DOUG 10-K & 10-Q changes, risk factors and insider trading
Douglas Elliman Inc. · NYSE · Real Estate Agents & Managers (For Others) · CIK 1878897 · All filings on SEC.gov
At a glance
What changed in the latest 10-K
Risk Factors
New heading “Our international expansion and launch of Elliman International may subject us to different or greater risks from those associated with our operations in the United States.”
New heading “Our mortgage business subjects us to additional risks and we may not realize the expected benefits from our mortgage business.”
New heading “Severe weather events or natural or man-made disasters, including increasing severity or frequency of such events, or other catastrophic events (including public health crises) may disrupt our business.”
New heading “We may not pay dividends on our common stock.”
New heading “Loss or attrition among our senior executives or other key employees and our inability to develop our existing workforce and to recruit top talent could adversely affect our financial performance.”
New heading “The trading price of the shares of our common stock has been and is likely to be volatile.”
New heading “Future offerings of debt or equity securities by us may adversely affect the market price of our Common Stock.”
New heading “Anti-takeover provisions in our organizational documents and Delaware law may discourage or prevent a change of control, even if an acquisition would be beneficial to our stockholders, which could affect our stock price adversely and prevent attempts by our stockholders to replace or remove our current management.”
Removed heading “Douglas Elliman is subject to risks and operational limitations associated with its strategic alliance with Knight Frank Residential.”
Removed heading “Our debt obligations under our Convertible Notes could impair our financial condition, limit our operational flexibility and result in significant dilution.”
Removed heading “We may not have the ability to raise the funds necessary to settle conversions of our Convertible Notes in cash or to repurchase the Convertible Notes in connection with a Major Transaction, and any other indebtedness we may incur in the future may contain limitations on our ability to pay cash upon conversion or repurchase of the Convertible Notes.”
Removed heading “Risks Relating to the Distribution”
Removed heading “Prior to December 2024, Douglas Elliman was materially dependent on Vector Group’s performance under various agreements. Subsequent to the termination of such agreements, Douglas Elliman has operated as a standalone company. While Douglas Elliman has an experienced management team, there can be no assurance, as a standalone company, Douglas Elliman will be able to effectively and efficiently implement and maintain its business strategy and operations.”
Removed heading “The Distribution could result in significant tax liability.”
Removed heading “We may have a significant indemnity obligation to Vector Group if the Distribution is treated as a taxable transaction.”
Largest changes
“The results of any such claims, lawsuits, arbitration proceedings, government investigations or other legal or regulatory proceedings cannot be predicted with certainty. Any claims against us or investigations involving us, whether meritorious or not, could be time-consuming, result in significant defense and compliance costs, be harmful to our reputation, require significant management attention and divert significant resources. Determining reserves for our pending litigation is a complex and fact-intensive process that requires significant subjective judgment and speculation. …”see in full comparison
We are periodically subject to claims, lawsuits, arbitration proceedings, government investigations and other legal and regulatory proceedings in the ordinary course of business, including those involving labor and employment, anti- discrimination, commercial disputes, competition, professional liability and consumer complaints, intellectual property disputes, compliance with regulatory requirements, antitrust and anti-competition claims (including claims related to NAR or MLS rules regarding buyer-broker commissions as further described in Note 14 to our consolidated financial statements included elsewhere in this Form 10-K), securities laws and other matters, and we may become subject to additional types of claims, lawsuits, government investigations and legal or regulatory proceedings if the regulatory landscape changes or as our business grows and as we deploy new offerings, including proceedings related to our acquisitions, securities issuances or business practices. See Item 3 “Legalsee in full comparisonProceedings- The results of any such claims, lawsuits, arbitration proceedings, government investigations or other legal or regulatory proceedings cannot be predicted with certainty. Any claims against us or investigations involving us, whether meritorious or not, could be time-consuming, result in significant defense and compliance costs, be harmful to our reputation, require significant management attention and divert significant resources. Determining reserves for our pending litigation is a complex and fact-intensive process that requires significant subjective judgment and speculation. It is possible that a resolution of one or more such proceedings could result in substantial damages, settlement costs, fines and penalties that could adversely affect our business, financial condition and results of operations. These proceedings could also result in harm to our reputation and brand, sanctions, consent decrees, injunctions or other orders requiring a change in our business practices. Any of these consequences could adversely affect our business, financial condition and results of operations. Furthermore, under certain circumstances, we have contractual and other legal obligations to indemnify and to incur legal expenses on behalf of our business and commercial partners and current and former directors, officers and employees.Proceedings.”
“As with many technological innovations, AI presents great promise but also risks and challenges that could adversely affect our business. Sensitive, proprietary, or confidential information of Douglas Elliman, our employees, agents and business partners could be leaked, disclosed, or revealed as a result of or in connection with the use of AI within the technology leveraged from our PropTech Investments. …”see in full comparison
“As with many technological innovations, AI presents great promise but also risks and challenges that could adversely affect our business. Sensitive, proprietary, or confidential information of Douglas Elliman, our employees, agents and business partners could be leaked, disclosed, or revealed as a result of or in connection with the use of AI by our employees or agents. Any such information input into a third-party generative AI or machine learning platform could be revealed to others, including if information is used to train the third party's generative AI or machine learning models. …”see in full comparison
“The Purchase Agreement contains certain affirmative and negative covenants (including restrictions on the Company’s ability to incur indebtedness, create liens, pay dividends or distributions, make investments and enter into certain affiliate transactions). …”see in full comparison
“In the event of certain Major Transactions (as defined in the Purchase Agreement), we will be required to repay the Convertible Notes on the date on which such transaction occurs at a price equal to the greater of (i) the outstanding principal and capitalized interest on the Convertible Note plus a make-whole premium and (ii) the sum of (a) the fair market value of the as-converted amount of the Convertible Note for common stock plus (b) the fair market value of additional make-whole shares calculated pursuant to a customary make-whole table. …”see in full comparison
Full comparison: every changed paragraph (98)
Our business faces many risks. Below we describeddescribe the known material risks that we face. There may be additional risks that we do not yet know of or that we do not currently perceive to be significant that may also impact our business. Each of the risks and uncertainties described below could lead to events or circumstances that have a material adverse effect on the business, results of operations, cash flows, prospects, as well as our financial condition of us,condition, which in turn could negatively affect the value of our common stock. You should carefully consider and evaluate all information included in this report and any subsequent reports that we may file with the SEC or make available to the public before investing in our securities.
Any of the following could be associated with cyclicality in the real estate market by halting or limiting a recovery in the residential real estate market, and consequently have an adverse effect on our business by causing periods of lower growth or a decline in the number of home sales and/or property prices which in turn could adversely affect our revenue and profitability:
•adverse changes in economic and general business conditions in the New York metropolitan area or the other markets in which we operate;
• adverse changes in global, national, regional and local economic and market conditions, particularly in the New York metropolitan area and the other markets where we operate, including those relating to pandemics and health crises.operate.
TheBeginning with the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) limitedand continuing with the One Big Beautiful Bill Act (the “OBBBA”), mortgage interest deductions as well as state and local income and property tax deductions.deductions have been limited since 2018. The loss of the use of these deductions has encouraged residents of states with high income and property taxes and costs of housing to migrate to states with lower tax rates and housing costs. In 2024,2025, approximately 63%64% of our closed sales occurred in New York, California, Connecticut, New Jersey and Massachusetts, and a migration of residents from these markets or a reduction in the attractiveness of these markets as a place to live could adversely impact demand for our products and services.
We are also impacted by the attractiveness of New York City as a place to live and invest in and its status as an international center for business and commerce. If New York City’s economy stagnates or contracts or if there are significant concerns or uncertainty regarding the strength of New York City’s economy due to domestic, international or global macroeconomic trends, or other factors (including, in particular, any matters which adversely affect New York City’s status as an international center for business and commerce or the economic benefits of New York City’s financial services industry), the New York metropolitan area may become a less attractive place to live, work, study or to own residential property for investment purposes. The attractiveness of New York City may also be negatively affected by other factors, including high residential property sales prices or rents (or a risk or perceived risk of a fall in sales prices in the future), high costs of living, the impact of the 2017 Tax Act,Act and the OBBBA, the impact of changes in state tax law, such as the real estate transfer tax on luxury property, and negative perceptions surrounding quality of life, safety and security (including the risk or perceived risk of acts of terrorism or protests).
We believe that low mortgage rates were a significant factor in the trend in increased homeowner equity and growth in home prices and sales inthrough 2021. In March 2022, the Federal Reserve Board began increasing its primary policy interest rate as well as reducing the size of its balance sheet. Consequently, mortgage interest rates have significantly and rapidly increased. Changes in the Federal Reserve Board’s policies, the interest rate environment and mortgage market are beyond our control and difficult to predict. Beginning in 2022, the cost of financing for homebuyers increased significantly, which resulted in higher monthly payment costs that make homes less affordable to purchasers and these conditions have continued. We believe these higher interest rates also reduced home inventory because many sellers considering a move faced higher monthly payment costs because of moving. Consequently, both of these trends resulted in a decline of transaction volume since 2021 and, if these trends continue, could eventually result in lower home prices. As the Federal Reserve lowered the federal funds rate by a total of 100 basis points in 2024 and 75 basis points in 2025, mortgage rates have remained relatively high but have since been declining.
The high interest rate environment may negatively impact and, until the interest rate environment meaningfully improves, it would be expected to negatively impact multiple aspects of our business, as increases in mortgage rates (as well as prolonged periods of high mortgage rates) generally have an adverse impact on transaction volume, housing affordability, and title, escrow, mortgage and refinancing volumes. If existing transactions were to remain at depressed levels or decline further (due to the high mortgage rate environment or otherwise), we would also expect to experience decreased title, escrow, mortgage origination and refinancing activity.
Changes in the Federal Reserve's policies, the interest rate environment, and the mortgage market are beyond our control, are difficult to predict, and could have a material adverse effect on our business, results of operations and financial condition. A significant decline in the number of transactions or title, escrow, mortgage and refinancing activity due to any of the foregoing would adversely affect our financial and operating results, which may be material.
Brand value can be severely damaged even by isolated incidents, particularly if the incidents receive considerable negative publicity or result in litigation. Some of these incidents may relate to the way we manage our relationship with our agents, our growth strategies or the ordinary course of our business or our brokerage business. Other incidents may arise from events that are or may be beyond our ability to control and may damage our brand, such as actions taken (or not taken) by one or more agents relating to health, safety, welfare or other matters; cybersecurity incidents; litigation and claims; failure to maintain high ethical and social standards for all of our operations and activities; failure to comply with local laws and regulations; and illegal activity targeted at Douglas Elliman or others. Further, we have licensed the use of our name and certain of our intellectual property in connection with our sale of our property management business and our Elliman International business. Therefore, our brand may be negatively impacted by the actions of third parties as well. Douglas Elliman’s brand value could diminish significantly if any such incidents or other matters erode consumer confidence in it.
We compete with other multi-office independent real estate organizations and with franchise real estate organizations competing in local areas. Competition is particularly intense in the densely populated metropolitan areas of New York City, South Florida and Los Angeles in which we operate. In addition, in the real estate brokerage industry, new participants face minimal barriers to entry into the market. We also compete for the services of qualified licensed agents. The ability of our brokerage offices to retain agents is generally subject to numerous factors, including the sales commissions they receive, advertising supportsupport, technology and ancillary real estate service offerings and perception of brand value. Some of our competitors may have greater financial resources than we do to enhance their value proposition to agents and consumers. Recent consolidation in our industry also could allow larger competitors, which have greater access to capital, the ability to scale and pursue strategies to outperform their competitors. This could include offering exclusive programs or the broad adoption of private listings accessible only through their agents, which could harm our ability to recruit and retain agents and/or limit the supply of listings our agents have access to. Failure to compete effectively could have a material adverse effect on our business, financial condition and results of operations.
