SEC Form 10-Q filed by Douglas Elliman Inc.

5/6/25 8:40:38 AM ET

Real Estate

Finance

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doug-20250331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

For The Quarterly Period Ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

DOUGLAS ELLIMAN INC.

(Exact name of registrant as specified in its charter)


Delaware	1-41054	87-2176850
(State or other jurisdiction of incorporation	Commission File Number	(I.R.S. Employer Identification No.)
incorporation or organization)

4400 Biscayne Boulevard

Miami, Florida 33137

305-579-8000

(Address, including zip code and telephone number, including area code,

of the principal executive offices)

Securities Registered Pursuant to 12(b) of the Act:


Title of each class:	Trading	Name of each exchange
	Symbol(s)	on which registered:
Common stock, par value $0.01 per share	DOUG	New York Stock Exchange

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

x Yes o No

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

x Yes o No

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐

Large accelerated filer

Accelerated filer

☐

Non-accelerated filer

Smaller reporting company

☐

Emerging Growth Company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

☐ Yes x No

At April 30, 2025, Douglas Elliman Inc. had 88,737,838 shares of common stock outstanding.

DOUGLAS ELLIMAN INC.

FORM 10-Q

TABLE OF CONTENTS


			Page
PART I. FINANCIAL INFORMATION

Item 1. Douglas Elliman Inc. Condensed Consolidated Financial Statements (Unaudited):

Condensed Consolidated Balance Sheets as of March 31, 2025 and December 31, 2024			2

Condensed Consolidated Statements of Operations for the three months ended March 31, 2025 and 2024			3



Condensed Consolidated Statements of Stockholders' Equity for the three months ended March 31, 2025 and 2024			4

Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024			5

Notes to Condensed Consolidated Financial Statements			6

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations			26

Item 3. Quantitative and Qualitative Disclosures About Market Risk			33

Item 4. Controls and Procedures			33

PART II. OTHER INFORMATION

Item 1. Legal Proceedings			34

Item 1A. Risk Factors			34

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds			34

Item 5. Other Information			34

Item 6. Exhibits			35

SIGNATURE			36

DOUGLAS ELLIMAN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited


	March 31, 2025		December 31, 2024
ASSETS:
Current assets:
Cash and cash equivalents	$	136,771	$	135,657
Investment securities at fair value	—		9,804
Receivables	20,746		19,598
Agent receivables, net	13,237		7,871

Restricted cash and cash equivalents	6,131		4,081
Other current assets	19,146		19,054
Total current assets	196,031		196,065
Property and equipment, net	36,988		37,700
Operating lease right-of-use assets	95,809		100,491
Long-term investments (includes $4,327 and $3,127 at fair value)	10,727		9,527
Contract assets, net	41,399		37,123
Goodwill	32,230		32,230
Other intangible assets, net	72,144		72,307

Equity-method investments	2,022		2,020
Other assets	6,593		6,425
Total assets	$	493,943	$	493,888
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current operating lease liabilities	$	21,343	$	21,672
Current portion of antitrust litigation settlement	5,000		—
Accounts payable	5,215		3,056
Income taxes payable, net	81		—
Commissions payable	18,946		20,452
Accrued salaries and benefits	3,301		8,296
Contract liabilities	16,112		18,225
Other current liabilities	30,635		20,456
Total current liabilities	100,633		92,157
Notes payable and other obligations less current portion	33,317		32,670
Fair value of derivative embedded within convertible debt	30,999		30,253
Non-current operating lease liabilities	96,873		101,935
Contract liabilities	68,283		63,765
Antitrust litigation settlement	5,000		10,000
Other liabilities	662		683
Total liabilities	335,767		331,463

Stockholders' equity:
Preferred stock, par value $0.01 per share, 10,000,000 shares authorized	—		—
Common stock, par value $0.01 per share, 250,000,000 shares authorized, 88,737,838 and 88,853,150 shares issued and outstanding	888		889
Additional paid-in capital	287,203		285,167
Accumulated deficit	(129,853)		(123,868)
Total Douglas Elliman Inc. stockholders' equity	158,238		162,188
Non-controlling interest	(62)		237
Total stockholders' equity	158,176		162,425
Total liabilities and stockholders' equity	$	493,943	$	493,888

The accompanying notes are an integral part of the condensed consolidated financial statements.

DOUGLAS ELLIMAN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited


	Three Months Ended
	March 31,
	2025		2024
Revenues:
Commissions and other brokerage income	$	241,143	$	188,265
Property management	9,492		9,047
Other ancillary services	2,768		2,927
Total revenues	253,403		200,239

Expenses:
Real estate agent commissions	186,525		149,016
Sales and marketing	19,739		21,298
Operations and support	17,728		18,799
General and administrative	27,325		27,016
Technology	5,535		5,843
Depreciation and amortization	1,900		1,981
Antitrust litigation settlement expense	—		17,750

Operating loss	(5,349)		(41,464)

Other income (expenses):
Interest expense	(1,530)		(7)
Interest income	1,361		1,383
Equity in earnings (losses) from equity-method investments	2		(11)
Change in fair value of derivative embedded within convertible debt	(746)		—
Investment and other losses	(22)		(391)
Loss before provision for income taxes	(6,284)		(40,490)
Income tax expense	—		1,195

Net loss	(6,284)		(41,685)

Net loss attributed to non-controlling interest	299		210

Net loss attributed to Douglas Elliman Inc.	$	(5,985)	$	(41,475)

Per basic common share:

Net loss applicable to common shares attributed to Douglas Elliman Inc.	$	(0.07)	$	(0.50)

Per diluted common share:

Net loss applicable to common shares attributed to Douglas Elliman Inc.	$	(0.07)	$	(0.50)

The accompanying notes are an integral part of the condensed consolidated financial statements.

DOUGLAS ELLIMAN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDER’S EQUITY

(Dollars in Thousands, Except Share Amounts)

Unaudited


	Douglas Elliman Inc. Stockholders' Equity
				Additional Paid-In				Non- controlling
	Common Stock					Accumulated
	Shares	Amount		Capital		Deficit		Interest		Total
Balance as of January 1, 2025	88,853,150	$	889	$	285,167	$	(123,868)	$	237	$	162,425
Net loss	—	—		—		(5,985)		(299)		(6,284)


Restricted stock grant canceled	(115,312)	(1)		1		—		—		—

Stock-based compensation	—	—		2,035		—		—		2,035

Balance as of March 31, 2025	88,737,838	$	888	$	287,203	$	(129,853)	$	(62)	$	158,176


	Douglas Elliman Inc. Stockholders' Equity
				Additional Paid-In				Non- controlling
	Common Stock					Accumulated
	Shares	Amount		Capital		Deficit		Interest		Total
Balance as of January 1, 2024	87,925,412	$	879	$	279,904	$	(47,552)	$	923	$	234,154
Net loss	—	—		—		(41,475)		(210)		(41,685)
Restricted stock grants	3,610,000	36		(36)		—		—		—
Stock-based compensation	—	—		3,355		—		—		3,355
Balance as of March 31, 2024	91,535,412	$	915	$	283,223	$	(89,027)	$	713	$	195,824

The accompanying notes are an integral part of the condensed consolidated financial statements.

DOUGLAS ELLIMAN INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(Dollars in Thousands)

Unaudited


	Three Months Ended
	March 31,
	2025		2024
Cash flows from operating activities:
Net loss	$	(6,284)	$	(41,685)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization	1,900		1,981
Non-cash stock-based compensation expense	2,035		3,355
Loss on sale of assets	137		70
Deferred income taxes	—		977
Net losses on investment securities	43		391
Equity in (earnings) losses from equity-method investments	(2)		11

Non-cash interest expense	647		—
Non-cash lease expense	4,883		5,907
Change in fair value of derivative embedded within convertible debt	746		—
Provision for credit losses	1,180		1,304
Changes in assets and liabilities:
Receivables	(7,694)		(4,605)
Income taxes, net	81		5,456
Contract assets, net	(2,430)		(2,888)
Operating lease liability, net	(5,592)		(6,433)
Accounts payable and accrued liabilities	10,869		(3,248)
Other assets and liabilities	(3,505)		(1,120)
Accrued salary and benefits	(5,032)		(10,641)
Contract liabilities	2,401		6,127
Antitrust litigation settlement	—		17,750

Net cash used in operating activities	(5,617)		(27,291)
Cash flows from investing activities:



Proceeds from sale or liquidation of long-term investments	78		8
Proceeds from sale or liquidation of short-term investments	54,416		—

Purchase of short-term investments	(44,612)		—
Purchase of long-term investments	(67)		(85)

Capital expenditures	(1,034)		(2,081)
Net cash provided by (used in) investing activities	8,781		(2,158)








Net increase (decrease) in cash, cash equivalents and restricted cash	3,164		(29,449)
Cash, cash equivalents and restricted cash, beginning of period	142,221		129,517
Cash, cash equivalents and restricted cash, end of period	$	145,385	$	100,068

The accompanying notes are an integral part of the condensed consolidated financial statements.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

(a)Basis of Presentation:

Douglas Elliman Inc. (“Douglas Elliman” or the “Company”) is engaged in the real estate services and property technology investment business and is seeking to acquire or invest in additional real estate services and property technology (“PropTech”), companies. The condensed consolidated financial statements of Douglas Elliman include the accounts of DER Holdings LLC and New Valley Ventures LLC (“New Valley Ventures”), a directly and an indirectly wholly owned subsidiary of the Company, respectively. DER Holdings LLC owns Douglas Elliman Realty, LLC and Douglas Elliman of California, Inc., which are engaged in the residential real estate brokerage business with their subsidiaries. The operations of New Valley Ventures consist of minority investments in innovative and cutting-edge PropTech companies.

