Executive Summary

Q3 2025 was a strong rebound quarter: total net revenues rose to $2.05B, diluted EPS reached $1.01, and return on adjusted tangible shareholders’ equity hit 13.6% as Investment Banking Advisory delivered a record quarter; Equities were strong and Asset Management improved .
Results beat Wall Street consensus: revenue $2.05B vs $1.88B estimate* and EPS $1.01 vs $0.76 estimate*; beats were driven by higher advisory deal values, improved underwriting activity, and stronger equity trading volumes .
Sequential momentum vs Q2 2025: net revenues up from $1.63B to $2.05B and pre-tax income up from $0.135B to $0.332B, with non-compensation ratio falling from 39.4% to 30.9% as operating leverage improved .
Management emphasized resilient liquidity ($11.5B cash) and equity ($10.5B) and said market reaction to the First Brands/Point Bonita headlines appears “meaningfully overdone;” they expect continued execution aided by an expanded SMBC alliance and $2.5B incremental credit facilities .
Stock reaction catalyst: at the Oct 16 Investor Meeting, management noted the stock was down ~7% that day and ~33% YTD amid sector credit headlines, but reiterated backlog strength and operating leverage into 4Q and 2026 .

What Went Well and What Went Wrong

What Went Well

Advisory had its best quarter ever at $656M, reflecting increased deal values and improved M&A conditions across sectors; Investment Banking reached $1.14B, +20% QoQ and +20%+ YoY .
Equities delivered strong global performance with higher volumes and robust corporate derivatives/electronic trading; Capital Markets net revenues rose to $723M .
Asset Management improved with $84M combined fees/investment return in Q3, driven by better performance across equity-biased strategies .

Management quote: “Our Investment Banking Advisory business delivered record quarterly results… This growth plus strong results in Equities and an improved performance in Asset Management helped drive net earnings… and ROATCE of 13.6%.”

What Went Wrong

Fixed Income net revenues declined YoY as tight credit conditions continued to slow client flow trading activity; the environment remained challenging vs prior-year strength .
Year-to-date pre-tax earnings from continuing operations remained below prior year ($617.8M YTD vs $700.7M), reflecting first-half softness and lower asset management investment returns earlier in the year .
Ongoing headlines regarding First Brands/Point Bonita pressured sentiment; management detailed exposure and recourse plans but acknowledged potential legal costs and a manageable loss scenario .

Financial Results

Core P&L vs Prior Year and Prior Quarter

Metric	Q3 2024	Q2 2025	Q3 2025
Total Net Revenues ($USD Billions)	$1.68	$1.63	$2.05
Diluted EPS – Continuing Operations ($)	$0.72	$0.40	$1.01
Pre-tax Earnings – Continuing Ops ($USD Billions)	$0.253	$0.135	$0.332
Net Earnings Attributable to Common Shareholders ($USD Billions)	$0.167	$0.088	$0.224
Compensation Ratio (%)	52.8%	52.3%	52.9%
Non-compensation Ratio (%)	32.2%	39.4%	30.9%

Segment Breakdown

Segment Net Revenues ($USD Millions)	Q3 2024	Q2 2025	Q3 2025
Advisory	$592.5	$457.9	$655.6
Equity Underwriting	$150.1	$122.4	$181.2
Debt Underwriting	$183.1	$205.4	$249.5
Total Investment Banking	$943.6	$766.3	$1,135.3
Equities	$387.3	$526.2	$486.7
Fixed Income	$289.2	$177.9	$236.7
Total Capital Markets	$676.5	$704.2	$723.4
Asset Management (Total)	$59.0	$154.6	$176.9

KPIs and Balance Sheet

KPI	Q3 2024	Q2 2025	Q3 2025
Book Value per Common Share ($)	$48.89	$49.96	$50.60
Adjusted Tangible BV per Fully Diluted Share ($)	$31.87	$32.84	$33.38
Average VaR ($USD Millions)	$11.81	$11.89	$10.45
Trading Loss Days (count)	7	13	3
Leverage Ratio (x)	6.3	6.5	6.6
Tangible Gross Leverage (x)	7.7	7.9	8.0
Employees at Period End	7,624	7,671	7,866
Cash and Cash Equivalents ($USD Billions)	$10.57	$11.26	$11.46

Results vs S&P Global Consensus (Q3 2025)

Metric	Consensus Estimate	Actual (Company)
Revenue ($USD Billions)	$1.88*	$2.05
Primary EPS ($)	$0.76*	$1.01

Values with an asterisk (*) were retrieved from S&P Global.

Guidance Changes

Metric	Period	Previous Guidance	Current Guidance	Change
Quarterly Dividend ($/share)	Q3 2025	$0.40	$0.40	Maintained
Operating Margin/Comp Ratio	2H 2025	Not provided	“Expect margins to normalize as business environment improves” (qualitative)	Commentary only
Tax Rate	FY 2025	Not provided	Q3 effective rate 26.9% (contextual, not forward guidance)	N/A

Management did not provide explicit numeric guidance for revenue/margins/OpEx/OI&E/tax beyond qualitative comments; dividend policy remained unchanged .