Our operations are dependent on the efforts, abilities and experience of our employees, and we compete for their services. We have contracts with certain employees that include provisions preventing them from competing with us both during and after the term of our employment contracts with them. Enforceability of the non-compete agreements that we have in place is not guaranteed, and contractual restrictions could be breached without discovery or adequate remedies. On July 9, 2021, President Biden signed an executive order encouraging the Federal Trade Commission (“FTC”) to curtail unfair use of non-compete agreements and other agreements that may unfairly limit worker mobility. While we cannot predict how the initiatives set forth in the executive order will be implemented or, as a result, the impact that the executive order will have on our operations, there is now increased uncertainty regarding the long-term enforceability of our non-compete agreements. In April 2024, the FTC enacted a rule that prohibited employers from entering into non-compete clauses with workers and require employers to rescind existing non-compete clauses. Shortly after enactment, the rule was subject to various legal challenges and the rule was set aside by the U.S. District Court for the Northern District of Texas. However, the FTC may appeal the discussion and the outcome of the FTC ruling is uncertain. In addition, the New York state legislature passed legislation in 2023 that would have prohibited most non-compete agreements between employers and workers in New York State, although it was not ultimately enacted. It is possible that additional similar legislation may be introduced in the future. We are monitoring developments related to these proposed laws for any potential impact on the arrangements we enter into with third parties, including our real estate agents.
Douglas Elliman is subject to risks and operational limitations associated with its strategic alliance with Knight Frank Residential.
Douglas Elliman has entered into a strategic alliance with Knight Frank Residential, the world’s largest privately-owned property consultancy, to market certain luxury residential properties of at least $2 million to international audiences through co-branded offices, located in the various luxury markets where Douglas Elliman operates, and select top-tier agents. The agreement provides for the sharing of commissions and certain other payments in respect of jointly marketed properties. This strategic alliance subjects Douglas Elliman to risks, including risks associated with the sharing of proprietary information between parties, non-performance by Douglas Elliman or Knight Frank Residential of obligations under the strategic alliance agreement, disputes over strategic or operational decisions or other matters and reputational risks, as well as litigation risks associated therewith. In particular, Douglas Elliman is subject to certain exclusivity and non-compete provisions in connection with marketing and selling properties outside the United States in various markets in which Knight Frank Residential operates, subject to certain exceptions. Although Douglas Elliman believes that the strategic alliance enhances its ability to serve its luxury customers, such restrictions could limit Douglas Elliman’s growth prospects.
InAs thepart threeof monthsour endedannual Septemberimpairment 30, 2024,test, we utilized third-party valuation specialists to prepare a quantitative assessment of the Company’s goodwill and trademark intangible assets, based on the current market conditions in the residential real estate brokerage industry which did not result in impairment charges related to its goodwill or trademark for the year ended December 31, 2024.2025. If we fail to achieve the financial projections used in the quantitative assessments of fair value and current market conditions deteriorate, impairment charges could result in future periods, and such impairment charges could be material.
Following the federal jury decision in the Sitzer/Burnett case on October 31, 2023, several additional putative class action lawsuits were filed against NAR and additional real estate brokerage firms, including the Company, alleging anticompetitive conduct similar to that in the Sitzer/Burnett case in violation of federal and state antitrust laws, consumer protection claims and other state law claims. The Company was named as a defendant in a number of cases in Missouri, Illinois and New York. On April 26, 2024, we entered into a settlement agreement (the “Settlement Agreement”) to resolve, on a nationwide basis, the Gibson and Umpa cases in the U.S. District Court for the Western District of Missouri (the “Lawsuits”). The settlement resolves all claims on a nationwide basis by the plaintiffs and proposed settlement class members (sellers of residential real estate) in the Lawsuits, which includes, but is not limited to, all claims concerning brokerage commissions by the proposed settlement class members that were asserted in other lawsuits against us (collectively, the “Claims”), and releases us, including our subsidiaries, and affiliated agents from all Claims. The Settlement Agreement is currently being challenged on appeal in the U.S. Court of Appeals for the Eighth Circuit, and there can be no assurances that the Settlement Agreement will be upheld on appeal. In the event the appeal is successful, the Company could be subject to further liabilities in the various seller class action litigation that is pending or that could be filed. Under the Settlement Agreement, we paid $7.75 million into an escrow fund on June 12, 2024, $5.0 million into an escrow fund on December 29, 2025, and agreed to pay twoan additional $5.0 million contingent paymentspayment subject to certain financial contingencies on or before December 31, 2027 (collectively, the “Settlement Amount”). In addition, we may become involved in additional legal proceedings concerning the same or similar claims and currently are a defendant in the buyer-side class action Lutz lawsuit, pending in the United StatesU.S. District Court for the Southern District of Florida, No. 4:24-cv-10040 (KMM). We are unable to reasonably estimate the financial impact of any remaining matters.
Our international expansion and launch of Elliman International may subject us to different or greater risks from those associated with our operations in the United States.
In June 2025, we launched Elliman International after the end of our strategic alliance with Knight Frank Residential. Elliman International is intended to enable us to directly serve our agents, clients, and developer’s international real estate needs, with an initial focus on luxury destinations in Latin America, the Middle East, Europe, Asia Pacific, and other emerging wealth centers outside the United States. While we continue to develop and refine our approach to international operations, there can be no assurance that these efforts will be successful. Entering foreign markets independently presents significant risks and operational challenges that may adversely affect our financial condition and operating results. Our international operations may face risks that are different from those that affect domestic operations. These risks include:
•Exposure to economic conditions and federal, state and local as well as potential international laws and regulations, including those relating to our agents;
•Potential adverse changes in the political stability of foreign countries or in their diplomatic relations with the United States;
•The effect of enacted and proposed tariffs and other trade policies, and related uncertainties in the global economy resulting from such policies;
•Economic instability, and related uncertainties in the global economy, from pressured banking systems, inflation and currency risk, lack of capital, and changing or inconsistent economic policies;
•Costs and incremental expenses associated with complying with a wide variety of foreign laws including laws with respect to real estate brokerage arrangements, agents, employment, corporate governance, operations, taxes, and litigation;
•Difficulties in managing international operations, including difficulties that arise from ambiguities in contracts written in foreign languages and difficulties that arise in enforcing such contracts;
•Aligning international operations with our existing corporate infrastructure and the need to adapt and localize our business platform(s) for specific countries;
•The geographic, time zone, language and cultural differences among personnel in different areas of the world;
•Tax uncertainty, including tax law changes, limited tax guidance and difficulty determining tax exposure or planning tax-efficient structures;
•Restrictions on the ability to obtain or retain licenses, permits and other regulatory approvals required for operation;
•Establishing brand recognition in new markets; and
•Difficulties with managing international operations, including costs and staffing.
We may expand our footprint in such markets by pursuing acquisitions, joint ventures, or other strategic arrangements with local or regional operators in those markets. These partners may have economic or other business interests or goals which are inconsistent with our business interests and goals. Disputes between us and our partners may result in litigation or arbitration that would increase our expenses, affect our brand, and prevent our officers and directors from focusing their time and effort on our business. Further, improper actions taken by any such third parties that we have strategic arrangements with may negatively impact our brand and reputation and potentially lead to direct claims against us and subject us to liability. If we fail to identify, establish, and maintain such relationships or successfully identify and acquire businesses, we may be unable to execute our expansion plans. We expect that our international activities may grow in the future as we pursue opportunities in international markets, which may require significant dedication of management attention and may require significant upfront investment.
In the event that we expand into new international markets, we may have only limited experience in marketing and conducting business in those markets. Such expansion requires significant management attention and financial resources and may require us to attract, retain and manage local agents or personnel in such markets. It could also require us to adapt our marketing and services to local market needs. These factors and risks may negatively affect the success of our international expansion.
Our mortgage business subjects us to additional risks and we may not realize the expected benefits from our mortgage business.
We may not realize the expected benefits from our mortgage business, which will depend, in part, on the successful alliance between us and our alliance partner, Associated Mortgage Bankers, and the successful operation of the business. Our mortgage business is subject to many of the same factors that affect our real estate brokerage and title and escrow services, including: regulatory changes; changes in mortgage underwriting standards; high mortgage rates; changes in real estate market conditions; changes in consumer trends; competition; decreases in operating margins; and changes in economic conditions. The services which our alliance partner is engaged to provide to the mortgage business may deteriorate and cause us to make alternative arrangements. Further, in the event of disagreements with our alliance partner, we may not be able to resolve such disagreements in our favor, which could have a material adverse effect on our mortgage business. In addition, improper actions taking place at our mortgage business may lead to direct claims against us, which, if determined adversely, could increase costs, negatively impact our reputation and subject us to liability for their actions. Our mortgage business may also have regulatory obligations and we or our alliance partner may fail to comply with those obligations, and that failure could also subject us to adverse actions from regulators. Any of the foregoing could have an adverse impact on our results of operations and financial condition.
As with many technological innovations, AI presents great promise but also risks and challenges that could adversely affect our business. Sensitive, proprietary, or confidential information of Douglas Elliman, our employees, agents and business partners could be leaked, disclosed, or revealed as a result of or in connection with the use of AI by our employees or agents. Any such information input into a third-party generative AI or machine learning platform could be revealed to others, including if information is used to train the third party's generative AI or machine learning models. Additionally, where a generative AI or machine learning model ingests personal information and makes connections using such data, those technologies may reveal other sensitive, proprietary, or confidential information generated by the model. Moreover, generative AI or machine learning models may create incomplete, inaccurate, or otherwise flawed outputs, which may appear correct. Due to these issues, these models could lead us to make flawed decisions that could result in adverse consequences to us, including exposure to reputational and competitive harm, customer loss, and legal liability. In addition, uncertainty in the legal and regulatory regime relating to AI may require significant resources to modify and maintain business practices to comply with applicable law, the nature of which cannot be determined at this time. Several jurisdictions have already proposed or enacted laws governing AI and may decide to adopt similar or more restrictive legislation that may render the use of such technologies challenging. These obligations may prevent or limit our ability to use AI in our business, lead to regulatory fines or penalties, or require us to change our business practices. If we cannot use AI, or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage. Any of these factors could adversely affect our business, financial condition, and results of operations.
Severe weather events or natural or man-made disasters, including increasing severity or frequency of such events, or other catastrophic events (including public health crises) may disrupt our business.
We have a significant concentration of offices and transactions in geographic regions where home prices are at the higher end of the U.S. real estate market, particularly the east and west coasts. Coastal areas, including California, Florida, New Jersey, New York and Texas are particularly subject to severe weather events (including hurricanes and flooding) and natural disasters. Increasingly, wildfires in the west have been difficult to contain and cover large areas. For example, in early 2025, California experienced significant wildfires. We are monitoring potential effects on the impacted markets and will continue to support our independent sales agents, franchisees and consumers.
The occurrence of a severe weather event or natural or man-made disaster can reduce the level and quality of home inventory and negatively impact the demand for homes in affected areas, which can disrupt local or regional real estate markets, delay the closing of transactions and have an unfavorable impact on home prices, transaction volume, relocation transactions, and title closing units. These effects may be compounded when the taxes or insurance costs associated with homeownership in the affected area are higher than average or the cost of such insurance materially increases in connect with the increasing frequency and severity of weather events or other disasters.
In addition, we could incur damage, which may be significant, to our office locations as a result of severe weather events or natural disasters, and our insurance may not be adequate to cover such losses. More frequent and/or severe weather events and/or long-term shifts in climate patterns exacerbate these risks. Likewise, our business and operating results could suffer as the result of other catastrophic events, including public health crises, such as pandemics and epidemics.