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.

The unaudited, interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and, in management’s opinion, contain all adjustments, consisting only of normal recurring items, necessary for a fair statement of the results for the periods presented. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. References to U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) are to the FASB Accounting Standards Codification, also referred to as the “Codification” or “ASC.” These condensed consolidated financial statements should be read in conjunction with the consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2024, filed with the Securities and Exchange Commission (“SEC”). The condensed consolidated results of operations for interim periods should not be regarded as necessarily indicative of the results that may be expected for the entire year.

In presenting the condensed consolidated financial statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates.

(b) Principles of Consolidation:

The condensed consolidated financial statements include the assets, liabilities, revenues, expenses and cash flows of DER Holdings LLC and New Valley Ventures as well as all other entities which Douglas Elliman has a controlling financial interest. All intercompany balances and transactions have been eliminated in the condensed consolidated financial statements.

When evaluating an entity for consolidation, Douglas Elliman first determines whether an entity is within the scope of the guidance for consolidation of variable interest entities (“VIE”) and if it is deemed to be a VIE. If the entity is considered to be a VIE, Douglas Elliman determines whether it would be considered the entity’s primary beneficiary. Douglas Elliman consolidates those VIEs for which it has determined that it is the primary beneficiary. Additionally, Douglas Elliman will consolidate an entity that is not deemed a VIE upon a determination that it has a controlling financial interest. If Douglas Elliman determines it does not have a controlling financial interest in an entity that is a VIE, it does not consolidate the entity. For entities where Douglas Elliman does not have a controlling financial interest, the investments in such entities are classified as available-for-sale securities or accounted for using the equity or cost method, as appropriate.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant estimates subject to material changes in the near term include impairment charges and valuation of intangible assets. Actual results could differ from those estimates.

(d) Loss Per Share (“EPS”):

The Company has restricted stock awards which will provide dividends at the same rate as paid on the common stock with respect to the shares underlying the restricted stock awards. These outstanding restricted stock awards represent participating securities under authoritative guidance. The participating securities holders do not participate in the Company’s net losses. There were no outstanding non-participating securities during the three months ended March 31, 2025 and 2024. The Company has not paid a cash dividend during the three months ended March 31, 2025 and 2024.


	Three Months Ended
	March 31,
	2025		2024
Net loss attributed to Douglas Elliman Inc.	$	(5,985)	$	(41,475)
Income attributable to participating securities	—		—
Net loss available to common stockholders attributed to Douglas Elliman Inc.	$	(5,985)	$	(41,475)

Basic EPS is computed by dividing net loss available to common stockholders attributed to Douglas Elliman Inc. by the weighted-average number of shares outstanding, which will include vested restricted stock.

Basic and diluted EPS were calculated using the following shares of common stock for the periods presented below:


	Three Months Ended
	March 31,
	2025	2024
Weighted-average shares for basic and diluted EPS	84,369,811	83,334,101

The following was outstanding during the three months ended March 31, 2025 and 2024, but were not included in the computation of diluted EPS because the effect was anti-dilutive:


	Three Months Ended
	March 31,
	2025		2024
Weighted-average number of shares issuable upon conversion of debt	33,333,333		—
Weighted-average conversion price	$	1.50	$	—

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

(e) Reconciliation of Cash, Cash Equivalents and Restricted Cash:

Restricted cash amounts included in current assets and other assets represent cash and cash equivalents required to be deposited into escrow for amounts required for letters of credit related to office leases, and certain deposit requirements for banking arrangements. The restrictions related to the letters of credit will remain in place for the duration of the respective lease. The restrictions related to the banking arrangements will remain in place for the duration of the arrangement.

The components of “Cash, cash equivalents and restricted cash” in the condensed consolidated statements of cash flows were as follows:


	March 31, 2025		December 31, 2024
Cash and cash equivalents	$	136,771	$	135,657
Restricted cash and cash equivalents in current assets	6,131		4,081
Restricted cash and cash equivalents included in other assets	2,483		2,483
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows	$	145,385	$	142,221

(f) Goodwill and Other Intangible Assets:

Goodwill and intangible assets with indefinite lives are not amortized and instead are tested for impairment on an annual basis, as of October 1, or whenever events or changes in business circumstances indicate the carrying value of the assets may not be recoverable. The Company follows ASC 350, Intangibles – Goodwill and Other, and subsequent updates including ASU 2011-08, Testing Goodwill for Impairment and ASU 2017-14, Simplifying the Test for Goodwill Impairment. The amendments permit entities to first perform a qualitative assessment to determine whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount. If the Company concludes that it is more likely than not that a reporting unit’s fair value is less than its carrying value or chooses to bypass the optional qualitative assessment, the Company then assesses recoverability by comparing the fair value of the reporting unit to its carrying amount; otherwise, no further impairment test would be required. The fair value of the intangible asset associated with the Douglas Elliman trademark is determined using a “relief from royalty payments” method. This approach involves two steps: (i) estimating reasonable royalty rates for its trademark associated with the Douglas Elliman trademark and (ii) applying these royalty rates to a net sales stream and discounting the resulting cash flows to determine fair value. This fair value is then compared with the carrying value of the trademark.

In the three months ended September 30, 2024, the Company utilized third-party valuation specialists to prepare a quantitative assessment of its 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. The Company performed a qualitative assessment for the three months ended March 31, 2025, which did not result in impairment charges related to its goodwill or trademark. If the Company fails to achieve the financial projections used in the quantitative assessments of fair value and current market conditions continue to deteriorate, additional impairment charges could result in future periods, and such impairment charges could be material.

(g) Related Party Transactions:

Agreements with Vector Group Ltd. (“Vector Group”). The Company paid Vector Group $1,050 under the transition services agreement, dated December 21, 2021, by and between the Company and Vector Group (the “Transition Services Agreement”) during the three months ended March 31, 2024. Additionally, the Company paid Vector Group $595 under certain aircraft lease agreements entered into with affiliates of Vector Group (the “Aircraft Lease Agreements”) during the three months ended March 31, 2024. In October 2024 and December 2024, the Aircraft Lease Agreements and Transition Service Agreement, respectively, were terminated.

Real estate commissions. Real estate commissions include commissions of approximately $6,699 and $1,224 for the three months ended March 31, 2025 and 2024, respectively, from projects where the Company has been engaged by certain developers as the sole broker or the co-broker for real estate development projects that Vector Group owns an interest in through its real estate venture investments.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

(h) Investment and Other Losses:

Investment and other losses consist of the following:


	Three Months Ended
	March 31,
		2025		2024

Net unrealized (losses) gains recognized on long-term investments at fair value		$	(121)	$	89
Net gains (losses) recognized on long-term investment securities without a readily determinable fair value that does not qualify for the NAV practical expedient		78		(480)
Other income		21		—

Investment and other losses		$	(22)	$	(391)

(i) Other Comprehensive Income:

The Company does not have any activity that results in Other Comprehensive Income; therefore, no statement of Comprehensive Income is included in the condensed consolidated financial statements.

(j) Subsequent Events:

The Company has evaluated subsequent events through May 6, 2025, the date the financial statements were issued.

(k) New Accounting Pronouncements:

ASUs to be adopted in future periods:

In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. The ASU requires that all public entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. The ASU is effective for annual periods beginning after December 15, 2024. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and will adopt the standard in the year ending December 31, 2025.

In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220) – Disaggregation of Income Statement Expenses. The ASU requires enhanced disclosures around disaggregation of certain income statement expense lines into specified categories. The new standard is effective on a prospective basis for annual periods beginning after December 15, 2026, and interim periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its consolidated financial statements and anticipates adopting the standard in the year ending December 31, 2026.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

2. REVENUE RECOGNITION

Disaggregation of Revenue

In the following tables, revenue is disaggregated by major services line and primary geographical market:


	Three Months Ended March 31, 2025
	New York City		Northeast		Southeast		West		Total
Revenues:
Commission and other brokerage income - existing home sales	$	66,217	$	42,995	$	69,399	$	41,396	$	220,007
Commission and other brokerage income - development marketing	8,170		152		12,374		440		21,136
Property management revenue	9,282		210		—		—		9,492
Escrow and title fees	76		8		—		2,684		2,768
Total revenue	$	83,745	$	43,365	$	81,773	$	44,520	$	253,403

	Three Months Ended March 31, 2024
	New York City		Northeast		Southeast		West		Total
Revenues:
Commission and other brokerage income - existing home sales	$	49,240	$	34,586	$	57,630	$	40,253	$	181,709
Commission and other brokerage income - development marketing	4,719		65		1,325		447		6,556
Property management revenue	8,846		201		—		—		9,047
Escrow and title fees	211		149		—		2,567		2,927
Total revenue	$	63,016	$	35,001	$	58,955	$	43,267	$	200,239

Contract Balances

The following table provides information about contract assets and contract liabilities from development marketing and commercial leasing contracts with customers:


	March 31, 2025		December 31, 2024

Receivables, which are included in receivables	$	2,094	$	1,789
Contract assets, net, which are included in other current assets	9,089		10,935
Contract assets, net, which are in other assets	41,399		37,123
Payables, which are included in commissions payable	1,519		1,302
Contract liabilities, which are in current liabilities	16,112		18,225
Contract liabilities, which are in other liabilities	68,283		63,765

The Company recognized revenue of $6,381 for the three months ended March 31, 2025, that were included in the contract liabilities balances at December 31, 2024. The Company recognized revenue of $1,163 for the three months ended March 31, 2024, that were included in the contract liabilities balances at December 31, 2023.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

3. CURRENT EXPECTED CREDIT LOSSES

Real estate broker agent receivables: Douglas Elliman Realty is exposed to credit losses for various amounts due from real estate agents, which are included in Agent receivables, net on the condensed consolidated balance sheets, net of an allowance for credit losses. The Company estimates its allowance for credit losses on receivables from agents based on an evaluation of aging of receivables from agents, agent sales in progress, any security, specific exposures, historical experience of collections from the individual agents, and current and expected future market trends. The Company estimated that the credit losses for these receivables were $5,411 and $4,783 at March 31, 2025 and December 31, 2024, respectively.