Earnings Call Themes & Trends

Topic	Previous Mentions (Q1 2025 & Q2 2025)	Current Period (Q3 2025)	Trend
Advisory/M&A momentum	Q1: Advisory +17% YoY; backlog building despite policy/geopolitical uncertainty . Q2: Advisory +61% YoY; market share gains; underwriting muted early in quarter	Record advisory quarter ($656M); improved capital formation, better underwriting activity	Accelerating
Equities platform	Q1/Q2: Strong global performance; prime services and electronic trading notable	Continued strength in U.S./Europe cash, options, derivatives, and global electronic trading	Broad-based strength
Fixed Income	Q1/Q2: Lower global activity; volatility in credit spreads; several businesses impacted	YoY lower client flow trading as tight credit conditions slow activity	Challenged
Asset Management	Q1: Weaker investment return vs strong prior year; performance fees realized	Q3 improvement: $84M combined fees/return; equity-biased strategies performed better	Improving
SMBC strategic alliance	Ongoing deepening of partnership; complementary capabilities	Expanded alliance, $2.5B of new/incremental credit facilities; SMBC intends to lift stake to up to 20%	Structurally positive
AI/Technology	Invested for efficiency; embedded AI, cloud-hosted infrastructure to widen operating margins	Ongoing AI productivity push, operating margin leverage expectations	Execution phase
Tariffs/macro uncertainty	Q1/Q2: Early quarter uncertainty slowed activity; later improvement	Management sees resilience; backlog building; operating leverage into 4Q	Improving visibility
Risk management/credit	Prior comments on lower Level 3; high liquidity	First Brands/Point Bonita update; exposure quantified; CLO holdings small; losses absorbable	Contained/managed

Management Commentary

“Net revenues of $2.05 billion… Advisory delivered record quarterly results… strong results in Equities… improved performance in Asset Management… ROATCE of 13.6%.” — Richard Handler & Brian Friedman
“We are encouraged by the rebound in global market sentiment… more strongly positioned than ever… optimistic about the near and long-term outlook.” — Handler & Friedman
“Expanded SMBC alliance… included $2.5B of new and incremental credit facilities… SMBC intending to increase ownership from 14.5% to up to 20%.” — CEO/President letter
On First Brands/Point Bonita: “We intend to exert every effort to protect the interests and enforce the rights of Point Bonita and its investors.” — Company update

Q&A Highlights

Return profile: management targets sustained double-digit returns, calling 2008–2023 “aberrational,” with recent ROATCE evidence and operating leverage supporting higher margins .
Stock reaction and capital return: management noted blackout constraints but reiterated alignment and buyback awareness; viewed market reaction as overdone .
Risk management (Point Bonita): exposures are limited; receivables primarily due from investment-grade obligors; fraud allegations under investigation; broad strategies are liquid and diversified .
Prime brokerage: invited into larger hedge funds; measured expansion with financing largely off-balance-sheet; strong platform synergies .
Operating leverage and comp: non-comp leverage expected to be more immediate; comp ratio to trend down with scale over time .

Estimates Context

Q3 2025 beats: Revenue $2.05B vs $1.88B estimate*; EPS $1.01 vs $0.76 estimate*. Management attributed beats to record advisory, improved underwriting, and strong Equities .
Forward consensus*: Q4 2025 revenue $2.04B*, EPS $0.99*; Q1 2026 revenue $2.13B*, EPS $0.97*. EBITDA consensus for Q4 2025 $370M*, Q1 2026 $403M*. Consensus recommendation (text) unavailable*.
Values with an asterisk (*) were retrieved from S&P Global.

Key Takeaways for Investors

Advisory strength and broader platform momentum suggest continued operating leverage into 4Q and 2026; management confidence supported by backlog and improved market sentiment .
Equities remains a structural growth engine (cash, derivatives, electronic trading); fixed income is mixed amid tight spreads but could benefit as activity normalizes .
Asset Management showed improvement in Q3; Point Bonita/First Brands exposures are quantified and presented as absorbable relative to $10.5B equity and $11.5B cash .
Expanded SMBC alliance (credit capacity and strategic integration) is a medium-term catalyst for larger financings and cross-border opportunities; JV benefits expected to accrue post-2026 for equities .
Cost discipline evident: non-comp ratio fell sharply QoQ; comp ratio stable; as revenue scales, margin capture should improve further .
Dividend maintained at $0.40; management indicated buybacks constrained by blackout but reiterated alignment and long-term value focus .
Near-term trading setup: narrative shifting from first-half uncertainty to second-half realization; continued beats could prompt upward estimate revisions and multiple re-rating as credit headlines fade .

Notes and Sources:  
Q3 2025 earnings press release and 8-K 2.02: **[96223_0000096223-25-000010_jef-20250929.htm:0]**–**[96223_0000096223-25-000010_jfgpressrelease8-31x25.htm:11]**.  
Q1 2025 and Q2 2025 earnings press releases (8-K 2.02): **[96223_0001628280-25-014973_jef-20250326.htm:0]**–**[96223_0001628280-25-014973_jfgpressrelease2-28x25.htm:10]**, **[96223_0001628280-25-033018_jef-20250625.htm:0]**–**[96223_0001628280-25-033018_jfgpressrelease5-31x25.htm:12]**.  
Investor Meeting transcript (Oct 16, 2025): **[0000096223_2190465_0]**–**[0000096223_2190465_35]**.  
First Brands/Point Bonita 8-K update (Oct 8, 2025): **[96223_0001140361-25-037595_ef20056799_8k.htm:0]**–**[96223_0001140361-25-037595_ef20056799_ex99-1.htm:1]**.  
CEO/President letter (Oct 13, 2025): **[96223_b76df6306a564a43adf110d165f011de_0]**–**[96223_b76df6306a564a43adf110d165f011de_4]**.  
S&P Global estimates used and marked with asterisks.

Jefferies Financial Group Inc. (JEF)·Q3 2025 Earnings Summary