Our PropTech investments involve a high degree of risk. In general, financial and operating risks confronting private companies can be significant. While targeted returns should reflect the perceived level of risk in any investment, there can be no assurance that New ValleyDOUG Ventures will be adequately compensated for risks taken, and the loss of its entire investment is possible. The investments may be difficult to value, and the timing of any profit realization is highly uncertain. Losses have occurred and may occur in the future.
As with many technological innovations, AI presents great promise but also risks and challenges that could adversely affect our business. Sensitive, proprietary, or confidential information of Douglas Elliman, our employees, agents and business partners could be leaked, disclosed, or revealed as a result of or in connection with the use of AI within the technology leveraged from our PropTech Investments. Any such information input into a third-party generative AI or machine learning platform could be revealed to others, including if information is used to train the third party's generative AI or machine learning models. Additionally, where a generative AI or machine learning model ingests personal information and makes connections using such data, those technologies may reveal other sensitive, proprietary, or confidential information generated by the model. Moreover, generative AI or machine learning models may create incomplete, inaccurate, or otherwise flawed outputs, which may appear correct. Due to these issues, these models could lead us to make flawed decisions that could result in adverse consequences to us, including exposure to reputational and competitive harm, customer loss, and legal liability. In addition, uncertainty in the legal and regulatory regime relating to AI may require significant resources to modify and maintain business practices to comply with applicable law, the nature of which cannot be determined at this time. Several jurisdictions have already proposed or enacted laws governing AI and may decide to adopt similar or more restrictive legislation that may render the use of such technologies challenging. These obligations may prevent or limit our ability to use AI in our business, lead to regulatory fines or penalties, or require us to change our business practices. If we cannot use AI, or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage. Any of these factors could adversely affect our business, financial condition, and results of operations.
Our debt obligations under our Convertible Notes could impair our financial condition, limit our operational flexibility and result in significant dilution.
On July 2, 2024, we issued Senior Secured Convertible Promissory Notes due July 2, 2029 (the “Convertible Notes”), pursuant to a Securities Purchase Agreement, dated as of July 2, 2024 (the “Purchase Agreement”), by and among the Company, Alter Domus (US) LLC, as collateral agent for the purchasers, and the purchasers named therein (such purchasers being funds affiliated with or managed by Kennedy Lewis Investment Management LLC (“KLIM”)), in an aggregate principal amount of $50.0 million. The Convertible Notes mature on July 2, 2029, and are convertible into shares of our common stock. The Convertible Notes were issued in a private placement pursuant to an exemption for transactions by an issuer not involving a public offering under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
In connection with the Purchase Agreement and the Convertible Notes, certain of our subsidiaries (each a “Guarantor” and, collectively, the “Guarantors”) entered into a Security Agreement, dated as of July 2, 2024 (the “Security Agreement”), whereby the Guarantors agreed to guarantee the obligations and liabilities of the Company under the Convertible Notes. As a result, our obligations under the Convertible Notes are secured by a perfected security interest in substantially all of our tangible and intangible assets (including our intellectual property assets).
Our indebtedness under the Convertible Notes could:
•impair our ability to obtain financing or additional debt in the future for working capital, capital expenditures, acquisitions or general corporate purposes;
•impair our ability to access capital and credit markets on terms that are favorable to us or at all;
•require us to dedicate a substantial portion of our cash flow for interest payments on our indebtedness and other financial obligations, thereby reducing the availability of our cash flow to fund working capital and general corporate purposes; and
•limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate.
The Purchase Agreement contains certain affirmative and negative covenants (including restrictions on the Company’s ability to incur indebtedness, create liens, pay dividends or distributions, make investments and enter into certain affiliate transactions). In addition, pursuant to the Purchase Agreement, if we have negative Consolidated Adjusted EBITDA (as defined in the Purchase Agreement) for any two consecutive fiscal quarters from and after the fiscal quarter commencing July 1, 2024, then we will be required to maintain Liquidity (as defined in the Purchase Agreement) of at least $20.0 million as of the end of each calendar month until we have positive Consolidated Adjusted EBITDA at the end of any subsequent fiscal quarter. There is no guarantee that we will be able to pay the principal and interest under the Convertible Notes or that future working capital, borrowings or equity financing will be available to repay or refinance any amounts outstanding under the Convertible Notes.
The Convertible Notes are convertible at any time at the option of KLIM, at an initial conversion price of $1.50 per share of common stock, provided that KLIM is prohibited from converting the Convertible Notes into shares of common stock if, upon such conversion, so long as the aggregate number of shares of common stock beneficially owned by KLIM would exceed 4.99% (the “Beneficial Ownership Limitation”) of the number of shares of common stock outstanding immediately after giving effect to the conversion, as such percentage ownership is determined in accordance with the terms of the Convertible Note, and which may be increased up to 24.99% at the election of KLIM. Assuming the Convertible Notes are converted in full (without issuance of any make-whole shares), and without giving effect to the Beneficial Ownership Limitation, the Convertible Notes would convert into 33,333,334 shares of common stock, or 40,854,085 shares of common stock upon issuance of all make-whole shares, which would result in significant dilution to our stockholders.
We may not have the ability to raise the funds necessary to settle conversions of our Convertible Notes in cash or to repurchase the Convertible Notes in connection with a Major Transaction, and any other indebtedness we may incur in the future may contain limitations on our ability to pay cash upon conversion or repurchase of the Convertible Notes.
In the event of certain Major Transactions (as defined in the Purchase Agreement), we will be required to repay the Convertible Notes on the date on which such transaction occurs at a price equal to the greater of (i) the outstanding principal and capitalized interest on the Convertible Note plus a make-whole premium and (ii) the sum of (a) the fair market value of the as-converted amount of the Convertible Note for common stock plus (b) the fair market value of additional make-whole shares calculated pursuant to a customary make-whole table. The noteholders may elect to convert the Convertible Notes prior to such repayment, receive shares of common stock in respect of such repayment amount in certain circumstances or require such payment in cash. Our ability to repurchase the notes or to pay cash upon conversion of the Convertible Notes may be limited by law, by regulatory authority or by agreements governing our future indebtedness. Our failure to repurchase notes at a time when the repurchase is required by the Convertible Notes or to pay any cash payable on future conversions of the Convertible Notes may constitute an Event of Default under the Purchase Agreement. An Event of Default under the Purchase Agreement or the occurrence of the Major Transaction itself could also lead to a default under any agreements governing other future indebtedness. If the repayment of the related indebtedness were to be accelerated after any applicable notice or grace periods, we may not have sufficient funds to repay the indebtedness and to repay or repurchase our Convertible Notes.
Douglas Elliman Inc. is a holding company and depends on cash payments from our subsidiaries to pay dividends onmeet our commoncash stock.obligations.
Douglas Elliman Inc. is a holding company and includes the Company’s investment business that invests in select PropTech opportunities through our New ValleyDOUG Ventures subsidiary. We hold our interests in our business through our wholly owned subsidiaries. In addition to our own cash resources, our ability to pay dividends onmeet our commoncash stockobligations depends on the ability of our subsidiaries to make cash available to us. Our receipt of cash payments, as dividends or otherwise, from our subsidiaries is an important source of our liquidity and capital resources. If we do not have sufficient cash resources of our own and do not receive payments from our subsidiaries in an amount sufficient to repaymeet our debtscash and to pay dividends on our common stock,obligations, we must obtain additional funds from other sources. There is a risk that we will not be able to obtain additional funds at all or on terms acceptable to us. Our inability to continue to pay dividends onmeet our common stockobligations would significantly harm us and the value of our common stock.
We may not pay dividends on our common stock.
Although we have declared dividends on our common stock in the past, any future declarations of cash dividends are subject to the determination and discretion of our board of directors. Accordingly, if no such future dividends are declared, you must rely on sales of your common stock after price appreciation, which may never occur, as the only way to realize any positive return on your investment in our common stock.
Our available cash and cash equivalents are held in accounts with or managed by financial institutions and consist of cash in our operating accounts and cash and cash equivalents invested in money market funds. The amount of cash in our operating accounts exceeds the Federal Deposit Insurance Corporation (“FDIC”) insurance limits. While we monitor our accounts regularly and adjust our balances as appropriate, the valuation of oras well as our access to these accounts could be negatively impacted if the underlying financial institutions fail or become subject to other adverse conditions in the financial markets. The operations of U.S. and global financial services institutions are interconnected and the performance and financial strength of specific institutions are subject to rapid change, the timing and extent of which cannot be known. To date, we have experienced no material realized losses on or lack of access to our cash held in operating accounts or our invested cash or cash equivalents, however, we can provide no assurances that access to our cash held in operating accounts or our invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets or the negative performance of financial institutions.
Investors’We may be subject to competing demands and expectations offrom ouremployees, performanceinvestors and other third parties relating to environmental, social and governance factors; we may imposeincur additional costs and exposebe usexposed to new risks.risks as we respond to these competing demands and expectations.
There is an increasing focus from certain employees, investors, other stakeholders and regulators concerning corporate responsibility, specifically related to environmental, social and governance factors.
Management's Discussion & Analysis (MD&A)
New heading “Change in Reportable Segments”
Removed heading “Real Estate Brokerage.”
Removed heading “Corporate Activities and Other.”
Removed heading “Summary of PropTech Investments”
Largest changes
“Litigation Settlement. On April 26, 2024, we entered into a settlement agreement to resolve, on a nationwide basis, the Gibson and Umpa cases. The settlement resolves all claims, on a nationwide basis, by the plaintiffs and proposed settlement class members in the Lawsuits, which includes, but is not limited to, all claims concerning brokerage commissions by the proposed settlement class members (sellers of residential real estate) that were asserted in other lawsuits against us and our subsidiaries, and releases us, our subsidiaries, and affiliated agents from all Claims. …”see in full comparison
“(a) Represents unusual litigation expense, settlement and related expenses incurred in connection with industry-wide antitrust class action lawsuits and other matters related to employees and agents. For the Real estate brokerage segment, $17,750 is included within Antitrust litigation settlement expense line and $2,738 is included within general and administrative expenses on the Consolidated Statement of Operations for the year ended December 31, 2024. …”see in full comparison
“(d)Represents unusual litigation, settlement and related expenses, net incurred in connection with industry-wide antitrust class action lawsuits and other matters related to employees and agents. For the year ended December 31, 2025, we incurred unusual litigation expense, settlement and related expenses, net of insurance proceeds received, of $7,637 included in General and administrative expenses on the Consolidated Statement of Operations. …”see in full comparison
“(c)Represents unusual litigation expense, settlement and related expenses incurred in connection with industry-wide antitrust class action lawsuits and other matters related to employees and agents. We have increased unusual litigation expense, settlement and related expenses amounts previously reported in our Annual Report on Form 10-K for the year ended December 31, 2023 by $770 and in our Quarterly Report on Form 10-Q for each of the three months ended March 31, 2024, June 30, 2024 and September 30, 2024, respectively, by $770, $645, $534 and $3,774, respectively.”see in full comparison
“Real Estate Brokerage Litigation. On April 26, 2024, we entered into a settlement agreement to resolve all claims on a nationwide basis in the pending seller class action litigations, Gibson v. NAR, No. 4:23-cv-00788-SRB (W.D. Mo.) and Umpa v. NAR, 4:23-cv-00945-SRB (W.D. Mo.) alleging claims on behalf of sellers against Douglas Elliman Inc. and our subsidiaries. (That settlement agreement is currently being challenged on appeal in the U.S. …”see in full comparison
“Other litigation. Litigation is subject to uncertainty and it is possible that there could be adverse developments in the Gibson/Umpa appeals and other pending cases. These cases include (i) the buyer-side class action Lutz vs. HomeServices of America, Inc. et al lawsuit, pending in the U.S. District Court for the Southern District of Florida, No. …”see in full comparison
Full comparison: every changed paragraph (130)
The following discussion should be read in conjunction with the consolidated financial statements and corresponding notes, elsewhere in this Form 10-K. Any forward-looking statements are not historical facts, but rather they are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Any forward-looking statements are subject to several important factors, including those factors discussed under “Risk Factors” and “Special Note on Forward-Looking Statements,” that could cause our actual results to differ materially from those indicated in such forward-looking statements.