The following table summarizes changes in the allowance for credit losses for the three months ended March 31, 2025:


	January 1, 2025		Current Period Provision			Write-offs		Recoveries		March 31, 2025
Allowance for credit losses:

Real estate broker agent receivables	$	4,783	$	1,180	(1)	$	552	$	—	$	5,411

_____________________________

(1) The current period provision for the real estate broker agent receivables is included in “General and administrative expenses” in the Company’s condensed consolidated statements of operations.

The following table summarizes changes in the allowance for credit losses for the three months ended March 31, 2024:


	January 1, 2024		Current Period Provision			Write-offs		Recoveries		March 31, 2024
Allowance for credit losses:

Real estate broker agent receivables	$	5,575	$	1,304	(1)	$	1,056	$	—	$	5,823

_____________________________

4. LEASES

The Company has operating leases for corporate and sales offices and equipment. The components of lease expense were as follows:


	Three Months Ended
	March 31,
	2025		2024
Operating lease cost	$	7,358	$	8,578
Short-term lease cost	158		256
Variable lease cost	1,257		989
Less: Sublease income	(16)		(56)
Total lease cost	$	8,757	$	9,767

Supplemental cash flow information related to leases was as follows:


	Three Months Ended
	March 31,
	2025		2024
Cash paid for amounts included in measurement of lease liabilities:
Operating cash flows from operating leases	$	8,066	$	9,096

Right-of-use assets obtained in exchange for lease obligations:
Operating leases	$	505	$	2,998

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Supplemental balance sheet information related to leases was as follows:



	March 31,		December 31,
	2025		2024
Weighted average remaining lease term:
Operating leases	5.57		5.73

Weighted average discount rate:
Operating leases	8.61	%	8.58	%

As of March 31, 2025, maturities of lease liabilities were as follows:


	Operating Leases
Period Ending December 31:
Remainder of 2025	$	23,328
2026	29,188
2027	26,041
2028	22,690
2029	18,342
2030	13,419
Thereafter	19,125
Total lease payments	152,133
Less imputed interest	(33,917)
Total	$	118,216

As of March 31, 2025, the Company had a $2,020 undiscounted lease payment relating to a real estate lease that has not yet commenced. The operating lease will commence in the second half of 2025 with a lease term of approximately 10.3 years.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

5. LONG-TERM INVESTMENTS

Long-term investments consisted of the following:


	March 31, 2025		December 31, 2024
PropTech convertible trading debt securities	$	1,254	$	1,254
Long-term investment securities at fair value (1)	3,073		3,127
PropTech investments at cost	6,400		6,400
PropTech investments under equity method	617		619
Total investments	11,344		11,400
Less PropTech current convertible trading debt securities (2)	—		1,254
Less PropTech investments accounted for under the equity method (3)	617		619
Total long-term investments	$	10,727	$	9,527

_____________________________

(1) These assets are measured at net asset value (“NAV”) as a practical expedient under ASC 820.

(2) These amounts are included in “Other current assets” on the condensed consolidated balance sheets.

(3) These amounts are included in “Equity-method investments” on the condensed consolidated balance sheets.

Net realized and unrealized losses recognized on long-term investment securities were as follows:


	Three Months Ended
	March 31,
		2025		2024

Net unrealized (losses) gains recognized on long-term investments at fair value		$	(121)	$	89
Net gains (losses) recognized on long-term investment securities without a readily determinable fair value that does not qualify for the NAV practical expedient		78		(480)
Net realized and unrealized losses recognized on long-term investment securities		$	(43)	$	(391)

(a) PropTech Convertible Trading Debt Securities:

These securities are classified as trading debt securities and are accounted for at fair value. The remaining convertible note matures in February 2027.

(b) Long-Term Investment Securities at Fair Value:

The following is a summary of unrealized (losses) gains recognized in net loss on long-term investment securities at fair value during the three months ended March 31, 2025 and 2024, respectively:


	Three Months Ended
	March 31,
	2025		2024
Net unrealized (losses) gains recognized on long-term investments at fair value	$	(121)	$	89

The Company has unfunded commitments of $520 related to long-term investment securities at fair value as of March 31, 2025.

Equity securities without readily determinable fair values that do not qualify for the NAV practical expedient consisted of investments in various limited liability companies as of March 31, 2025. The total carrying value of equity securities without readily determinable fair values that do not qualify for the NAV practical expedient was $6,400 as of March 31, 2025, and as of December 31, 2024. The Company did not record an impairment expense for the three months ended March 31, 2025. The Company recorded an impairment expense of $489 for the three months ended March 31, 2024. The impairment was included in “Investment and other losses” on the condensed consolidated statements of operations.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

6. EQUITY METHOD INVESTMENTS

Equity method investments consisted of the following:


	March 31, 2025		December 31, 2024
Ancillary services ventures	$	2,022	$	2,020

At March 31, 2025, the Company’s ownership percentages in these investments ranged from 5.4% to 50.0%. Due to the Company’s ability to exercise significant influence, but not control, the Company applies the equity method of accounting for these investments.

VIE Consideration:

The Company has determined that the Company is not the primary beneficiary of any of its equity method investments because it does not control the activities that most significantly impact the economic performance of each investment. The Company determined that the entities were VIEs but the Company was not the primary beneficiary. Therefore, the Company’s equity method investments have been accounted for under the equity method of accounting.

Maximum Exposure to Loss:

The Company’s maximum exposure to loss from its equity method investments consists of the net carrying value of the investments adjusted for any future capital commitments and/or guarantee arrangements. The maximum exposure to loss was $2,022 as of March 31, 2025.

7. NOTES PAYABLE AND OTHER OBLIGATIONS

Notes payable and other obligations consisted of:


	March 31, 2025		December 31, 2024
Convertible Notes, net of unamortized discount of $16,683 and $17,330	$	33,317	$	32,670
Aggregate carrying value	$	33,317	$	32,670

*The fair value of the derivatives embedded within the 7.0% Convertible Note ($30,999 at March 31, 2025 and $30,253 at December 31, 2024, respectively), is separately classified as a derivative liability in the condensed consolidated balance sheets.

7.0% Convertible Notes due 2029:

On July 2, 2024, the Company, Alter Domus (US) LLC, as collateral agent, and entities (the “Purchasers”) advised or managed by Kennedy Lewis Investment Management LLC entered into a Securities Purchase Agreement, pursuant to which the Company agreed to issue and sell to the Purchasers, and the Purchasers agreed to purchase from the Company, $50,000 aggregate principal amount of the Company’s newly issued senior secured convertible promissory notes due July 2, 2029 (the “Convertible Notes”) in a private placement transaction in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended. The Company intends to use the net proceeds from the sale of the Convertible Notes for general corporate purposes. The issuance and sale of the Convertible Notes contemplated by the Purchase Agreement were consummated on July 2, 2024.

The Convertible Notes bear interest at a rate of 7.0% per annum payable in cash, or, at the Company’s election, 8.0% per annum paid in kind, due semi-annually. The maturity date of the Convertible Notes is July 2, 2029.

The Purchasers have the right to elect at any time to convert the Convertible Notes into shares of the Company’s common stock at an initial conversion price equal to $1.50 per share of common stock, so long as the aggregate number of shares of common stock beneficially owned by such Purchaser (together with its affiliates) would not 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. The Purchasers have the right to increase or decrease the Beneficial Ownership Limitation upon no less than 61 days’ prior written notice to the Company, provided that the Beneficial Ownership Limitation may in no event exceed 24.99% of the number of shares of common stock outstanding immediately after giving effect to the conversion. The initial conversion price of the Convertible Notes represents a premium of approximately 19% to the last reported sale price of the common stock on the New York Stock Exchange on July 1, 2024. The conversion price will be subject to certain customary anti-dilution adjustments. Assuming the

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Convertible Notes are converted in full (without issuance of any make-whole shares) and based on the current number of shares of common stock outstanding, the Purchasers would beneficially own approximately 27% of the shares of common stock outstanding on an as-converted basis.

The Convertible Notes are senior secured obligations of the Company and are guaranteed by certain of the Company’s direct and indirect subsidiaries (the “Subsidiary Guarantors”) and secured by first priority security interests in substantially all of the assets of the Company and the Subsidiary Guarantors, subject to customary exceptions.

