compensation expenses
$
600,827
$
670,114
$
591,090
Non-compensation ratio15
37.7
%
34.2
%
34.0
%
Total Non-interest expenses
$
1,441,954
$
1,651,740
$
1,517,961
Net earnings from continuing operations before income taxes
$
151,065
$
304,862
$
220,242
Income tax expense
$
14,216
$
86,117
$
55,959
Income tax rate
9.4
%
28.2
%
25.4
%
Net earnings from continuing operations
$
136,849
$
218,745
$
164,283
Net earnings (losses) from discontinued operations, net of income taxes
—
5,155
(7,891
)
Net losses attributable to noncontrolling interests
(6,983
)
(8,262
)
(7,438
)
Preferred stock dividends
16,039
26,416
14,189
Net earnings attributable to common shareholders
$
127,793
$
205,746
$
149,641
Highlights
Three Months Ended February 28, 2025
Asset Management
Non-interest Expenses
Amounts herein pertaining to February 28, 2025 represent a preliminary estimate as of the date of this earnings release and may be revised upon filing our Quarterly Report on Form 10-Q with the Securities and Exchange Commission (“SEC”). More information on our results of operations for the three months ended February 28, 2025 will be provided upon filing our Quarterly Report on Form 10-Q with the SEC, which we expect to file on or about April 9, 2025.
This press release contains certain “forward-looking statements” within the meaning of the safe harbor provisions of the U.S. Private Securities Litigation Reform Act of 1995. Forward-looking statements are based on current views and include statements about our future and statements that are not historical facts. These forward-looking statements are usually preceded by the words “should,” “expect,” “intend,” “may,” “will,” "would," or similar expressions. Forward-looking statements may contain expectations regarding revenues, earnings, operations, and other results, and may include statements of future performance, plans, and objectives. Forward-looking statements may also include statements pertaining to our strategies for future development of our businesses and products. Forward-looking statements represent only our belief regarding future events, many of which by their nature are inherently uncertain. It is possible that the actual results may differ, possibly materially, from the anticipated results indicated in these forward-looking statements. Information regarding important factors, including Risk Factors that could cause actual results to differ, perhaps materially, from those in our forward-looking statements is contained in reports we file with the SEC. You should read and interpret any forward-looking statement together with reports we file with the SEC. We undertake no obligation to update or revise any such forward-looking statement to reflect subsequent circumstances.
Past performance may not be indicative of future results. Different types of investments involve varying degrees of risk. Therefore, it should not be assumed that future performance of any specific investment or investment strategy will be profitable or equal the corresponding indicated performance level(s).
Consolidated Statements of Earnings (Unaudited)
$ in thousands, except per share amounts
Three Months Ended
February 28, 2025
February 29, 2024
Revenues
Investment banking
$
729,510
$
679,065
Principal transactions
407,230
640,736
Commissions and other fees
288,300
245,543
Asset management fees and revenues
85,408
50,372
Interest
845,171
819,489
Other
117,245
116,737
Total revenues
2,472,864
2,551,942
Interest expense
879,845
813,739
Net revenues
1,593,019
1,738,203
Non-interest expenses
Compensation and benefits
841,127
926,871
Brokerage and clearing fees
109,436
109,670
Underwriting costs
17,846
18,484
Technology and communications
139,475
137,512
Occupancy and equipment rental
30,199
28,153
Business development
72,291
57,651
Professional services
72,466
77,844
Depreciation and amortization
30,988
43,202
Cost of sales
41,568
34,671
Other expenses
86,558
83,903
Total non-interest expenses
1,441,954
1,517,961
Earnings from continuing operations before income taxes
151,065
220,242
Income tax expense
14,216
55,959
Net earnings from continuing operations
136,849
164,283
Net losses from discontinued operations, net of income taxes
—
(7,891
)
Net earnings
136,849
156,392
Net losses attributable to noncontrolling interests
(6,983
)
(7,438
)
Preferred stock dividends
16,039
14,189
Net earnings attributable to common shareholders
$
127,793
$
149,641
Financial Data and Metrics (Unaudited)
Three Months Ended
February 28, 2025
November 30, 2024
February 29, 2024
Other Data:
Number of trading days
61
63
61
Number of trading loss days7
4
8
3
Average VaR (in millions)8
$
13.13
$
12.75
$
15.13
In millions, except other data
February 28, 2025
November 30, 2024
February 29, 2024
Financial position:
Total assets
$
70,219
$
64,360
$
60,933
Cash and cash equivalents
11,176
12,153
7,616
Financial instruments owned
26,087
24,138
23,212
Level 3 financial instruments owned9
781
734
589
Goodwill and intangible assets
2,038
2,054
2,064
Total equity
10,268
10,225
9,867
Total shareholders' equity
10,204
10,157
9,780
Tangible shareholders' equity10
8,166
8,103
7,716
Other data and financial ratios:
Leverage ratio11
6.8
6.3
6.2
Tangible gross leverage ratio12
8.3
7.7
7.6
Number of employees at period end
7,701
7,822
7,745
Number of employees excluding OpNet, Tessellis and Stratos at period end