Douglas Elliman Inc. is a holding company andthat, through its subsidiaries, is engaged principallyin the real estate services business, and is seeking to acquire or invest in twoadditional businessreal segments:estate services businesses.
RealWe Estate Brokerage: theconduct residential real estate brokerage services through our subsidiary Douglas Elliman Realty, which operates one of the largest residential brokerage companies in the New York metropolitan areaarea, and also conductsconduct residential real estate brokerage operations in Florida, California, Texas, Colorado, Nevada, Massachusetts, Connecticut, Maryland, Virginia, New Jersey and Washington, D.C. Arizona, New Hampshire and Michigan. We also offer, including through our subsidiaries and ventures, development marketing services and ancillary services, such as property management,mortgage, title and escrow services. In addition, we have also invested in PropTech opportunities through our DOUG Ventures (f/k/a New Valley Ventures LLC) subsidiary.
Corporate Activities and Other: the operations of our holding company as well as our investment business that invests in select PropTech opportunities through our New Valley Ventures subsidiary.
Results of Operations. This section provides an analysis of our results of operations for the years ended December 31, 2025 and 2024.
Results of Operations. This section provides an analysis of our results of operations for the years ended December 31, 2024 and 2023. Certain discussions of the changes in our results of operations and liquidity and capital resources from the year ended December 31, 2023 as compared to the year ended December 31, 2022 have been omitted from this Form 10-K and may be found in Item 7. “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2023 filed with the Securities and Exchange Commission on March 16, 2023.
Since its inception in 1911, Douglas Elliman has challenged the status quo of the real estate industry. We were founded on Douglas L. Elliman’s vision that New Yorkers would shift their preference for traditional homes to favor luxury apartments that were both sold and managed by comprehensive real estate companies. More than a century later, the Douglas Elliman brand is still associated with service, luxury and forward thinking — our markets are primarily international finance and technology hubs that are densely populated and offer housing inventory at premium price points. The average transaction value of a home we sold in 20242025 was approximately $1.67$1.86 million — significantly higher than our principal competitors.
WeDouglas areElliman buildingboasts ona ourprestigious recordluxury brand that is complemented by a comprehensive suite of innovation. We are focused on digitizing, integrating and simplifyingtechnology-enabled real estate activities for agentsservices and elevatinginvestments. theirThese clients’distinguishing experiences.qualities position us to capitalize on opportunities in the U.S. residential real estate market. We are bringing innovative,innovative technology driven PropTech solutions to Douglas Elliman by adopting new PropTech solutions forour agents and their clients and investing in select PropTech opportunities through our subsidiary, New Valley Ventures LLC.clients. Our model is to source and use best-of-breed products and services that we believe will increase our efficiency. In addition to entering business relationships with these PropTechtechnology companies, we arehave committedinvested toin creatingproperty overtechnology, timeor a dynamic portfolio of PropTechPropTech, companies byand leveragingleveraged our relationships to provide themthese technology companies access to our agents and their clients, as well as our knowledge and experience. We believe these collaborative relationships arehave been mutually beneficial because they keephave kept Douglas Elliman both asset light and on the cutting edge by offering our agents innovative solutions and services that can be integrated into our technology. Furthermore, we maintain upside potential in the success of our PropTech partners in which we invest through minority stakes in their capital structures.
Industry trends in 2025. Since 2021, according to the NAR, existing home sales have declined or remained flat compared to the previous year. In 2025, existing home sales were 4.06 million, which was flat with 2024. Although sales in 2025 and 2024 were little changed from 2023, when sales of existing homes were 4.09 million units, existing home sales in 2025 were the lowest since 1995. Nonetheless, the national median home price for 2025 and 2024, respectively, rose 1.7% and 4.7% from the prior year, according to NAR. By comparison, our average sales price increased by 11% to $1.86 million in 2025 from $1.67 million in 2024.
We boast a prestigious luxury brand that is complemented by a comprehensive suite of technology-enabled real estate services and investments. These distinguishing qualities position us to capitalize on opportunities in the U.S. residential real estate market. Despite various “agentless” models such as “iBuying,” approximately 90% of sellers and 88% of buyers were assisted by a real estate agent or broker when selling or purchasing their home between July 2023 and June 2024, according to the National Association of Realtors, or NAR, highlighting the central role agents continue to play in real estate transactions. Agents are able to generate significant repeat business from clients and referrals, with 66% of home sellers between July 2023 and June 2024 choosing to collaborate with an agent they had used in the past or from a referral, according to the NAR. Repeat business, as well the ability to provide ancillary services, allows agents to extend their client relationships and generate significant lifetime value.
Industry trends in 2024 After a strong 2021, when existing home sales reported by the NAR reached their highest level since 2006, the residential real estate brokerage industry began experiencing significant challenges in the second quarter of 2022, which have continued to date. These challenges have been marked by a reduced inventory of homes available for sale, which we believe has been caused by elevated mortgage rates since early 2022. According to the NAR, sales of existing homes of 4.06 million in 2024, which was the lowest amount since 1995, declined from 4.09 million in 2023 and 5.03 million in 2022. By comparison, our transactions increased by 1% to 21,781 in 2024 from 21,606 in 2023. We began to see a stabilization in our revenues during 2023. This trend continued throughout 2024, and our revenues were 4% more than in 2023. Based on cash receipts in January and February 2025, we expect these increases to continue in the first quarter of 2025 and the NAR and other real estate industry consortiums are forecasting similar increases in the U.S. residential real estate market in 2025.
Despite these recent changes, weWe believe our competitive advantages in the luxury markets distinguish us from our competitors and our comprehensive suite of real estate solutions, the strength of our industry-leading brand name, and our talented team of employeesagents and agentsemployees set us apart in the industry. WeIn were2025 recentlyand 2024, Douglas Elliman was named the most trusted real estate brokerage firm in the United States as part of the America's Most Trusted Series by Lifestory Research. As the real estate brokerage industry evolves and addresses challenges related to constrained inventory of homes as well as higher mortgage rates, we continue to pursue profitable growth opportunities through the expansion of our footprint,footprint investmentsand innew cutting-edgeancillary PropTechreal companiesestate throughservice New Valley Ventures,offerings, continued recruitment of best-in-class talent, acquisitions (acqui-hires), and operational efficiencies. We will continue to employ a disciplined capital allocation strategy aimed at generating sustainable long-term value for our stockholders.
Change in Reportable Segments
Beginning in the first quarter of 2025, our business began to report our financial results as a single reportable segment. Presentation of our financial information for the year ended December 31, 2025 and 2024 is reported as one segment. The accounting policies of the segment are the same as those described in the summary of significant accounting policies. Prior year information has been recast to conform to the current presentation. For more information, see Note 18, “Segment Information” to our consolidated financial statements.
Distribution
On December 29, 2021, Vector Group distributed all our common stock to its stockholders. Since the Distribution, we have been incurring expenses necessary to operate a standalone public company, including pursuant to the Transition Services Agreement entered into with Vector Group in connection with the Distribution, which was terminated in December 2024.
In addition to our financial results, prepared in accordance with GAAP, we use the following business metrics to evaluate our business and identify trends affecting our business. To evaluate our operating performance, we also use Adjusted EBITDA attributed to Douglas Elliman Inc. and Adjusted EBITDA margin attributed to Douglas Elliman Margin and financial measures for the year ended December 31, 2024Inc. (“Non-GAAP Financial Measures”), which are financial measures not prepared in accordance with GAAP.
(1)We calculate total transactions by taking the sum of all transactions closed in whichthat our agent represented the buyer or seller in the purchase or sale of a home (excluding rental transactions). We include a single transaction twice when one or more of our agents represent both the buyer and seller in any given transaction. Total transactions by quarter for the year ended December 31, 2024 were 4,477 for the three months ended March 31, 2024, 5,885 for the three months ended June 30, 2024, 6,082 for the three months ended September 30, 2024 and 5,337 for the three months ended December 31, 2024.
(2)Gross Transaction Value is the sum of all closing sale prices for homes transacted by our agents (excluding rental transactions). We include the value of a single transaction twice when our agents serve both the home buyer and home seller in the transaction. Gross Transaction Value by quarter for the year ended December 31, 2024 was $7.1 billion for the three months ended March 31, 2024, $10.7 billion for the three months ended June 30, 2024, $9.8 billion for the three months ended September 30, 2024 and $8.8 billion for the three months ended December 31, 2024.
Adjusted EBITDA attributed to Douglas Elliman Inc. is a non-GAAP financial measure that represents net income (loss) attributed to Douglas Elliman Inc. adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, gain on disposal of the DEPM business (including the operations of DEPM and related corporate overhead prior to its disposal), impairment of fixed assets, litigation, settlement and related expenses, net, executive severance and separation expenses, restructuring and other items (interest expense, interest income, equity in earnings from equity-method investments, change in fair value of the derivative embedded within convertible debt, loss on extinguishment of liability and other income). Adjusted EBITDA margin attributed to Douglas Elliman Inc. is the quotient of (x) Adjusted EBITDA attributed to Douglas Elliman Inc. divided by (y) revenue.
Adjusted EBITDA attributed to Douglas Elliman is a non-GAAP financial measure. Adjusted EBITDA attributed to Douglas Elliman Margin is the quotient of (x) Adjusted EBITDA attributed to Douglas Elliman divided by (y) revenue.
Computation of Adjusted EBITDA attributed to Douglas Elliman Inc.
(a)Includes results from operations of Residential Management Group, LLC, which conducts business as Douglas Elliman Property Management (“DEPM”), which was disposed on October 24, 2025. This adjustment also includes the corporate allocation to Douglas Elliman Realty LLC (“DER”) from DEPM. The expenses associated with the corporate allocation to DEPM have continued at DER after the disposal.
(a)Represents amortization of stock-based compensation. $4,325 is attributable to the Real estate brokerage segment and $2,249 is attributable to the Corporate activities and other segment.
(b)Represents equity in (earnings) losses recognized from our investments in equity method investments that are accounted for under the equity method and are not consolidated in our financial results.
(c)Represents unusual litigation expense, settlement and related expenses incurred in connection with industry-wide antitrust class action lawsuits and other matters related to employees and agents. We have increased unusual litigation expense, settlement and related expenses amounts previously reported in our Annual Report on Form 10-K for the year ended December 31, 2023 by $770 and in our Quarterly Report on Form 10-Q for each of the three months ended March 31, 2024, June 30, 2024 and September 30, 2024, respectively, by $770, $645, $534 and $3,774, respectively.
(db)Represents $17,750 is included within Antitrust litigation settlement expense line and $15,583 is included within general and administrative expenses on the Consolidated Statementamortization of Operationsstock-based forcompensation. For the year ended December 31, 2024.2025, $770$7,538 of stock-based compensation is included within generalGeneral and administrative expenses and $1,039 is included within Operations and support expenses on the Consolidated StatementStatements of Operations for the year ended December 31, 2023.Operations.
(c)Represents equity in earnings recognized from our investments in equity-method investments that are accounted for under the equity-method and are not consolidated in our financial results.
(d)Represents unusual litigation, settlement and related expenses, net incurred in connection with industry-wide antitrust class action lawsuits and other matters related to employees and agents. For the year ended December 31, 2025, we incurred unusual litigation expense, settlement and related expenses, net of insurance proceeds received, of $7,637 included in General and administrative expenses on the Consolidated Statement of Operations. For the year ended December 31, 2024, we incurred unusual litigation expense, settlement and related expenses, net of $33,333 with $17,750 included in Antitrust litigation settlement expense and $15,583 included in General and administrative expenses on the Consolidated Statement of Operations.