On or after July 2, 2027, the Company will have the right to redeem up to one-third of the initial outstanding principal and capitalized interest of the Convertible Notes (the “Redemption Amount”) in cash if the last reported sale price of the common stock equals or exceeds 200% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) in a 30-day trading period. On or after January 2, 2028, the Company will have the right to redeem the Redemption Amount in cash if the last reported sale price of the common stock equals or exceeds 225% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) in a 30-day trading period. On or after July 2, 2028, the Company will have the right to redeem the Redemption Amount in cash if the last reported sale price of the common stock equals or exceeds 250% of the conversion price then in effect for at least 20 trading days (whether or not consecutive) in a 30-day trading period. The Company may not redeem more than the Redemption Amount in any rolling six-month period after July 2, 2027. In each case, such optional redemption would entitle the holder of the Convertible Notes to convert into shares of common stock calculated pursuant to a customary make-whole table prior to the applicable redemption date.

In the event of certain major transactions, the Company 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. In the event of a major transaction triggered by (i) the common stock or, following an earlier merger, consolidation or similar transaction, the equity securities of a successor entity, ceasing to be listed on a national trading market or (ii) the sale of the Company’s property management business, the Purchasers may decline to be repaid.

In addition, upon certain fundamental transactions that do not result in the foregoing major transactions, the right to convert the Convertible Notes into shares of common stock will be converted into the right to receive the shares of a successor entity, if any, or the Company and any additional consideration receivable as a result of such transaction.

The Purchase Agreement also contains certain affirmative and negative covenants (including restrictions on the Company’s ability to incur indebtedness, permit liens, make dividends or distributions, consummate investments and consummate certain affiliate transactions). In addition, pursuant to the Purchase Agreement, if the Company’s Condensed 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 is less than $0, the Company will be required to maintain Liquidity (as defined in the Purchase Agreement) of at least $20,000 as of the end of each calendar month until such time as the Company’s Condensed Consolidated Adjusted EBITDA is greater than $0 at the end of any subsequent fiscal quarter. The Company was in compliance with all covenants as of March 31, 2025.

The Convertible Notes provide for customary events of default which include (subject in certain cases to customary grace and cure periods), among others, the following: nonpayment of principal or interest, breach of covenants or other agreements in the Purchase Agreement and Convertible Notes, certain bankruptcy or insolvency events, the failure of the common stock to be eligible for listing or quotation on a national trading market and the failure of the Company to file certain required reports under the Exchange Act of 1934, as amended (the “Exchange Act”). Upon an event of default, the holders of the Convertible Notes may declare the outstanding principal amount of the Convertible Notes plus accrued and unpaid interest immediately due and payable. In addition, after the occurrence of any Event of Default that results in the eventual acceleration of any Convertible Notes, such Convertible Notes bear an additional rate of interest equal to 1.0% per annum.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Embedded Derivatives on the Convertible Debt:

The Company determined that the conversion feature meets the definition of a derivative liability. The Company separated the derivative liability from the host debt instrument based on the fair value of the derivative liability. In accordance with authoritative guidance on accounting for derivatives and hedging, the Company has bifurcated these embedded derivatives and estimated the fair value of the embedded derivative liability based on a third-party valuation. The resulting discount created by allocating a portion of the issuance proceeds to the embedded derivative is then amortized to interest expense over the term of the debt using the effective interest method. Changes to the fair value of these embedded derivatives are reflected quarterly in the Company’s condensed consolidated statements of operations as “Change in fair value of derivatives embedded within convertible debt.” The value of the embedded derivatives is contingent on changes in interest rates, the Company’s stock price, stock price volatility, and the Company’s dividend yield over the term of the debt.

A summary of non-cash interest expense associated with the amortization of the debt discount created by the embedded derivative liability associated with the Company’s convertible debt is as follows:


	Three Months Ended
	March 31,
	2025		2024
Convertible Notes	$	534	$	—
Interest expense associated with embedded derivatives	$	534	$	—

A summary of non-cash changes in fair value of derivatives embedded within convertible debt is as follows:


	Three Months Ended
	March 31,
	2025		2024
Convertible Notes	$	746	$	—
Loss on changes in fair value of derivatives embedded within convertible debt	$	746	$	—

Fair Values of Notes Payable and Other Obligations:

The estimated fair value of the Company’s notes payable has been determined by the Company using available market information and appropriate valuation methodologies including the evaluation of the Company’s credit risk. However, considerable judgment is required to develop the estimates of fair value and, accordingly, the estimate presented herein is not necessarily indicative of the amount that could be realized in a current market exchange.

The estimated fair value of the Company’s notes payable is as follows:


	March 31, 2025				December 31, 2024
	Carrying Value		Fair Value		Carrying Value		Fair Value
Notes payable	$	33,317	$	39,389	$	32,670	$	41,002
Notes payable and other obligations	$	33,317	$	39,389	$	32,670	$	41,002

Notes payable and other obligations are recorded on the condensed consolidated balance sheets at amortized cost. The determinations of fair values disclosed above would be classified as Level 3 under the fair value hierarchy disclosed in Note 10 if such liabilities were recorded on the condensed consolidated balance sheets at fair value.

Letters of Credit:

As of March 31, 2025 and December 31, 2024, the Company had outstanding $2,990 of letters of credit, collateralized by certificates of deposit. The letters of credit have been issued as security deposits for leases of office space.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

8. CONTINGENCIES

The Company is involved in litigation in the normal course of its business and otherwise. Some claims are covered by the Company’s insurance policies in excess of any applicable retention. Other claims are not covered by the Company’s insurance policies, and the Company seeks contribution toward the payment of costs and expenses from agents for non-covered claims when applicable pursuant to the Company’s agent policies. The Company believes that the resolution of ordinary course matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company.

In October 2023, individual plaintiffs filed an action on behalf of a putative national class of home sellers from October 2019 through the present in the Western District of Missouri against the National Association of Realtors (“NAR”) and certain real estate brokerage firms, including the Company, alleging anticompetitive behavior in violation of federal antitrust laws arising from NAR’s requirement that sellers’ agents for Multiple Listing Service (“MLS”) listed properties offer to pay a portion of commissions received on the sale of such properties to buyers’ agents (the Gibson case).

Thereafter, additional litigation was filed by other plaintiffs on behalf of putative classes of home sellers from 2019 to the present against certain real estate brokerage firms, including the Company and/or its subsidiaries, alleging anticompetitive behavior, similar to the Gibson case: (i) the March case (November 2023 – Southern District of New York) – a putative class action on behalf of home sellers in Manhattan from November 2019 through the present; (ii) the Friedman case (January 2024 – Southern District of New York) – a putative class action on behalf of home sellers in certain parts of Brooklyn from January 2020 through present; (iii) the Umpa case (December 2023 - Western District of Missouri) – putative class action on behalf of home sellers nationwide (with certain markets excluded) from December 2019 through present, which has now been consolidated into the Gibson case; (iv) the Whaley case (January 2024 - District of Nevada) – putative class action on behalf of home sellers in Nevada from January 2020 through the present, and (v) the Boykin case (February 2024 - District of Nevada) – putative class action on behalf of home sellers in Nevada from February 2020 through the present, which has now been consolidated into the Whaley case.

In April 2024, the Company entered into a settlement agreement (the “Settlement Agreement”) to resolve, on a nationwide basis, the Gibson and Umpa cases (the “Lawsuits”). On April 30, 2024, the Court in the Lawsuits preliminarily approved the settlement, preliminarily certified the proposed settlement class and stayed the cases against the Company pending final approval of the Settlement Agreement.

After preliminary approval, the Company obtained stays of the remaining actions against it, other than the Lutz case described below. The final approval hearing for the settlement took place on October 31, 2024, and on November 4, 2024, the Settlement Agreement received final court approval and became effective as of that date.

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 that were asserted in other lawsuits against the Company and its subsidiaries (collectively, the “Claims”), and releases the Company, its subsidiaries, and affiliated agents from all Claims. The settlement is not an admission of liability, nor does the Company concede or validate any of the claims asserted against it.

Under the Settlement Agreement, the Company 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 (collectively, the “Settlement Amount”). The contingent payments may be accelerated under certain circumstances. The Company recognized an expense of $17,750 for the year ended December 31, 2024.

In addition, the Company agreed to make certain changes to its business practices and emphasize certain practices that have been a part of the Company’s 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 its 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.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

While most of the industry-wide antitrust class action lawsuits launched by plaintiffs on behalf of a putative class of home sellers have been settled (although appeals challenging the settlements are still pending), including those against the Company, certain suits launched by plaintiffs on behalf of a putative class of home buyers are still pending. In November 2023, individual plaintiffs filed an action on behalf of a putative national class of home buyers from 1996 to the present in the Northern District of Illinois against certain real estate brokerage firms (the “Batton II case”), including the Company, alleging anticompetitive behavior similar to the now resolved Gibson case. In June 2024, plaintiffs voluntarily dismissed this action against the Company without prejudice. However, on June 11, 2024, plaintiffs’ counsel from the Batton II case added the Company as 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). This case was brought by individual plaintiffs who filed an action on behalf of a putative national class of home buyers from December 1996 through the present against certain real estate brokerage firms, now including the Company, alleging anticompetitive behavior in violation of federal antitrust laws, state antitrust and consumer protection laws, as well as asserting an unjust enrichment claim. The allegations and claims in the Lutz case are similar to the Batton II case. As this case was brought by a putative national class of home buyers, it is not subsumed within the Settlement Agreement resolving the antitrust actions brought by home sellers against the Company, 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. The Company has not provided any amounts in the condensed consolidated financial statements for unfavorable outcomes for these industry-wide home buyer antitrust class action lawsuits as management concluded that it is not probable that a loss has been incurred and is unable to reasonably estimate the possible loss or range of loss that could result from an unfavorable outcome of any pending industry-wide home buyer antitrust class action lawsuits.