5,994
5,968
5,790
Components of Numerators and Denominators for Earnings Per Common Share
$ in thousands, except per share amounts
Three Months Ended
February 28, 2025
February 29, 2024
Numerator for earnings per common share from continuing operations:
Net earnings from continuing operations
$
136,849
$
164,283
Less: Net losses attributable to noncontrolling interests
(6,983
)
(6,452
)
Allocation of earnings to participating securities
(16,039
)
(14,189
)
Net earnings from continuing operations attributable to common shareholders for basic earnings per share
$
127,793
$
156,546
Net earnings from continuing operations attributable to common shareholders for diluted earnings per share
$
127,793
$
156,546
Numerator for earnings per common share from discontinued operations:
Net losses from discontinued operations, net of taxes
$
—
$
(7,891
)
Less: Net losses attributable to noncontrolling interests
—
(986
)
Net losses from discontinued operations attributable to common shareholders for basic and diluted earnings per share
$
—
$
(6,905
)
Net earnings attributable to common shareholders for basic earnings per share
$
127,793
$
149,641
Net earnings attributable to common shareholders for diluted earnings per share
$
127,793
$
149,641
Denominator for earnings per common share:
Weighted average common shares outstanding
206,046
211,535
Weighted average shares of restricted stock outstanding with future service required
(2,200
)
(2,402
)
Weighted average restricted stock units outstanding with no future service required
10,690
10,913
Weighted average basic common shares
214,536
220,046
Stock options and other share-based awards
5,287
2,894
Senior executive compensation plan restricted stock unit awards
2,625
2,351
Weighted average diluted common shares
222,448
225,291
Earnings (losses) per common share:
Basic from continuing operations
$
0.60
$
0.71
Basic from discontinued operations
—
(0.03
)
Basic
$
0.60
$
0.68
Diluted from continuing operations
$
0.57
$
0.69
Diluted from discontinued operations
—
(0.03
)
Diluted
$
0.57
$
0.66
Non-GAAP Reconciliations
The following tables reconcile our non-GAAP financial measures to their respective U.S. GAAP financial measures. Management believes such non-GAAP financial measures are useful to investors as they allow them to view our results through the eyes of management, while facilitating a comparison across historical periods. These measures should not be considered a substitute for, or superior to, measures prepared in accordance with U.S. GAAP.
Return on Adjusted Tangible Equity Reconciliation
$ in thousands
Three Months Ended
February 28, 2025
February 29, 2024
Net earnings attributable to common shareholders (GAAP)
$
127,791
$
149,641
Intangible amortization and impairment expense, net of tax
7,073
4,147
Adjusted net earnings to common shareholders (non-GAAP)
134,864
153,788
Preferred stock dividends
16,039
14,189
Adjusted net earnings to total shareholders (non-GAAP)
$
150,903
$
167,977
Adjusted net earnings to total shareholders (non-GAAP)1
$
603,612
$
671,908
Net earnings impact for net losses from discontinued operations, net of noncontrolling interests
—
6,905
Adjusted net earnings to total shareholders from continuing operations (non-GAAP)
150,903
174,882
Adjusted net earnings to total shareholders from continuing operations (non-GAAP)1
603,612
699,528
November 30,
2024
2023
Shareholders' equity (GAAP)
$
10,156,772
$
9,709,827
Less: Intangible assets, net and goodwill
(2,054,310
)
(2,044,776
)
Less: Deferred tax asset, net
(497,590
)
(458,343
)
Less: Weighted average impact of dividends and share repurchases
(94,936
)
(67,475
)
Adjusted tangible shareholders' equity (non-GAAP)
$
7,509,936
$
7,139,233
Return on adjusted tangible shareholders' equity (non-GAAP)1
8.0
%
9.4
%
Return on adjusted tangible shareholders' equity from continuing operations (non-GAAP)1
8.0
%
9.8
%
Adjusted Tangible Book Value and Fully Diluted Shares Outstanding Reconciliation
Reconciliation of book value (shareholders' equity) to adjusted tangible book value and common shares outstanding to fully diluted shares outstanding:
$ in thousands, except per share amounts
February 28, 2025
Book value (GAAP)
$
10,204,228
Stock options(1)
114,939
Intangible assets, net and goodwill
(2,037,906
)
Adjusted tangible book value (non-GAAP)
$
8,281,261
Common shares outstanding (GAAP)
206,250
Preferred shares
27,563
Restricted stock units ("RSUs")
13,950
Stock options(1)
5,065
Other
1,459
Adjusted fully diluted shares outstanding (non-GAAP)(2)
254,287
Book value per common share outstanding
$
49.48
Adjusted tangible book value per fully diluted share outstanding (non-GAAP)
$
32.57
(1)
Stock options added to book value are equal to the total number of stock options outstanding as of February 28, 2025 of 5.1 million multiplied by the weighted average exercise price of $22.69 on February 28, 2025.
(2)
Fully diluted shares outstanding include vested and unvested RSUs as well as the target number of RSUs issuable under the senior executive compensation plans until the performance period is complete. Fully diluted shares outstanding also include all stock options and the impact of convertible preferred shares if-converted to common shares.
Notes
Source: Jefferies Financial Group Inc.
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