(e) The benefit of $299 includes insurance proceeds received during the year ended December 31, 2025 and is included within general and administrative expenses on the Consolidated Statement of Operations for the year ended December 31, 2025. $2,010 is included within general and administrative expenses on the Consolidated Statement of Operations for the year ended December 31, 2024.
Sale of Douglas Elliman Property Management. On October 24, 2025, DER sold its subsidiary, Residential Management Group, LLC, which conducts business as Douglas Elliman Property Management, for a base purchase price of $85,000, subject to adjustments for cash, indebtedness, transaction expenses and working capital amounts at closing. The tax impact of the sale of our property management business was treated as a discrete item in the fourth quarter of 2025. For more information, see Note 1(ab) “Sale of Douglas Elliman Property Management.”
Repayment and Redemption of 7% Senior Secured Convertible Debt. On October 24, 2025, we repaid and redeemed all of our senior secured convertible promissory notes due on July 2, 2029 (the “Convertible Notes”) for an aggregate payment of $95,000, including approximately $1,400 of accrued interest. The liens on the assets of the Company and the subsidiary guarantors were released upon redemption.
Management changes. On October 21, 2024, our former Chairman of the Board of Directors, President and Chief Executive Officer, notified our Board of his resignation as Chairman of the Board, President and Chief Executive Officer, effective immediately. In connection with his cessation of employment with us, we cancelled 2,965,625 unvested shares of common stock subject to vesting pursuant to our 2021 Management Incentive Plan. On October 25, 2024, the former President and Chief Executive Officer of our subsidiary, Douglas Elliman Realty LLC, was terminated effective immediately. On October 30, 2024, we agreed to mutually terminate the employment of our Chief Technology Officer, effective immediately. On December 13, 2024, our Chief Operating Officer notified our Board of Directors of his decision to retire voluntarily, effective immediately. He continues to serve following his retirement as a non-employee member of our Board of Directors. In connection with his retirement, we cancelled 1,181,250 unvested shares of common stock subject to vesting pursuant to our 2021 Management Incentive Plan.
On November 24, 2024 and October 30, 2024, we entered into employment agreements, as of October 22, 2024 and October 7, 2024, respectively, with each of our Chief Executive Officer and our Chief Financial Officer, which are each filed as exhibits to this Annual Report on Form 10-K.
Assumption Miami Office. On December 20, 2024, we entered into an amendment to office lease agreement with Vector Group, our former parent, and Frost Real Estate Holdings, LLC, our landlord, and agreed to assume the rent balance of our Miami headquarters space through the lease’s expiration on April 30, 2028. An affiliate of the Landlord, Dr. Phillip Frost, beneficially owns more than 5% of our common stock.
Aircraft Leases. On October 17, 2024, we delivered notices of termination to terminate, effective as of November 16, 2024, two aircraft lease agreements with Vector Group.
Convertible Debt. On July 2, 2024, we issued $50,000 in aggregate principal amount of senior secured convertible notes due on July 2, 2029 to funds advised by Kennedy Lewis Investment Management LLC, or KLIM. The convertible notes bear interest at a rate of 7.0% per annum payable in cash, or, at our election, 8.0% per annum paid in kind, due semi-annually. They are convertible into common stock at an initial conversion rate equal to $1.50 per share, subject to certain customary anti-dilution adjustments. We are using the net proceeds from the sale of the Convertible Notes for general corporate purposes.
Litigation Settlement. On April 26, 2024, we entered into a settlement agreement to resolve, on a nationwide basis, the Gibson and Umpa cases. The settlement resolves all claims, on a nationwide basis, by the plaintiffs and proposed settlement class members in the Lawsuits, which includes, but is not limited to, all claims concerning brokerage commissions by the proposed settlement class members (sellers of residential real estate) that were asserted in other lawsuits against us and our subsidiaries, and releases us, our subsidiaries, and affiliated agents from all Claims. The settlement is not an admission of liability, nor does we concede or validate any of the claims asserted against it. Under the Settlement Agreement, we paid $7,750, into an escrow fund, on June 12, 2024 and agreed to pay two $5,000 contingent payments subject to certain financial contingencies on or before December 31, 2027. The contingent payments may be accelerated under certain circumstances. We recognized an expense of $17,750 for the year ended December 31, 2024. In addition, we agreed to make certain changes to its business practices and emphasize certain practices that have been a part of its longstanding policies and practices, including: reminding its brokerages and agents that the Company has no rule requiring agents to make or accept offers of compensation; requiring its brokerages and agents to clearly disclose to clients that commissions are not set by law and are fully negotiable; prohibiting its brokerages and buyer agents from claiming buyer agent services are free; requiring its brokerages and agents to disclose to the buyer the listing broker’s offer of compensation for prospective buyers’ agents as soon as possible; prohibiting our brokerages and agents from using any technology (or manual methods) to sort listings by offers of compensation, unless requested by the client; reminding its brokerages and agents of their obligation to show properties regardless of compensation for buyers’ agents for properties that meet the buyer’s priorities; and developing training materials for its brokerages and agents that support all the practice changes outlined in the injunctive relief. See Note 14 - “Contingencies” to our consolidated financial statements. The Settlement Agreement is currently being challenged on appeal in the U.S. Court of Appeals for the Eighth Circuit. In the event the appeal is successful, we could be subject to further liabilities in the various seller class action litigation that is pending or that could be filed. In addition, we are a defendant in the Lutz case pending in the United States District Court for the Southern District of Florida, No. 4:24-cv-10040 (KMM), an action on behalf of a putative national class of home buyers from December 1996 through the present, alleging violations of federal antitrust laws, state antitrust and consumer protection laws, as well as asserting an unjust enrichment claim. As this case was brought by a putative national class of home buyers, it is not subsumed within the Settlement Agreement, except to the extent that the class includes home buyers who also are part of the home sellers settling class referenced above that released their claims as home buyers.
Update on Expense Reduction. Since June 2022, our operating results have been negatively impacted by a reduction of revenues from existing home sales caused, in part, by lower listing inventory and the volatility in the financial markets as well as increases in mortgage rates. As a result, during 2023 and 2024, we have endeavored to adjust our cost structure to better fit our business, including through, among other things, reductions in personnel and incentive compensation expense, eliminating certain corporate sponsorship events, streamlining advertising expenditures and beginning a process of consolidating offices as leases expire. These efforts have been undertaken to increase the efficiency of our operations without significantly impacting the agent experience.
During 2024, we reduced our operating expenses, excluding commissions, litigation settlement and related expenses, restructuring, executive severance and separation expenses and non-cash stock compensation expenses by approximately $19,725 (6.8%) as compared to 2023. These reductions during 2024 included approximately $17,996 of general and administrative expenses. In 2023, we actively executed expense reduction programs that reduced expenses in our business, including our headcount by approximately 100 employees in 2023. These programs continued in 2024. In addition, in the second quarter of 2024, a lease on property used by one of our subsidiaries expired and it has moved its operations to a new location resulting in an approximate $4,000 reduction in annual occupancy costs on an ongoing basis.
Embedded Derivatives.Derivative. We measure all derivatives, including certain derivatives embedded in other contracts, at fair value and recognize them in the consolidated balance sheet as an asset or a liability, depending on our rights and obligations under the applicable derivative contract. During 2024, we have issued variable interest senior convertible debt in a series of private placementsplacement where a portion of the total interest payable on the debt iswas computed by reference to our common stock. This portion of the interest payment iswas considered an embedded derivative within the convertible debt, which we arewere required to separatelyvalue value.separately. As a result, we have bifurcated this embedded derivative and estimated the fair value of the embedded derivative liability. The resulting discount created by allocating a portion of the issuance proceeds to the embedded derivative iswas then amortized to interest expense over the term of the debt using the effective interest method.
On October 24, 2025, we redeemed the Convertible Notes and no longer report a fair value of the derivative liabilities. Prior to the redemption, changes to the fair value of the embedded derivative were reflected on our consolidated statements of operations as “Changes in fair value of the derivative embedded within convertible debt.” We recognized a loss of $28,482 and $14,978 in 2025 and 2024, respectively, due to changes in the fair value of the embedded derivative.
As of December 31, 2024, the fair value of derivative liabilities was estimated at $30,253. Changes to the fair value of the embedded derivative are reflected on our consolidated statements of operations as “Changes in fair value of derivatives embedded within convertible debt.” The value of the embedded derivative is contingent on changes in interest rates of debt instruments maturing over the duration of the convertible debt as well as projections of future cash. We recognized a loss of $14,978 in 2024 due to changes in the fair value of the embedded derivatives. After giving effect to the recording of embedded derivative liabilities as a discount to the convertible debt, our common stock had a fair value at the issuance date of the notes in excess of the conversion price, resulting in a beneficial conversion feature. The intrinsic value of the beneficial conversion feature was recorded as additional paid-in capital and as a further discount on the debt. The discount is then amortized to interest expense over the term of the debt using the effective interest rate method.
WeIn 2025 and 2024, we recognized non-cash interest expense of $983$1,814 inand 2024,$983, respectively, due to the amortization of the debt discount attributable to the embedded derivativesderivative and $80$148 inand 2024,$80, respectively, due to the amortization of the debt discount attributable to the beneficial conversion feature.
InAs thepart threeof monthsour endedannual Septemberimpairment 30, 2024,test, we utilized third-party valuation specialists to prepare a quantitative assessment of the Company’s goodwill and trademark intangible assets, based on the current market conditions in the residential real estate brokerage industry which did not result in impairment charges related to its goodwill or trademark for the year ended December 31, 2024.2025. If we fail to achieve the financial projections used in the quantitative assessments of fair value and current market conditions deteriorate, impairment charges could result in future periods, and such impairment charges could be material.
The primary components of our operating expenses, the changes in which are described in the following discussion of our results of operations,expenses are summarized below:
•Sales and marketing. Sales and marketing expenseexpenses consistsconsist primarily of marketing and advertising expenses, compensation and other personnel-related costs for employees supporting sales, marketing, expansion and related functions, occupancy-related costs and agent acquisition incentives.
•Operations and support. Operations and support expenseexpenses consistsconsist primarily of compensation and other personnel-related costs for employees supporting agents, third-party consulting and professional services costs (not included in general and administrative or technology), commissions related to escrow transactions, fair value adjustments to contingent consideration for our acquisitions and other related expenses.
•General and administrative. General and administrative expenseexpenses consistsconsist primarily of compensation, stock-based compensation expense and other personnel-related costs for executive management and administrative employees, including executives, finance and accounting, legal, human resources and communications, property management (prior to October 25, 2025) and escrow services as well as the occupancy costs for our headquarters and other offices supporting our administrative functions and, including, until December 2024, transition service fees paid to our former parent, Vector Group, for the use of office space and employees, professional services fees for legal and finance, insurance expenses and talent acquisition expenses.
•Technology. Technology expenseexpenses consistsconsist primarily of compensation and other personnel-related costs for employees in the product, engineering and technology functions, website hosting expenses, software licenses and equipment, third-party consulting costs, technology data licenses of PropTech and other related expenses associated with the implementation of our technology initiatives.
As discussed previously, effective on January 1, 2025, we began to report our financial results as a single operating and reportable segment. Therefore, the presentation of our business’s financial information for the year ended December 31, 2025 and 2024 will be reported as one segment. For more information, see Note 18, “Segment Information” to our consolidated financial statements.