Two real estate salespersons formerly associated with the Company as independent contractors, have, together or separately, been named as defendants in multiple complaints by women accusing them of sexual assault and related wrongdoing, and face criminal charges related to similar alleged conduct. Recently, the Company and its former Chief Executive Officer were named as defendants in one of these lawsuits. Plaintiffs have brought claims against the Company under the New York Gender-Motivated Violence Act and sex trafficking, negligence, and negligent hiring, retention, and supervision claims. The Company denies liability and intends to defend vigorously against these claims. The Company is aware that other claims may be asserted against it and possibly against certain former Company leadership arising out of matters related to the two former real estate salespersons.

Litigation is subject to uncertainty, and it is possible that there could be adverse developments in pending cases or that more cases, including antitrust lawsuits, could be commenced. With the commencement of any new case, the defense costs and the risks relating to the unpredictability of litigation increase. Legal defense costs are expensed as incurred. Management reviews on a quarterly basis with counsel all pending litigation and evaluates the probability of a loss being incurred and whether an estimate can be made of the possible loss or range of loss that could result from an unfavorable outcome. An unfavorable outcome or settlement of pending litigation could encourage the commencement of additional litigation. The Company is unable to reasonably estimate the financial impact of these litigation matters. For the three months ended March 31, 2025 and 2024, the Company incurred legal expenses and costs totaling $4,359 and $1,951 (which are included within “General and administrative expenses” on the consolidated statements of operations), respectively. The Company’s condensed consolidated financial position, results of operations or cash flows could be materially adversely affected from an unfavorable outcome in, or settlement of, any of these matters.

Accounting Policy. The Company and its subsidiaries record provisions in their condensed consolidated financial statements for pending litigation when they determine that an unfavorable outcome is probable and the amount of loss can be reasonably estimated.

9. INCOME TAXES

The Company records a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all the deferred tax assets will not be realized. The Company did not record a provision for income taxes during the three months ending March 31, 2025 because it has established a valuation allowance for the full amount of the deferred tax assets. During the three months ending March 31, 2024, the Company analyzed the likelihood of utilizing its deferred tax assets and determined it will be more likely than not that the benefits of these deductible differences will not be realized, and as a result the Company established a valuation allowance for the full amount of the deferred tax assets and recorded a charge of $977 in addition to state income tax expense of $218.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

10. FAIR VALUE MEASUREMENTS

The Company’s financial assets and liabilities subject to fair value measurements were as follows:


	Fair Value Measurements as of March 31, 2025
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Assets:
Money market funds (1)	$	86,559	$	86,559	$	—	$	—
U.S. treasury bills (2)	43,368		43,368		—		—
Certificates of deposit (3)	507				507		—

Long-term investments
PropTech convertible trading debt securities	1,254						1,254
Long-term investment securities at fair value (4)	3,073		—		—		—
Total long-term investments	4,327		—		—		1,254
Total assets	$	134,761	$	129,927	$	507	$	1,254

Liabilities:

Fair value of derivatives embedded within convertible debt	30,999		—		—		30,999		(746)
Total liabilities	$	30,999	$	—	$	—	$	30,999	$	(746)

_____________________________

(1)Amounts included in Cash and cash equivalents on the condensed consolidated balance sheets, except for $6,131 that is included in current restricted cash and cash equivalents and $2,483 that is included in non-current restricted assets within Other assets.

(2)$43,368 included in Cash and cash equivalents.

(3)$345 included in other current assets and $162 included in other assets on the condensed consolidated balance sheets.

(4)In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited


	Fair Value Measurements as of December 31, 2024
Description	Total		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)		Total Gains (Losses)
Assets:
Money market funds (1)	$	85,535	$	85,535	$	—	$	—
U.S. treasury bills (2)	52,744		52,744		—		—
Certificates of deposit (3)	507		—		507		—
PropTech convertible trading debt securities	1,254		—		—		1,254
Long-term investments
Long-term investment securities at fair value (4)	3,127		—		—		—
Total long-term investments	3,127		—		—		—
Total assets	$	143,167	$	138,279	$	507	$	1,254

Liabilities:
Fair value of derivatives embedded within convertible debt	30,253		—		—		30,253		(14,978)
Total liabilities	$	30,253	$	—	$	—	$	30,253	$	(14,978)

Nonrecurring fair value measurements
Long-term investments (5)	$	—					$	—	$	(489)
	$	—					$	—	$	(489)

_____________________________

(1)Amounts included in Cash and cash equivalents on the condensed consolidated balance sheets, except for $4,081 that is included in current restricted assets and $2,483 that is included in non-current restricted assets within Other assets.

(2)$42,940 included in Cash and cash equivalents and $9,804 included in investment securities at fair value.

(3)$345 included in other current assets and $162 included in other assets on the condensed consolidated balance sheets.

(4)In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.

(5)Long-term investments with a carrying amount of $489 were written down to their fair value of $0, resulting in an impairment charge of $489, which was included in earnings.

The fair value of the Level 2 certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is the rate offered by the financial institution.

The fair values of the Level 3 PropTech convertible trading debt securities were derived using a discounted cash flow model utilizing a probability-weighted expected return method based on the probabilities of different potential outcomes for the convertible trading debt securities.

The long-term investments are based on NAV per share provided by the partnerships based on the indicated market value of the underlying assets or investment portfolio. In accordance with Subtopic 820-10, these investments are not classified under the fair value hierarchy disclosed above because they are measured at fair value using the NAV practical expedient.

The fair value of derivatives embedded within the convertible debt and the fair value of the convertible debt itself was derived using a binomial lattice valuation model. These derivatives have been classified as Level 3. Changes in the fair value of the derivatives embedded with the convertible debt are presented in the condensed consolidated statements of operations. The value of the embedded derivatives is contingent on changes in interest rates, the Company’s stock price, stock price volatility, and the Company’s dividend yield. The Company’s stock price, volatility, and dividend yield are based on market observable inputs. The interest rate component of the value of the note is computed by calibrating the yield as of the issuance date, such that the value of the convertible note is equal to the principal net of the original issue discount. This yield is adjusted by the change in spreads from the discount curve equivalent to the Company’s implied credit rating.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The Company did not record a change in the fair value of the Level 3 assets during the three months ended March 31, 2025.

The changes in the fair value of the Level 3 liabilities as of March 31, 2025 were as follows:


	2025
Balance as of January 1	$	30,253

Change in fair value of derivatives embedded within convertible debt	746

Balance as of March 31	$	30,999

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows as of March 31, 2025:


	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	March 31, 2025		Valuation Technique	Unobservable Input	Range (Actual)


PropTech convertible trading debt securities	$	1,254	Discounted cash flow	Interest rate	5%
				Maturity	Feb 2027
				Volatility	44.29%
				Discount rate	27.85%

Fair value of derivatives embedded within convertible debt	$	30,999	Binomial Lattice Model	Assumed annual stock dividend	—	%
				Assumed annual cash dividend	—	%
				Stock price	1.72
				Volatility	50	%
				Risk-free rate	3.86	%
				Implied credit spread	9.91	%

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows as of December 31, 2024:


	Quantitative Information about Level 3 Fair Value Measurements
	Fair Value at
	December 31, 2024		Valuation Technique	Unobservable Input	Range (Actual)


PropTech convertible trading debt securities	$	1,254	Discounted cash flow	Interest rate	5%
				Maturity	Feb 2025
				Volatility	46.82%
				Discount rate	25.65%

Fair value of derivatives embedded within convertible debt	$	30,253	Binomial Lattice Model	Assumed annual stock dividend	—	%
				Assumed annual cash dividend	—	%
				Stock price	1.67
				Volatility	50	%
				Risk-free rate	4.36	%
				Implied credit spread	8.06	%

In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record assets and liabilities at fair value on a nonrecurring basis. Generally, assets and liabilities are recorded at fair value on a nonrecurring basis because of impairment charges. The Company had no nonrecurring nonfinancial assets subject to fair value measurements as of March 31, 2025 and December 31, 2024.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

11. SEGMENT INFORMATION

Prior to January 1, 2025 (including, for the three months ended March 31, 2024 and year ended December 31, 2024), the Company’s reportable segments were Real Estate Brokerage and Corporate Activities and Other, which consisted of the operations of our holding company which included the Company’s investment business that invests in select PropTech opportunities through our New Valley Ventures subsidiary. Effective on January 1, 2025, the Company is now managed as a single operating and reporting segment.

Previous reportable segments were recast because our chief executive officer (“CEO”), who became CEO in October 2024 and acts as the chief operating decision maker (“CODM”), began reviewing the operating performance of the Company as a whole, instead of on a segment basis as was done prior to January 1, 2025.

Furthermore, the CODM now evaluates the operating results and revenue of the Company as total real estate services, including PropTech investments, to make decisions. This change led to revisions in the nature and substance of information regularly provided to and used by the CODM and served to align our reported results to evaluate the performance of our businesses and related trends. The CODM uses and compares results, which includes operating loss and investment and other income, to prior periods and, based on these results, assesses performance and identifies trends of ongoing operations.

As the Company is now managed as a single operating and reportable segment, the measure of segment profit or loss is the condensed consolidated net loss. The measure of segment assets is reported on the Company’s condensed consolidated balance sheets.

As a result, beginning in the first quarter of 2025, the Company began to report our financial results as a single reportable segment. Presentation of the Company’s financial information for the three months ended March 31, 2025 and 2024, and year ended December 31, 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 period information has been recast to conform to the current presentation.

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

Financial information for the Company’s revenue and expenses for the three months ended March 31, 2025 and 2024 were as follows:


	Three Months Ended
	March 31,
	2025		2024
Total Revenue	$	253,403	$	200,239

Operating expenses:
Real estate agent commissions	186,525		149,016
Sales and marketing	19,739		21,298
Operations and support	17,728		18,799
General and administrative	27,325		27,016
Technology	5,535		5,843
Depreciation and amortization	1,900		1,981
Antitrust litigation settlement expense	—		17,750

Operating loss	(5,349)		(41,464)
Other income (expenses):
Interest expense	(1,530)		(7)
Interest income	1,361		1,383
Equity in earnings (losses) from equity-method investments	2		(11)
Change in fair value of derivative embedded within convertible debt	(746)		—
Investment and other losses	(22)		(391)
Loss before provision for income tax	(6,284)		(40,490)
Income tax expense	—		1,195
Net loss	(6,284)		(41,685)
Net loss attributed to non-controlling interest	299		210
Net loss attributed to Douglas Elliman Inc.	$	(5,985)	$	(41,475)

For the three months ended March 31, 2025, $1,770 of stock-based compensation is included within General and administrative expenses and $265 is included within Operations and support expenses on the condensed consolidated statements of operations.

For the three months ended March 31, 2024, $3,099 of stock-based compensation is included within General and administrative expenses and $256 is included within Operations and support expenses on the condensed consolidated statements of operations.

The Company’s identifiable assets and capital expenditures for March 31, 2025 and December 31, 2024 were as follows:


	Total
Three Months Ended March 31, 2025
Identifiable assets	$	493,943
Capital expenditures	$	1,034

Year Ended December 31, 2024
Identifiable assets	$	493,888
Capital expenditures	$	5,534

DOUGLAS ELLIMAN INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)

(Dollars in Thousands, Except Per Share Amounts)

Unaudited

12. ESCROW FUNDS IN HOLDING

As a service to its customers, Portfolio Escrow Inc., a subsidiary of the Company, administers escrow and trust deposits which represent undisbursed amounts received for the settlement of real estate transactions. Deposits at FDIC-insured institutions are insured up to $250. Portfolio Escrow Inc. had escrow funds on deposit in the amount of $30,043 and $37,967 as of March 31, 2025 and December 31, 2024, respectively, and corresponding escrow funds in holding of the same amount. These deposits are not assets of Portfolio Escrow Inc., the subsidiary of the Company (and, therefore, are excluded from the accompanying condensed consolidated balance sheets).

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

(Dollars in Thousands, Except Per Share Amounts or Stated Otherwise)

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, 2024 and Notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Annual Report”), and our Condensed Consolidated Financial Statements and related Notes as of and for the quarterly period ended March 31, 2025. Any forward-looking statements are not historical facts, but rather 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 2024 Annual Report and this Quarterly Report and “Special Note on 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.

Overview

Douglas Elliman Realty operates the largest residential brokerage company in the New York metropolitan area and also conducts residential real estate brokerage operations in Florida, California, Texas, Colorado, Nevada, Massachusetts, Connecticut, Maryland, Virginia, Washington, D.C., Arizona, New Hampshire and Michigan. We also operate our investment business that invests in select PropTech opportunities through our New Valley Ventures subsidiary.

Change in Reportable Segments

We now manage our business as a single business segment. Therefore, prior business segments were recast because our Chief Executive Officer, who became CEO in October 2024 and acts as the Chief Operating Decision Maker, or CODM, began reviewing the operating performance of our business as a whole, instead of on a segment basis as was done prior to January 1, 2025.

Furthermore, the CODM now evaluates the operating results and revenue of our business as total real estate services to make decisions. As a result of this change, the nature and substance of information regularly provided to and used by the CODM have been revised. The CODM uses and compares results, which include operating loss and investment and other income, to prior periods and, based on these results, assesses business performance and identifies trends of ongoing operations on a consolidated basis.

As a result, 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 three months ended March 31, 2025 and 2024, and year ended December 31, 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 period information has been recast to conform to the current presentation.

Key Business Metrics and Non-GAAP Financial Measures

In addition to our financial results, 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, Adjusted EBITDA attributed to Douglas Elliman Margin and financial measures for the last twelve months ended March 31, 2025 (“Non-GAAP Financial Measures”), which are financial measures not prepared in accordance with GAAP.

Key Business Metrics


	Last twelve months ended			Three months ended March 31,						Year ended December 31, 2024
	March 31, 2025			2025			2024
Key Business Metrics
Total transactions (1)	22,212			4,908			4,477			21,781
Gross transaction value (in billions) (2)	$	39.1		$	9.9		$	7.1		$	36.4
Average transaction value per transaction (in thousands) (3)	$	1,761.4		$	2,016.4		$	1,595.1		$	1,669.6
Number of Principal Agents (4)	4,763			4,763			5,095			5,264
Annual Retention (5)	87		%	N/A			N/A			89		%
Net loss attributed to Douglas Elliman Inc.	$	(40,826)		$	(5,985)		$	(41,475)		$	(76,316)
Net loss margin	(3.89)		%	(2.36)		%	(20.71)		%	(7.67)		%
Adjusted EBITDA attributed to Douglas Elliman	$	1,571		$	1,108		$	(18,246)		$	(17,783)
Adjusted EBITDA attributed to Douglas Elliman Margin	0.15		%	0.44		%	(9.11)		%	(1.79)		%

_____________________________

(1)We calculate total transactions by taking the sum of all transactions closed that 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.

(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.

(3)Average transaction value per transaction is the quotient of (x) gross transaction value divided by (y) total transactions.

(4)The number of Principal Agents is determined as of the last day of the specified period. We use the number of Principal Agents, in combination with our other key business metrics such as total transactions and gross transaction value, as a measure of agent productivity.

(5)Annual Retention is the quotient of (x) the prior year revenue generated by agents retained divided by (y) the prior year revenue generated by all agents. We use Annual Retention as a measure of agent stability.

Non-GAAP Financial Measures

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. Last twelve months financial measures are non-GAAP financial measures that are calculated by reference to the trailing four-quarter performance for the relevant metric.

We believe that Non-GAAP Financial Measures are important measures that supplement analysis of our results of operations and enhance an understanding of our operating performance. We believe Non-GAAP Financial Measures provide a useful measure of operating results unaffected by non-recurring items, differences in capital structures and ages of related assets among otherwise comparable companies. Management uses Non-GAAP Financial Measures as measures to review and assess the operating performance of our business, and management and investors should review both the overall performance (GAAP net income) and the operating performance (Non-GAAP Financial Measures) of our business. While management considers Non-GAAP Financial Measures to be important, they should be considered in addition to, but not as substitutes for or superior to, other measures of financial performance prepared in accordance with GAAP, such as operating income, and net income. In addition, Non-GAAP Financial Measures are susceptible to varying calculations and our measurement of Non-GAAP Financial Measures may not be comparable to those of other companies.

Reconciliations of these non-GAAP measures are provided in the table below (in thousands).

Computation of Adjusted EBITDA attributed to Douglas Elliman


	Last twelve months ended		Three months ended March 31,				Year ended December 31, 2024
	March 31, 2025		2025		2024
Net loss attributed to Douglas Elliman Inc.	$	(40,826)	$	(5,985)	$	(41,475)	$	(76,316)
Interest expense	4,462		1,530		7		2,939
Interest income	(5,511)		(1,361)		(1,383)		(5,533)
Income tax (benefit) expense	(78)		—		1,195		1,117
Net loss attributed to non-controlling interest	(775)		(299)		(210)		(686)
Depreciation and amortization	7,655		1,900		1,981		7,736
EBITDA	(35,073)		(4,215)		(39,885)		(70,743)
Stock-based compensation (a)	5,254		2,035		3,355		6,574
Equity in (earnings) losses from equity method investments (b)	(49)		(2)		11		(36)
Change in fair value of derivatives embedded within convertible debt	15,724		746		—		14,978
Litigation, settlement and related settlement expenses (c)	16,836		1,898		18,395		33,333
Executive severance and separation expense (d)	2,420		410		—		2,010
Restructuring	1,041		—		—		1,041
Other, net	(5,658)		22		391		(5,289)
Adjusted EBITDA	495		894		(17,733)		(18,132)
Adjusted EBITDA attributed to non-controlling interest	431		214		132		349
Adjusted EBITDA attributed to Douglas Elliman	$	926	$	1,108	$	(17,601)	$	(17,783)

_____________________________

(a)Represents amortization of stock-based compensation. For the last twelve months ended March 31, 2025, $4,181 of stock-based compensation is included within General and administrative expenses and $1,073 is included within Operations and support expenses on the condensed consolidated statements of operations. For the three months ended March 31, 2025, $1,770 of stock-based compensation is included within General and administrative expenses and $265 is included within Operations and support expenses on the condensed consolidated statements of operations. For the three months ended March 31, 2024, $3,099 of stock-based compensation is included within General and administrative expenses and $256 is included within Operations and support expenses on the condensed consolidated statements of operations. For the year ended December 31, 2024, $5,510 of stock-based compensation is included within General and administrative expenses and $1,064 is included within Operations and support expenses on the consolidated statements of operations.