The following table sets forth our revenue and operating income (loss) income by segment for the year ended December 31, 20242025 compared to the year ended December 31, 20232024:
(a) Represents unusual litigation expense, settlement and related expenses incurred in connection with industry-wide antitrust class action lawsuits and other matters related to employees and agents. For the Real estate brokerage segment, $17,750 is included within Antitrust litigation settlement expense line and $2,738 is included within general and administrative expenses on the Consolidated Statement of Operations for the year ended December 31, 2024. For the Corporate activities and other segment, $12,845 is included within general and administrative expenses on the Consolidated Statement of Operations for the year ended December 31, 2024. For the Real estate brokerage segment, $770 is included within general and administrative expenses on the Consolidated Statement of Operations for the year ended December 31, 2023.
(b) For the Real estate brokerage segment, $1,175 and for the corporate activities and other segment $835 are included within general and administrative expenses on the Consolidated Statement of Operations for the year ended December 31, 2024.
Unless the context suggests otherwise, figures in the belowdiscussion discussionin this section are presented in thousands.
Revenues. Our revenues were $995,627 for the year ended December 31, 2024 compared to $955,578 for the year ended December 31, 2023. The $40,049 increase in revenues was primarily due to an increase in commissions and other brokerage income because of increased commissions from existing home sales.
Operating expenses. Our operating expenses were $1,064,453 for the year ended December 31, 2024 compared to $1,020,075 for the year ended December 31, 2023. The $44,378 increase was due primarily to an increase in the real estate brokerage commissions of $37,657 as well as increases in litigation expense, settlement and related expenses of $32,563 and was partially offset by a decline in general and administrative expenses, after adjusting for the increase in litigation expense, settlement and related expenses. Please refer to “Recent Developments,” “Update on Expense Reductions” in this section.
Operating loss. Operating loss was $68,826 for the year ended December 31, 2024 compared to a loss of $64,497 for the year ended December 31, 2023. The $4,329 increase in operating loss was primarily due to unusual litigation expense, settlement and related expenses and was offset by increases in brokerage revenues and a decline in other operating expenses. Please refer to “Recent Developments,” “Update on Expense Reductions” in this section.
Other (expenses) income. Other expense was $7,059 for the year ended December 31, 2024 compared to other income of $6,278 for the year ended December 31, 2023. For the year ended December 31, 2024, other expenses primarily consisted of the change in fair value of derivatives embedded within convertible debt of $14,978 associated with the issuance of the new financing debt and interest expense of $2,939. This was partially offset by interest income of $5,533 and investment and other income associated with our investments of our PropTech business of $5,289.
Loss before provision for income taxes. Loss before income taxes was $75,885 for the year ended December 31, 2024 and loss before income taxes was $58,219 for the year ended December 31, 2023.
What changed in the latest 10-Q
Risk Factors
New heading “The failure of third-party vendors or partners to perform as we expect or appropriately manage risks, or our failure to adequately monitor third-party performance, could result in harm to our reputation and ability to generate revenue.”
New heading “The use of technology that incorporates AI presents various operational, regulatory and reputational risks and may lead to changes in our industry. If we fail to implement AI technology successfully or if any of such risks materialize, it may adversely affect our business and results of operations.”
Largest changes
“As we integrate, use and apply AI technologies of third parties, we are dependent in part on the manner in which those third parties develop such AI technologies. Failures or changes in these systems, including errors, unreliable performance, cybersecurity incidents, changes to terms of use or unfavorable changes to contractual or pricing terms, could adversely affect our use and ability to obtain the expected benefits of AI technologies, as well as our business. …”see in full comparison
“If our third-party partners or vendors (or their respective vendors) were to fail to perform as we expect, fail to appropriately manage risks, provide diminished or delayed services to us or our customers or face cybersecurity breaches of their information technology systems, or if we fail to adequately monitor their performance, our operations and reputation could be materially adversely affected, in particular if any such failures related to the development of key products or the transformation of our information technology infrastructure. …”see in full comparison
“The use of technology that incorporates AI presents various operational, regulatory and reputational risks and may lead to changes in our industry. If we fail to implement AI technology successfully or if any of such risks materialize, it may adversely affect our business and results of operations.”see in full comparison
“The failure of third-party vendors or partners to perform as we expect or appropriately manage risks, or our failure to adequately monitor third-party performance, could result in harm to our reputation and ability to generate revenue.”see in full comparison
“We have integrated, and plan to further integrate, AI technologies in our business, including the launch of our proprietary intelligence business, Elius, and our adoption of Google Cloud technology. We expect these initiatives to improve our productivity and operating efficiency, reduce costs and create potential new revenue opportunities. However, as with many technological innovations, AI presents great promise but also risks and challenges that could adversely affect our business. …”see in full comparison
“We engage with third-party vendors and partners in a variety of ways, including strategic collaborations and the development and delivery of applications, employing key internal operational processes and critical client systems. In many instances, these third parties are in direct contact with our agents and customers to deliver services on our behalf or to fulfill their role in the applicable collaboration. In some instances, these third parties may be in possession of personal information of our customers, agents or employees or other commercially sensitive business information. …”see in full comparison
Full comparison: every changed paragraph (8)
There are no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors,” of our 2025 Annual Report.Report, except as set forth below:
The failure of third-party vendors or partners to perform as we expect or appropriately manage risks, or our failure to adequately monitor third-party performance, could result in harm to our reputation and ability to generate revenue.
We engage with third-party vendors and partners in a variety of ways, including strategic collaborations and the development and delivery of applications, employing key internal operational processes and critical client systems. In many instances, these third parties are in direct contact with our agents and customers to deliver services on our behalf or to fulfill their role in the applicable collaboration. In some instances, these third parties may be in possession of personal information of our customers, agents or employees or other commercially sensitive business information. In other instances, these third parties may play a critical role in developing products and services central to our business strategy or in implementing information technology transformation. Our third-party partners may encounter difficulties in the provision of required deliverables or may fail to provide us with timely services, which may delay us, and also may make decisions that may harm us or that are contrary to our best interests, including by pursuing opportunities outside of the applicable Company project or program, to the detriment of such project or program.
If our third-party partners or vendors (or their respective vendors) were to fail to perform as we expect, fail to appropriately manage risks, provide diminished or delayed services to us or our customers or face cybersecurity breaches of their information technology systems, or if we fail to adequately monitor their performance, our operations and reputation could be materially adversely affected, in particular if any such failures related to the development of key products or the transformation of our information technology infrastructure. Depending on the function involved, vendor or third-party application failure or error may lead to increased costs, business disruption, distraction to management, processing inefficiencies, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, effects on financial reporting, loss of customers, damage to our reputation, or litigation, regulatory claims and/or remediation costs (including claims based on theories of breach of contract, vicarious liability, negligence or failure to comply with laws and regulations). Third-party vendors and partners (or their respective vendors) may also fail to maintain or keep adequate levels of insurance, which could result in a loss to us or expose us to litigation. The actions of our third-party vendors and unaffiliated third-party developers are beyond our control. We face the same risks with respect to subcontractors that might be engaged by our third-party vendors and partners or their subcontractors.
The use of technology that incorporates AI presents various operational, regulatory and reputational risks and may lead to changes in our industry. If we fail to implement AI technology successfully or if any of such risks materialize, it may adversely affect our business and results of operations.
We have integrated, and plan to further integrate, AI technologies in our business, including the launch of our proprietary intelligence business, Elius, and our adoption of Google Cloud technology. We expect these initiatives to improve our productivity and operating efficiency, reduce costs and create potential new revenue opportunities. However, as with many technological innovations, AI presents great promise but also risks and challenges that could adversely affect our business. There can be no assurance that our implementation of AI technology will be successful or that we will realize the desired or anticipated benefits from AI technology. These benefits are based on assumptions and expectations that are inherently uncertain. We may not implement these initiatives on the anticipated timetables, and such initiatives may not achieve sufficient adoption by our employees, agents or clients. In addition, such technologies developed or deployed through these initiatives may also not perform as expected, may become obsolete, or may not generate the anticipated efficiencies, revenues or cost and productivity improvements. Also, capital expenditures and other costs associated with the initiatives may exceed our expectations or be incurred before, or without, the realization of corresponding benefits. We may also need to attract and retain personnel with specialized skills and expertise to support our AI technology initiatives.
As we integrate, use and apply AI technologies of third parties, we are dependent in part on the manner in which those third parties develop such AI technologies. Failures or changes in these systems, including errors, unreliable performance, cybersecurity incidents, changes to terms of use or unfavorable changes to contractual or pricing terms, could adversely affect our use and ability to obtain the expected benefits of AI technologies, as well as our business. We may also become dependent on particular providers or technologies, which could limit our ability to transition to alternative providers, negotiate favorable terms or adapt to technological or regulatory changes. Moreover, we may have limited visibility into how third-party AI models are trained, the integrity of their underlying datasets, and the adequacy of embedded controls. Sensitive, proprietary, or confidential information of Douglas Elliman, our clients, employees, agents and business partners could be leaked, disclosed, or revealed as a result of or in connection with the use of AI technologies by our clients, employees or agents. Any such information input into a third-party generative AI or machine learning platform could be revealed to others, including if information is used to train the third party's generative AI or machine learning models. Additionally, where a generative AI or machine learning model ingests personal information and makes connections using such data, those technologies may reveal other sensitive, proprietary, or confidential information generated by the model. Moreover, generative AI or machine learning models may create incomplete, inaccurate, or otherwise flawed outputs, which may appear correct, as well as unintentionally biased outputs, which may implicate fair housing and anti-discrimination laws. AI technologies are also known to exhibit “hallucinatory behavior” and may produce unexpected results and behave in unpredictable ways, including by generating irrelevant, nonsensical or factually incorrect content. Due to these issues, these models could lead us to make flawed decisions that could result in adverse consequences to us, including exposure to reputational and competitive harm, customer loss, and legal liability. In addition, uncertainty in the legal and regulatory regime relating to AI technologies may require significant resources to modify and maintain business practices to comply with applicable law, the nature of which cannot be determined at this time. Several jurisdictions have already proposed or enacted laws governing AI and may decide to adopt similar or more restrictive legislation that may render the use of such technologies challenging. These obligations may prevent or limit our ability to use AI technologies in our business, lead to regulatory fines or penalties, or require us to change our business practices. If we cannot use AI technologies, or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage. Any of these factors could adversely affect our business, financial condition, and results of operations.
If our competitors or new market entrants deploy AI technologies more quickly, more effectively or at a lower cost than us, have access to superior AI technologies or achieve higher acceptance of their AI technologies, our business may be adversely affected. Further, the development and use of AI technologies may enable consumers to search for, buy or sell homes independently, which may lead to a decline in the demand for full-service real estate professionals. To be successful and remain competitive, we must be able to adapt to changes in a timely and effective manner, and if we fail to do so, our business and results of operations may be adversely affected.
Management's Discussion & Analysis (MD&A)
New heading “Six months ended June 30, 2026 Compared to Six months ended June 30, 2025”
Largest changes
(d)Represents unusual litigation, settlement and related expenses, net, incurred in connection with industry-wide antitrust class action lawsuits and other matters related to employees and agents. For the last twelve monthssee in full comparisonand three monthsendedMarchJune31,30, 2026,$9,590weandincurred$3,851,such expenses of $7,588, net of amounts recovered from insurance,areof which $2,041 is included in Antitrust litigation settlement expense and $5,547 is included within General and administrative expenses on the condensed consolidated statements ofoperations, respectively.operations. For thethreesix months endedMarchJune31,30, 2026, we incurred such expenses of $2,909, net of amounts recovered from insurance, of which $2,041 is included in Antitrust litigation settlement expense and $868 is included within General and administrative expenses on the condensed consolidated statements of operations. For the six months ended June 30, 2025, we incurred such expenses of$1,898,$2,958, whichiswere included within General and administrative expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025, we incurred such expenses of $7,637, whichiswere included within General and administrative expenses on the consolidated statements of operations.