(b)Represents equity in (earnings) losses recognized from our investment in an equity method investment that is accounted for under the equity method and is 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. For the last twelve months and three months ended March 31, 2025, $16,836 and $1,898 are included within General and administrative expenses on the condensed consolidated statements of operations, respectively. For the three months ended March 31, 2024, we incurred such expenses of $18,395 with $645 being included in General and administrative expenses and $17,750 being included in Antitrust litigation settlement expense in the condensed consolidated statement of operations. For the year ended December 31, 2024, we incurred unusual litigation expense, settlement and related expenses of $33,333 with $15,583 being included in General and administrative expenses and $17,750 being included in Antitrust litigation settlement expense on the consolidated statement of operations.

(d) For the last twelve months and three months ended March 31, 2025, $2,420 and $410 are included within General and administrative expenses on the condensed consolidated statement of operations, respectively. For the year ended December 31, 2024, $2,010 is included within General and administrative expenses on the consolidated statement of operations.

Results of Operations

The following discussion provides an assessment of our results of operations, capital resources and liquidity and should be read in conjunction with our condensed consolidated financial statements and related notes included elsewhere in this report.

The primary components of our operating expenses, the changes, which are described in the following discussion of our results of operations, are summarized below:

•Sales and marketing. Sales and marketing expense consists 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 expense consists 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 expense consists primarily of compensation, stock-based compensation expense and other personnel-related costs for administrative employees, including executives, finance and accounting, legal, human resources, communications, property management and escrow services as well as the occupancy costs for our headquarters and other offices supporting our administrative functions and, for the three months ended March 31, 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 expense consists 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, data licenses of PropTech and other related expenses associated with the implementation of our technology initiatives.

Three months ended March 31, 2025 Compared to Three months ended March 31, 2024

As discussed above, 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 three months ended March 31, 2025 and 2024 will be reported as one segment. For more information, see Note 11. “Segment Information” to our condensed consolidated financial statements.

The following table sets forth our revenue and operating loss for the three months ended March 31, 2025 compared to the three months ended March 31, 2024:


	Three Months Ended March 31,
	2025		2024
	(Dollars in thousands)

Revenue	$	253,403	$	200,239

Operating expenses:
Real estate agent commissions	$	186,525	$	149,016
Sales and marketing	19,739		21,298
Operations and support	17,728		18,799
General and administrative	27,325		27,016
Technology	5,535		5,843
Depreciation and amortization	1,900		1,981
Antitrust litigation settlement expense	—		17,750

Operating loss	(5,349)		(41,464)
Other (expense) income	(935)		974
Loss before provision for income taxes	(6,284)		(40,490)
Income tax expense	—		1,195
Net loss	(6,284)		(41,685)
Net loss attributed to non-controlling interest	299		210
Net loss attributed to Douglas Elliman Inc.	$	(5,985)	$	(41,475)

Revenues. Our revenues were $253,403 for the three months ended March 31, 2025 compared to $200,239 for the three months ended March 31, 2024. The $53,164 increase in revenues was primarily due to higher commissions and other brokerage income, driven by an increased number of transactions and higher transaction values from existing home sales in both the New York City and Florida markets compared to the 2024 period.

Our revenues from commission and other brokerage income totaled $241,143 for the three months ended March 31, 2025, compared to $188,265 for the three months ended March 31, 2024, representing an increase of $52,878. In 2025, our commission and other brokerage income from existing homes sales increased by $16,977 in New York City, $11,769 in the Florida market, $8,409 in the Northeast region (excluding New York City), and $1,143 in the West region. Additionally, our revenues from Development Marketing increased by $14,580, primarily related to the Florida market during the 2025 period compared to 2024.

Operating expenses. Our operating expenses were $258,752 for the three months ended March 31, 2025, compared to $241,703 for the three months ended March 31, 2024. The $17,049 increase was primarily due to higher real estate brokerage

commissions of $37,509 resulting from increased revenues, partially offset by lower operating expenses, mainly related to a $17,750 litigation settlement incurred in 2024.

Real Estate Agent Commissions. As a result of increased commissions and other brokerage income, our real estate agent commissions expense was $186,525 for the three months ended March 31, 2025, compared to $149,016 for the three months ended March 31, 2024, representing an increase of $37,509, or 25.2%. Real estate agent commissions expense as a percentage of revenues decreased to 73.6% for the three months ended March 31, 2025, compared to 74.4% for the three months ended March 31, 2024. This decline was primarily driven by a higher percentage of commission revenues derived from the Development Marketing division as well as existing home sales in the New York City region, which generally pay lower commission rates than those generated in the Southeast (Florida) and West regions.

Sales and Marketing. Sales and marketing expenses were $19,739 for the three months ended March 31, 2025, compared to $21,298 for the three months ended March 31, 2024.

Operations and support. Operations and support expenses were $17,728 for the three months ended March 31, 2025, compared to $18,799 for the three months ended March 31, 2024.

General and administrative. General and administrative expenses were $27,325 for the three months ended March 31, 2025, compared to $27,016 for the three months ended March 31, 2024.

Technology. Technology expenses were $5,535 for the three months ended March 31, 2025, compared to $5,843 for the three months ended March 31, 2024.

Operating loss. Operating loss was $5,349 for the three months ended March 31, 2025, compared to $41,464 for the three months ended March 31, 2024. The $36,115 decrease in operating loss was primarily due to increased revenues and reduced operating expenses, partially offset by higher commission expenses and the $17,750 litigation settlement.

Other (expense) income. Other expense was $935 for the three months ended March 31, 2025, compared to other income of $974 for the three months ended March 31, 2024. For the three months ended March 31, 2025, other expense primarily consisted of interest expense of $1,530, a $746 loss from changes in the 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.

Loss before provision for income taxes. Loss before income taxes was $6,284 for the three months ended March 31, 2025, and $40,490 for the three months ended March 31, 2024.

Income tax expense. There was no income tax expense for the three months ended March 31, 2025. The income tax expense for the three months ended March 31, 2024 was $1,195.

We calculate our provision for income taxes based upon our estimate of the annual effective income tax rate based on full year projections and apply the annual effective income tax rate against year-to-date pretax income to record income tax expense, adjusted for discrete items, if any. We did not record an income tax provision for the three months ending March 31, 2025 because we have established a valuation allowance for the full amount of the deferred tax assets. During the three months ending March 31, 2024, we analyzed the likelihood of utilizing our deferred tax assets and determined it will be more likely than not that the benefits of these deductible differences will not be realized, and as a result we established a valuation allowance for the full amount of the deferred tax assets and recorded a charge of $977. We refine annual estimates as current information becomes available.

Summary of PropTech Investments

As of March 31, 2025, New Valley Ventures had investments (at a carrying value) of approximately $11,344 in PropTech companies. This amounts to approximately 2% of the value of Douglas Elliman’s total assets, which totaled approximately $494 million as of March 31, 2025.

Liquidity and Capital Resources

Cash, cash equivalents and restricted cash increased by $3,164 to $145,385, which included $8,614 of restricted cash, during the three months ended March 31, 2025. This compares to a decrease of $29,449, to $100,068, which included restricted cash of $8,617, during the three months ended March 31, 2024.

Cash used in operations was $5,617 for the three months ended March 31, 2025, compared to $27,291 for the three months ended March 31, 2024. The decline in the cash used in the 2025 period was attributable to a lower operating loss and favorable

changes in working capital, primarily due to increases in other current liabilities. This was partially offset by the absence of income tax refunds and the $17,750 litigation settlement in the three months ended March 31, 2025.

Cash provided by investing activities was $8,781 for the three months ended March 31, 2025, compared to cash used in investing activities of $2,158 for the three months ended March 31, 2024. For the three months ended March 31, 2025, cash provided by investing activities was comprised of the proceeds from sale of short-term investments of $54,416 and proceeds from the sale of investments of $78 in our PropTech business. These inflows were partially offset by the purchase of short-term investments of $44,612, long-term investments of $67, and capital expenditures of $1,034. For the three months ended March 31, 2024, cash used in investing activities was comprised of capital expenditures of $2,081 and the purchase of investments of $85 in our PropTech business. This was partially offset by distributions of $8 from our investments in equity securities.

Our investment philosophy is to maximize return on investments by seeking reasonable expectations for return when investing in equity-method investments and PropTech investments, as well as when making capital expenditures.

We continue to evaluate our capital structure and current market conditions related to our capital structure. We may acquire, or seek to acquire, additional operating businesses through a merger, purchase of assets, stock acquisition or other means, or to make other revisions to our capital structure, including, if authorized by our Board of Directors and holders of our Convertible Notes, the repurchase of our common stock in open market transactions. These initiatives may limit our liquidity otherwise available.