“Six months ended June 30, 2026 Compared to Six months ended June 30, 2025”see in full comparison
“Gross profit. We define gross profit as the remaining portion after real estate agent commissions are subtracted from our revenues. Gross profit was $46,942 for the three months ended March 31, 2026, compared to $66,878 for the three months ended March 31, 2025. The decline was primarily due to the absence of property management revenues in 2026, as well as lower commissions and other brokerage income for the three months ended March 31, 2026 as compared to the 2025 period. …”see in full comparison
Cash used in operations wassee in full comparison$19,342$7,739 for thethreesix months endedMarchJune31,30, 2026, compared to$5,617$4,974 for thethreesix months endedMarchJune31,30, 2025. The increase in the cash used in operations in the 2026 period was attributable to an increase in operating loss as well as increased payments of accrued compensation in 2026 and income taxliabilitiesliabilities, which were attributable to the gain on the October 2025 disposal of our property management business, in the 2026 period. These amounts were offset by an increase to the net changes in contract liabilities and related contract assets, which was associated with increased progress payments from our development marketing business, as well as the receipt of a portion of the settlement related to the Strougo litigation for the six months ended June 30, 2026.
“Gross profit. We define gross profit as the remaining portion after real estate agent commissions are subtracted from our revenues. Our gross profit for the three months ended June 30, 2026 and 2025, respectively, was as follows:”see in full comparison
“Gross profit. We define gross profit as the remaining portion after real estate agent commissions are subtracted from our revenues. Our gross profit for the six months ended June 30, 2026 and 2025, respectively, was as follows:”see in full comparison
Full comparison: every changed paragraph (71)
The following discussion should be read in conjunction with our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and Audited Consolidated Financial Statements as of and for the year ended December 31, 2025 and Notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), and our Condensed Consolidated Financial Statements and related Notes as of and for the three and six months ended MarchJune 31,30, 2026. Any forward-looking statements are not historical facts, but rather they are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Any forward-looking statements are subject to several important factors, including those factors discussed under “Risk Factors” in our 2025 Annual Report and this Quarterly Report and “Special Note Regarding Forward-Looking Statements,” that could cause our actual results to differ materially from those indicated in such forward-looking statements. References to “Douglas Elliman” or “Company” refer to Douglas Elliman Inc. Certain references to “Douglas Elliman Realty” refer to the Company’s residential real estate brokerage business, including the operations of Douglas Elliman Realty, LLC and Douglas Elliman of California Inc., unless otherwise specified.
We conduct residential real estate brokerage services through our subsidiary, Douglas Elliman Realty, which operates one of the largest residential brokerage companies in the New York metropolitan area and also conducts residential real estate brokerage operations in Florida, California, Texas, Colorado, Nevada, Massachusetts, Connecticut, Maryland, Virginia, New JerseyJersey, New Hampshire and Washington D.C. We also offer, including through our subsidiaries and ventures, development marketing services (“Development Marketing”) and ancillary services, such as mortgage, title and escrow services. In addition, we have also invested in PropTech opportunities through our DOUG Ventures subsidiary.
In addition to our financial results, prepared in accordance with U.S. GAAP, we use the following business metrics to evaluate our business and identify trends affecting our business. To evaluate our operating performance, we also use Adjusted EBITDA attributed to Douglas Elliman Inc., Adjusted EBITDA margin attributed to Douglas Elliman Inc. and financial measures for the last twelve months ended MarchJune 31,30, 2026 (“Non-GAAP Financial Measures”), which are financial measures not prepared in accordance with U.S. GAAP.
(a)Includes results from operations of Residential Management Group, LLC, which conducts business as DEPM, which was disposed on October 24, 2025. This adjustment also includes the corporate allocation to Douglas Elliman RealtyRealty, LLC (“DER”) from DEPM. The expenses associated with the corporate allocation to DEPM have continued at DER after the disposal.
(b)Represents amortization of stock-based compensation. For the last twelve months ended MarchJune 31,30, 2026, $6,867$6,594 of stock-based compensation is included within General and administrative expenses and $843$646 is included within Operations and support expenses on the condensed consolidated statements of operations. For the threesix months ended MarchJune 31,30, 2026, $1,099$2,682 of stock-based compensation is included within General and administrative expenses and $69$140 is included within Operations and support expenses on the condensed consolidated statements of operations. For the threesix months ended MarchJune 31,30, 2025, $1,770$3,626 of stock-based compensation is included within General and administrative expenses and $265$533 is included within Operations and support expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025, $7,538 of stock-based compensation is included within General and administrative expenses and $1,039 is included within Operations and support expenses on the consolidated statements of operations.
(d)Represents unusual litigation, settlement and related expenses, net, incurred in connection with industry-wide antitrust class action lawsuits and other matters related to employees and agents. For the last twelve months and three months ended MarchJune 31,30, 2026, $9,590we andincurred $3,851,such expenses of $7,588, net of amounts recovered from insurance, areof which $2,041 is included in Antitrust litigation settlement expense and $5,547 is included within General and administrative expenses on the condensed consolidated statements of operations, respectively.operations. For the threesix months ended MarchJune 31,30, 2026, we incurred such expenses of $2,909, net of amounts recovered from insurance, of which $2,041 is included in Antitrust litigation settlement expense and $868 is included within General and administrative expenses on the condensed consolidated statements of operations. For the six months ended June 30, 2025, we incurred such expenses of $1,898,$2,958, which iswere included within General and administrative expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025, we incurred such expenses of $7,637, which iswere included within General and administrative expenses on the consolidated statements of operations.
(e) For the last twelve months ended MarchJune 31,30, 2026, benefitexpense of $709,$194 net of amounts recovered from insurance, areis included within General and administrative expenses on the condensed consolidated statement of operations. For the threesix months ended MarchJune 31,30, 2025, $410benefit of $493, net of amounts recovered from insurance, is included within General and administrative expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025, the benefit of $299 includes insurance proceeds received and is included within General and administrative expenses on the consolidated statement of operations.
The presentation of our business’s financial information for the three and six months ended MarchJune 31,30, 2026 and 2025 is reported as one segment. For more information, see Note 11, “Segment Information” to our condensed consolidated financial statements.
Three months ended MarchJune 31,30, 2026 Compared to the Three months ended MarchJune 31,30, 2025
The following table sets forth our revenuerevenues and operating loss for the three months ended MarchJune 31,30, 2026 compared to the three months ended MarchJune 31,30, 2025:
Revenues. Our revenues were $214,333 for the three months ended March 31, 2026 compared to $253,403 for the three months ended March 31, 2025. The $39,070 decline in revenues was primarily due to lower commissions and other brokerage income, which was driven by decreased existing home sales and revenues from our Development Marketing division compared to the 2025 period as well as the absence of revenues from our property management division, which was sold in October 2025. Excluding our property management revenues for 2025, our revenues were $214,333 and $243,911 for the periods ended March 31, 2026 and 2025, respectively. Our results for three months ended March 31, 2026 continued to be negatively impacted by economic pressures, which were driven by geopolitical uncertainties, as well as industry-specific headwinds related to the continuation of elevated mortgage rates, when compared to recent history.
Our revenues from commissions and other brokerage income were $211,881 for the three months ended March 31, 2026 compared to $241,143 for the three months ended March 31, 2025, a decline of $29,262. In the three months ended March 31, 2026, our commissions and other brokerage income generated from the sales of existing homes decreased by $14,726 in New York City, $7,610 in the West region and $3,744 in the Northeast region. Additionally, our revenues from Development Marketing declined by $7,121. These decreases were partially offset by a $3,865 increase in revenues for existing home sales in the Florida market for the 2026 period compared with the 2025 period.
Operating expenses. Our operating expenses were $231,844 for the three months ended March 31, 2026 compared to $258,752 for the three months ended March 31, 2025. The decline of $26,908 was due primarily to a decline in real estate brokerage commissions expense of $19,134 arising primarily from declines in commissions and other brokerage income as well as the absence of expenses from our property management division. Excluding our property management expenses for 2025, our operating expenses were $231,844 and $251,141 for the periods ended March 31, 2026 and 2025, respectively.
Real Estate Agent Commissions. As a result of a decline in our commissions and other brokerage income, our real estate agent commissions expense was $167,391 for the three months ended March 31, 2026 compared to $186,525 for the three months ended March 31, 2025, representing a decline of $19,134. Real estate agent commissions expense, as a percentage of revenues, increased to 78.1% for the three months ended March 31, 2026 compared to 73.6% (76.5% excluding property management revenues) for the three months ended March 31, 2025. The increase in real estate agent commissions expense as a percentage of revenue in the 2026 period was primarily driven by a lower percentage of commission revenues derived from Development Marketing, which generally pays lower commission rates, during the three months ended March 31, 2026 compared to the prior year period. In addition, during the three months ended March 31, 2026, a higher percentage of our revenues was generated from locations (primarily Florida) which customarily pay higher commission rates.
Gross profit. We define gross profit as the remaining portion after real estate agent commissions are subtracted from our revenues. Gross profit was $46,942 for the three months ended March 31, 2026, compared to $66,878 for the three months ended March 31, 2025. The decline was primarily due to the absence of property management revenues in 2026, as well as lower commissions and other brokerage income for the three months ended March 31, 2026 as compared to the 2025 period. The decline was also impacted by the higher real estate agent commissions expense as percentage of revenues for the three months ended March 31, 2026 discussed in Real Estate Agent Commissions.
Sales and Marketing. Sales and marketing expenses were $17,737 for the three months ended March 31, 2026 compared to $19,739 for the three months ended March 31, 2025. The decline in sales and marketings expense primarily related to the elimination of non-agent related marketing expenses as well as the impact of lower revenues.
Operations and support. Operations and support expenses were $16,240 for the three months ended March 31, 2026 compared to $17,728 for the three months ended March 31, 2025. The decline in operations and support expenses for the three months ended March 31, 2026 primarily related to the absence of our property management division and lower commissions from escrow transactions.
General and administrative. General and administrative expenses were $23,192 for the three months ended March 31, 2026 compared to $27,325 for the three months ended March 31, 2025, representing a decrease of $4,133, which was primarily due to the absence of our property management division and management’s heightened focus on general and administrative expenses offset by increased legal and settlement expenses for the three months ended March 31, 2026.
Technology. Technology expenses were $5,238 for the three months ended March 31, 2026 compared to $5,535 for the three months ended March 31, 2025 The decline in technology expenses for the three months ended March 31, 2026 was primarily related to the absence of our property management division.
Operating loss. Operating loss was $17,511 for the three months ended March 31, 2026 compared to $5,349 for the same period in 2025. The $12,162 increase in operating loss was primarily due to the decline in gross profit from our brokerage business of $10,444 and the absence of our property management division of $2,015 during the three months ended March 31, 2026 compared to the three months ended March 31, 2025.
Other income (expenses). Other income was $1,235 for the three months ended March 31, 2026 compared to other expenses of $935 for the three months ended March 31, 2025. For the three months ended March 31, 2026, other income consisted primarily of interest income of $890. For the three months ended March 31, 2025, other expenses primarily consisted of interest expense of $1,530, a $746 loss from the change in fair value of the derivative embedded within convertible debt, and net losses realized on investment securities of $22. These were partially offset by interest income of $1,361.
LossRevenues. beforeOur provision for income taxes. Loss before income taxes was $16,276 and $6,284revenues for the three months ended MarchJune 31,30, 2026 and 2025, respectively.respectively, were as follows:
The increase in revenues, excluding revenues from the property management business, was primarily due to an increase in commissions and other brokerage income of $22,187, which was driven by an increase in revenues from existing home sales in Florida of $28,223, and $3,405 in the Northeast region, which excludes New York City. Additionally, revenues from Development Marketing increased by $4,179 and the increase was from our Florida and Texas markets. These increases were partially offset by declines from the sales of existing homes in the West region of $7,172, which were associated with Colorado and California, and New York City of $6,523 for the 2026 period compared to the 2025 period.
Operating expenses. Our operating expenses for the three months ended June 30, 2026 and 2025, respectively, were as follows:
The increase in operating expenses was due primarily to an increase in real estate brokerage commissions expense of $19,665 arising from the increase in revenues from commissions and other brokerage income, which was offset by the absence of expenses of our property management business, which was disposed in October 2025.
Real Estate Agent Commissions. As a result of an increase in our commissions and other brokerage income, our real estate agent commissions expense was $224,259 for the three months ended June 30, 2026 compared to $204,594 for the three months ended June 30, 2025, representing an increase of $19,665. Real estate agent commissions expense, as a percentage of revenues, increased to 79.1% for the three months ended June 30, 2026 compared to 75.4% (78.4% excluding property management revenues) for the three months ended June 30, 2025. The increase in real estate agent commissions expense as a percentage of revenues in the 2026 period was primarily driven by a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which customarily pay higher commission rates.
Gross profit. We define gross profit as the remaining portion after real estate agent commissions are subtracted from our revenues. Our gross profit for the three months ended June 30, 2026 and 2025, respectively, was as follows:
Our gross profit, as a percentage of revenues, declined due to the absence of property management revenues as well as a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which customarily pay higher commission rates.
Operating expenses, excluding real estate agent commissions expense. Our operating expenses, excluding real estate agent commissions expense, for the three months ended June 30, 2026 and 2025, respectively, were as follows:
Sales and Marketing. Sales and marketing expenses were $19,731 for the three months ended June 30, 2026 compared to $20,069, which included $280 associated with our property management business, for the three months ended June 30, 2025.
Operations and support. Operations and support expenses were $17,771 for the three months ended June 30, 2026 compared to $17,775, which included $795 associated with our property management business, for the three months ended June 30, 2025.
General and administrative. General and administrative expenses were $17,795 for the three months ended June 30, 2026 compared to $26,177 for the three months ended June 30, 2025, representing a decrease of $8,382, of which $6,209 was associated with our property management business, for the six months ended June 30, 2025 and also reflects a decline in expenses associated with professional services in the 2026 period.
Technology. Technology expenses were $5,591 for the three months ended June 30, 2026 compared to $5,766, which included $535 associated with our property management business, for the three months ended June 30, 2025.
Operating loss. Our operating loss for the three months ended June 30, 2026 and 2025, respectively, was as follows:
The decline in operating loss was primarily due to the increase in gross profit, after excluding our property management business as well as lower operating expenses in the 2026 period and was partially offset by the absence of operating income from our property management business in the 2026 period.
Other income (expenses). Other income was $691 for the three months ended June 30, 2026 compared to other expense of $17,093 for the three months ended June 30, 2025. For the three months ended June 30, 2026, other income consisted primarily of interest income of $719. For the three months ended June 30, 2025, other expense primarily consisted of a $16,969 loss from the change in fair value of the derivative embedded within convertible debt and interest expense of $1,545, partially offset by interest income of $1,259.
Loss before provision for income taxes. Loss before income taxes was $2,734 and $22,625 for the three months ended June 30, 2026 and 2025, respectively.
Income tax expense. There was no income tax expense for the three months ended MarchJune 31,30, 2026 and 2025. We calculate our provision for income taxes for interim reporting periods based upon our estimate of the annual effective income tax rate based on full year projections, which does not include the impact of discrete items. We then apply the annual effective income tax rate against year-to-date pretax income to record income tax expense and then adjust our provision for income tax expense for any discrete items.items, Thereif wereany. noWe discretedid itemsnot record a provision for income taxes during the three months ended MarchJune 31,30, 2026 and 2025.2025, respectively, because we had established a valuation allowance for the full amount of our deferred tax assets.
Six months ended June 30, 2026 Compared to Six months ended June 30, 2025
The following table sets forth our revenues and operating loss for the six months ended June 30, 2026 compared to the six months ended June 30, 2025:
Revenues. Our revenues for the six months ended June 30, 2026 and 2025, respectively, were as follows:
The decline in revenues, excluding revenues from our property management business, was primarily due to lower revenues from commissions and other brokerage income. For the six months ended June 30, 2026, our commissions and other brokerage income from existing homes sales decreased by $21,248 in New York City, $14,782 in the West region, and $339 in the Northeast region (excluding New York City). Additionally, our revenues from Development Marketing decreased by $2,942, primarily related to the Florida and New York City markets, during the 2026 period compared to 2025. However, these declines were partially offset by an increase in commissions and other brokerage income from existing home sales in the Florida market of $32,087 during the six months ended June 30, 2026 compared to the 2025 period.
Operating expenses. Our operating expenses for the six months ended June 30, 2026 and 2025, respectively, were as follows:
The decrease was primarily due to the absence of expenses of our property management business, as well as a decline in expenses from professional services.
Real Estate Agent Commissions. Our real estate agent commissions expense was $391,650 for the six months ended June 30, 2026, compared to $391,119 for the six months ended June 30, 2025, representing an increase of $531. Real estate agent commissions expense, as a percentage of revenues, increased to 78.7% for the six months ended June 30, 2026, compared to 74.5% (77.5% excluding property management revenues) for the six months ended June 30, 2025. This increase in real estate agent commissions expense as a percentage of revenues in 2026 period was primarily driven by a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which customarily pay higher commission rates.
Gross profit. We define gross profit as the remaining portion after real estate agent commissions are subtracted from our revenues. Our gross profit for the six months ended June 30, 2026 and 2025, respectively, was as follows:
Our gross profit, as a percentage of revenues, declined due to the absence of property management revenues and was also attributable to a shift in the revenue mix, driven by a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which had a lower gross margin during the period.
Operating expenses, excluding real estate agent commissions expense. Our operating expenses, excluding real estate agent commissions expense, for the six months ended June 30, 2026 and 2025, respectively, were as follows:
Sales and Marketing. Sales and marketing expenses were $37,468 for the six months ended June 30, 2026, compared to $39,808, which included $555 associated with our property management business, for the six months ended June 30, 2025. The decline in expenses is attributable to expense rationalization efforts to streamline our sales and marketing process.
Operations and support. Operations and support expenses were $34,011 for the six months ended June 30, 2026, compared to $35,503, which included $1,736 associated with our property management business, for the six months ended June 30, 2025.
General and administrative. General and administrative expenses were $38,946 for the six months ended June 30, 2026, compared to $53,502 for the six months ended June 30, 2025, representing a decline of $14,556, of which $11,945 was associated with our property management business, for the six months ended June 30, 2025 and also reflects a decline in expenses associated with professional services in the 2026 period.
Technology. Technology expenses were $10,829 for the six months ended June 30, 2026, compared to $11,301, which included $1,124 associated with our property management business, for the six months ended June 30, 2025.
Operating loss. Our operating loss for the six months ended June 30, 2026 and 2025, respectively, was as follows:
The increase in operating loss was primarily due to the decline in gross profit, after excluding our property management business, as well as the absence of operating income from our property management business in the 2026 period, which was offset by a decline of operating expenses, after excluding real estate agent commissions expense and our property management business, in the 2026 period.
Other income (expenses). Other income was $1,926 for the six months ended June 30, 2026, compared to other expense of $18,028 for the six months ended June 30, 2025. For the six months ended June 30, 2026, other income primarily consisted of interest income of $1,609. For the six months ended June 30, 2025, other expense primarily consisted of the $17,715 loss from the change in fair value of the derivative embedded within convertible debt and interest expense of $3,075, partially offset by interest income of $2,620.
Loss before provision for income taxes. Loss before income taxes was $19,010 and $28,909 for the six months ended June 30, 2026 and 2025, respectively.
Income tax expense. There was no income tax expense for the six months ended June 30, 2026 and 2025. We calculate our provision for income taxes for interim reporting periods based upon our estimate of the annual effective income tax rate based on full year projections, which does not include the impact of discrete items. We then apply the annual effective income tax rate against year-to-date pretax income to record income tax expense and then adjust our provision for income tax expense for any discrete items, if any. We did not record a provision for income taxes during the six months ended June 30, 2026 and 2025, respectively, because we had established a valuation allowance for the full amount of our deferred tax assets.
Cash, cash equivalents and restricted cash declined by $19,733$8,840 to $102,976,$113,869, which included $7,005$8,644 of restricted cash, during the threesix months ended MarchJune 31,30, 2026. This compares to an increase of $3,164,$2,488, to $145,385,$144,709, which included restricted cash of $8,614,$8,375, during the threesix months ended MarchJune 31,30, 2025.
Cash used in operations was $19,342$7,739 for the threesix months ended MarchJune 31,30, 2026, compared to $5,617$4,974 for the threesix months ended MarchJune 31,30, 2025. The increase in the cash used in operations in the 2026 period was attributable to an increase in operating loss as well as increased payments of accrued compensation in 2026 and income tax liabilitiesliabilities, which were attributable to the gain on the October 2025 disposal of our property management business, in the 2026 period. These amounts were offset by an increase to the net changes in contract liabilities and related contract assets, which was associated with increased progress payments from our development marketing business, as well as the receipt of a portion of the settlement related to the Strougo litigation for the six months ended June 30, 2026.
Cash used in investing activities was $391$1,071 for the threesix months ended MarchJune 31,30, 2026, compared to cash provided by investing activities of $8,781$7,548 for the threesix months ended MarchJune 31,30, 2025. For the threesix months ended MarchJune 31,30, 2026, cash used in investing activities was comprised primarily of capital expenditures of $259$943 and the purchase of subsidiaries of $100 due to the acquisition of the non-controlling interest of Real Estate Associates of Houston LLC. For the threesix months ended MarchJune 31,30, 2025, cash provided by investing activities was comprised of proceeds from the sale of short-term investments of $54,416$97,677 and was partially offset by the purchase of short-term investments of $44,612.$87,873 and capital expenditures of $2,251.
DOUG insider buying and selling (Form 4)
Since 2026-04-11, insiders reported open-market purchases in 0 Form 4 filings and open-market sales in 0 filings. Totals add up every open-market (code P and S) line in those filings, using the prices reported in the filings. Awards, option exercises, tax withholding and gifts are listed below but not counted.
| Trade date | Insider | Transaction | Shares | Price | Value |
|---|---|---|---|---|---|
| 2026-08-14 | Lee Sanghyun |
Grant/award | 74,627 | — | — |
| 2026-08-14 | Feldman Justyn |
Grant/award | 74,627 | — | — |
| 2026-08-13 | Brodie Bradley Harris |
Shares withheld for tax | 24,593 | $2.01 | $49.4K |
| 2026-04-10 | Lampen Richard |
Grant/award | 90,910 | — | — |
| 2026-04-10 | Weitz Perry |
Grant/award | 90,910 | — | — |
| 2026-04-10 | Zeitchick Mark |
Grant/award | 90,910 | — | — |
| 2026-04-10 | White Wilson |
Grant/award | 90,910 | — | — |
Well-known investors holding DOUG (13F)
| Investor | Quarter | Shares | Reported value | % of their 13F | Change vs prior quarter |
|---|---|---|---|---|---|
| Renaissance Technologies | 2026-06-30 | 3,019,624 | $5.3M | 0.01% | Reduced 4% |
| First Eagle Investment Management | 2026-06-30 | 1,641,071 | $2.9M | 0.0% | Added 1% |
| AQR Capital Management (Cliff Asness) | 2026-06-30 | 742,471 | $1.3M | 0.0% | Added 361% |
| D. E. Shaw & Co. | 2026-06-30 | 400,738 | $709.3K | 0.0% | Reduced 20% |
| Two Sigma Investments | 2026-06-30 | 253,344 | $448.4K | 0.0% | Reduced 9% |