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 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. Under the settlement agreement, we agreed to pay $7,750 within 30 business days of preliminary approval of the settlement by the court, as well as two $5,000 contingent payments subject to certain financial contingencies through December 31, 2027.

Other litigation. Two real estate salespersons formerly associated with us as independent contractors, have, together or separately, been named as defendants in multiple complaints by women accusing them of sexual assault and related wrongdoing, and face criminal charges related to similar alleged conduct. Recently, we and our former Chief Executive Officer were named as defendants in one of these lawsuits. Plaintiffs have brought claims against us under the New York Gender-Motivated Violence Act and sex trafficking, negligence, and negligent hiring, retention, and supervision claims. We deny liability and intend to defend vigorously against these claims. We are aware that other claims may be asserted against us and possibly against certain former Company leadership arising out of the matters related to the two former real estate salespersons.

Litigation is subject to uncertainty and it is possible that there could be adverse developments in pending and other cases, including antitrust lawsuits.

Management cannot predict the cash requirements related to any future settlements or judgments, including cash required to bond any appeals, and there is a risk that those requirements will not be able to be met. Management is unable to make a reasonable estimate of the amount or range of loss that could result from an unfavorable outcome of the cases pending against our business or the costs of defending such cases. It is possible that our consolidated financial position, results of operations or cash flows in any future period could be materially adversely affected by an unfavorable outcome in any such litigation. For more information, see Note 8. “Contingencies” to our condensed consolidated financial statements.

We had cash and cash equivalents of approximately $136,771 as of March 31, 2025 and, in addition to any cash provided from operations, such cash is available to be used to fund such liquidity requirements as well as other anticipated liquidity needs in the normal course of business. Management currently anticipates that these amounts, together with expected cash flows from our operations and proceeds from any available financings, should be sufficient to meet our liquidity needs over the next twelve months. We may acquire or seek to acquire additional operating businesses through mergers, asset purchases, stock acquisitions, or other means, or pursue other investments, which could limit the liquidity otherwise available to us.

On July 2, 2024, we issued Convertible Notes due 2029 in the aggregate principal amount of $50,000. 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. For more information, see Note 7. “Notes Payable and Other Obligations” to our condensed consolidated financial statements.

Off-Balance Sheet Arrangements

We have various agreements in which we may be obligated to indemnify the other party with respect to certain matters. Generally, these indemnification clauses are included in contracts arising in the normal course of business under which we customarily agree to hold the other party harmless against losses arising from a breach of representations related to such matters as title to assets sold and licensed or certain intellectual property rights. Payment by us under such indemnification clauses is generally conditioned on the other party making a claim that is subject to challenge by us and dispute resolution procedures specified in the particular contract. Further, our obligations under these arrangements may be limited in terms of time and/or amount, and in some instances, we may have recourse against third parties for certain payments made by us. It is not possible to predict the maximum potential number of future payments under these indemnification agreements due to the conditional nature of our obligations and the unique facts of each particular agreement. Historically, payments made by us under these agreements have not been material. As of March 31, 2025, we were not aware of any indemnification agreements that would or are reasonably expected to have a current or future material adverse impact on our financial position, results of operations or cash flows.

As of March 31, 2025, we had outstanding approximately $2,990 of letters of credit, which are collateralized by certificates of deposit. The letters of credit have been issued as security deposits for leases of office space.

As a service to its customers, Portfolio Escrow Inc., a subsidiary of Douglas Elliman, administers escrow and trust deposits which represent undisbursed amounts received for the settlement of real estate transactions. Deposits at FDIC-insured institutions are insured up to $250. Portfolio Escrow Inc. had escrow funds on deposit in the amount of $30,043 and $37,967 as of March 31, 2025 and December 31, 2024, respectively, and corresponding escrow funds in holding of the same amount. These deposits are not assets of Portfolio Escrow Inc., the subsidiary of Douglas Elliman (and, therefore, are excluded from the accompanying condensed consolidated balance sheets).

Market Risk

We are exposed to market risks principally from fluctuations in interest rates and could be exposed to market risks from foreign currency exchange rates and equity prices in the future. We seek to minimize these risks through our regular operating and financing activities and our long-term investment strategy. Our market risk management procedures cover material market risks for our market risk sensitive financial instruments.

New Accounting Pronouncements

Refer to Note 1. “Summary of Significant Accounting Policies” to our financial statements for further information on New Accounting Pronouncements.

Legislation and Regulation

There are no material changes from the Legislation and Regulation section set forth in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of our 2024 Annual Report.

SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS

In addition to historical information, this report contains “forward-looking statements” within the meaning of the federal securities law. Forward-looking statements include information relating to our intent, belief or current expectations, primarily with respect to, but not limited to, economic outlook, capital expenditures, cost reduction, cash flows, operating performance, growth expectations, competition, legislation and regulations, litigation, and related industry developments (including trends affecting our business, financial condition and results of operations).

We identify forward-looking statements in this report by using words or phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may be,” “objective,” “opportunistically,” “plan,” “potential,” “predict,” “project,” “prospects,” “seek,” and “will be” and similar words or phrases or their negatives.

Forward-looking statements involve important risks and uncertainties that could cause our actual results, performance or achievements to differ materially from our anticipated results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, without limitation, the following:

•general economic and market conditions and any changes therein, including due to macroeconomic conditions, interest rate fluctuations, inflation, acts of war and terrorism or otherwise,

•governmental regulations and policies, including with respect to regulation of the real estate market or monetary and fiscal policy and its effect on overall economic activity, in particular, mortgage interest rates,

•the impact of enacted and proposed tariffs and other trade policies, and related uncertainties in the global economy resulting from such policies,

•the impacts of banks not honoring the escrow and trust deposits held by our subsidiaries,

•litigation risks, the costs associated with, and the outcome of, litigation and other proceedings to the extent uninsured, including litigation or other claims against companies we invest in or acquire,

•adverse changes in global, national, regional and local economic and market conditions, including those related to pandemics and health crises (and responses to them),

•the impacts of the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act of 2017, including the continued impact on the markets of our business,

•effects of industry competition, severe weather events or natural or man-made disasters, including the increasing severity or frequency of such events due to climate change or otherwise, or other catastrophic events that may disrupt our business and have an unfavorable impact on home sale activity,

•the tax-free treatment of the Distribution,

•the failure of Vector Group to satisfy its respective obligations under the agreements entered into in connection with the Distribution, and

•the additional factors described under “Risk Factors” in our 2024 Annual Report filed with the Securities and Exchange Commission as updated in this report.

Further information on the risks and uncertainties to our business includes the risk factors discussed above in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and under Item 1A, “Risk Factors” in our 2024 Annual Report filed with the Securities and Exchange Commission.

Although we believe the expectations reflected in these forward-looking statements are based on reasonable assumptions, there is a risk that these expectations will not be attained and that any deviations will be material. The forward-looking statements speak only as of the date they are made.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations - Market Risk” is incorporated herein by reference.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Under the supervision and with the participation of our management, including our principal executive officer and principal financial officer, we have evaluated the effectiveness of our disclosure controls and procedures as of the end of the period covered by this report, and, based on their evaluation, our principal executive officer and principal financial officer have concluded that these controls and procedures are effective.

Changes in Internal Control Over Financial Reporting

There have not been any changes in our internal control over financial reporting that occurred during the quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

Reference is made to Note 8. “Contingencies” to our condensed consolidated financial statements, incorporated herein by reference, which contains a general description of certain legal proceedings to which we or our subsidiaries are a party.

ITEM 1A. RISK FACTORS

There are no material changes from the risk factors set forth in Part I, Item 1A, “Risk Factors,” of our 2024 Annual Report.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

No equity securities of ours which were not registered under the Securities Act of 1933, as amended (the “Securities Act”) have been issued or sold by us during the three months ended March 31, 2025. In addition, we did not repurchase any of our equity securities during the three months ended March 31, 2025.

ITEM 5. OTHER INFORMATION

Securities Trading Plans of Directors and Executive Officers

In the quarter ended March 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement for the purchase or sale of our securities, within the meaning of Item 408 of Regulation S-K. However, certain of our officers or directors have made, and may from time to time make elections to have shares withheld to cover withholding taxes or pay the exercise price of options, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements.

ITEM 6. EXHIBITS:


31.1			Certification of Chief Executive Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2			Certification of Chief Financial Officer, Pursuant to Exchange Act Rule 13a-14(a), as Adopted Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

** 32.1			Certifications of Chief Executive Officer and Chief Financial Officer, Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS			XBRL Instance Document - the instance document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document.

101.SCH			Inline XBRL Taxonomy Extension Schema

101.CAL			Inline XBRL Taxonomy Extension Calculation Linkbase

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104			Cover Page Interactive Data File (the cover page tabs are embedded within the Inline XBRL document).

_____________________________

** Furnished herewith. These exhibits shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated into any filing under the Securities Act or the Exchange Act.

SIGNATURE

Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.


		DOUGLAS ELLIMAN INC.
		(Registrant)

		By: /s/ J. Bryant Kirkland III
		J. Bryant Kirkland III
		Executive Vice President, Secretary, Treasurer and Chief Financial Officer
Date:	May 6, 2025

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Date	Price Target	Rating	Analyst
7/18/2023		Neutral	BTIG Research
2/24/2022	$8.50	Buy	Jefferies

SEC Form 10-Q filed by Douglas Elliman Inc.

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