Douglas Elliman Inc. (NYSE: DOUG) narrows losses but faces higher commission costs
Douglas Elliman Inc. reported a second‑quarter 2026 net loss of $2.7 million, a substantial improvement from a $22.6 million loss a year earlier, as higher derivative-related expenses and interest on previously outstanding convertible notes were absent. Quarterly revenue rose to $283.4 million from $271.4 million, driven mainly by stronger brokerage activity in Florida and higher development marketing revenue, partly offset by softness in New York City and Western markets and the prior‑year contribution from a sold property management business.
For the six months ended June 30, 2026, revenue was $497.8 million, down from $524.8 million, and net loss narrowed to $19.0 million from $28.9 million. Real estate agent commissions rose as a percentage of revenue to 79%, reflecting mix shift toward higher‑commission markets, while general and administrative expenses declined meaningfully after the property management divestiture and lower professional fees. Adjusted EBITDA attributed to Douglas Elliman for the six‑month period was $(11.4) million, more negative than $(4.5) million a year earlier.
At June 30, 2026, the company held $113.9 million in cash, cash equivalents and restricted cash and reported no convertible debt outstanding following the 2025 redemption of its 7% notes. The balance sheet reflected $17.0 million of current and non‑current contract liabilities and recognized obligations related to previously agreed antitrust settlements with home sellers and an opt‑in settlement framework with home buyers, along with a $31.6 million multi‑year technology license and cloud services commitment through 2029.
Positive
- Net loss sharply reduced: quarterly net loss improved to $2.7 million from $22.6 million, and six‑month net loss to $19.0 million from $28.9 million, aided by lower financing and derivative expenses.
- Stronger brokerage revenue mix: Q2 2026 revenue excluding prior‑year property management increased 8.6%, driven by higher existing home sales in Florida and the Northeast and higher development marketing revenue.
- Debt overhang removed: the company has no 7% convertible notes outstanding after a 2025 redemption, eliminating associated interest and fair‑value volatility.
- Solid liquidity: cash, cash equivalents and restricted cash totaled $113.9 million at June 30, 2026, providing flexibility to absorb operating losses and litigation‑related cash outflows.
Negative
- Operating performance still weak: Adjusted EBITDA attributed to Douglas Elliman was $(11.4) million for the first half of 2026 versus $(4.5) million a year earlier, indicating deteriorated underlying profitability.
- Commission pressure on margins: real estate agent commissions rose to 79.1% of revenue in Q2 2026 from 75.4% (78.4% excluding property management), compressing gross margin despite revenue growth.
- Cash outflows from operations: net cash used in operating activities was $7.7 million for the first six months of 2026, compared with $5.0 million used in the prior‑year period.
- Material legal and settlement exposure: the company remains subject to multi‑year cash payments under antitrust settlements and an opt‑in home‑buyer settlement framework, and discloses that litigation outcomes could materially adversely affect its financial position.
Filing Explained
Buyer settlement approval is set for November 2, 2026; additional payments remain, and restricted-stock grants increased shares outstanding.
This Form 10-Q is an unaudited quarterly report for the period ended
Shares withheld for taxes and a cancelled grant partly offset those grants, but the outstanding share count was
The amount was fully reserved at quarter-end, but the settlement remains subject to court approval and the related Lutz action remains pending.
The named resolution milestone is the final approval hearing scheduled for
Key Figures
Q2 2026 Revenue: $283,449 (thousands)
Q2 2026 Net Loss: $2,734 (thousands)
Six‑Month 2026 Net Loss: $19,010 (thousands)
+5 more
8 metrics
Q2 2026 Revenue
$283,449 (thousands)
Three months ended June 30, 2026 total revenues
Q2 2026 Net Loss
$2,734 (thousands)
Net loss attributed to Douglas Elliman Inc. for Q2 2026
Six‑Month 2026 Net Loss
$19,010 (thousands)
Net loss for the six months ended June 30, 2026
Cash and Restricted Cash
$113,869 (thousands)
Cash, cash equivalents and restricted cash at June 30, 2026
Adjusted EBITDA H1 2026
$(11,432) (thousands)
Adjusted EBITDA attributed to Douglas Elliman Inc. for six months ended June 30, 2026
Real Estate Agent Commissions Ratio
79.1 %
Real estate agent commissions as a percentage of Q2 2026 revenues
Technology Commitment
$31,632 (thousands)
Total amounts due under technology and cloud services agreement through 2029
Antitrust Settlement Obligation
$17,750 (thousands)
Total expense recognized for Gibson home‑seller settlement agreement
Key Terms
Adjusted EBITDA, Gross Transaction Value, variable interest entities, valuation allowance, +2 more
6 terms
Adjusted EBITDA financial
"Adjusted EBITDA attributed to Douglas Elliman Inc. is a non-GAAP financial measure"
Adjusted EBITDA is a way companies measure how much money they make from their core operations, like running a business, by removing certain costs or income that aren’t part of regular business activities. It helps investors see how well a company is doing without distractions from unusual expenses or gains, making it easier to compare companies or track performance over time.
Gross Transaction Value financial
"Gross Transaction Value is the sum of all closing sale prices for homes"
Gross transaction value is the total dollar amount of all purchases or payments processed through a platform during a given period, measured before subtracting refunds, discounts, fees or cancellations. Investors watch it as a broad measure of a business’s sales volume and marketplace activity—like counting every ticket sold at a concert before refunds—to gauge growth and customer usage, while remembering it is not the same as actual revenue or profit.
variable interest entities financial
"guidance for consolidation of variable interest entities (“VIE”) and if it is deemed to be a VIE"
A variable interest entity (VIE) is a business that a company controls through contracts or special arrangements instead of owning a majority of its shares, like steering a puppet without holding its ticket. Investors care because these arrangements can hide who really bears the financial risks and rewards, affect how assets and liabilities appear on financial statements, and create extra legal or enforcement uncertainty that can change the value and risk of an investment.
valuation allowance financial
"established a valuation allowance for the full amount of deferred tax assets"
A valuation allowance is a reserve set aside to reduce the value of certain assets on a company's financial records when there is uncertainty about whether they will generate the expected benefits. It acts like a caution sign, indicating that some assets might not be fully recoverable or worth their recorded amount. This matters to investors because it provides a more realistic picture of a company's financial health and potential risks.
PropTech convertible trading debt securities financial
"PropTech convertible trading debt securities are classified as trading debt securities"
Antitrust litigation settlement expense regulatory
"For the six months ended June 30, 2026, $2,041 in “Antitrust litigation settlement expense”"
Earnings Snapshot
Revenue Q2 2026: $283,449 (thousands)
Three and six months ended June 30, 2026
Revenue Q2 2026
$283,449 (thousands)
up 4.5% vs Q2 2025
Net loss Q2 2026
$2,734 (thousands)
improved from $22,625 (thousands)
Revenue H1 2026
$497,782 (thousands)
down 5.1% vs H1 2025
Net loss H1 2026
$19,010 (thousands)
improved from $28,909 (thousands)
Adjusted EBITDA H1 2026
$(11,432) (thousands)
more negative than $(4,465) (thousands)
AI-generated analysis. How Rhea-AI works. Not financial advice.
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FAQ
How did DOUG’s revenue and net loss change in Q2 2026 versus Q2 2025?
Revenue in Q2 2026 rose to $283.4 million from $271.4 million, while net loss narrowed to $2.7 million from $22.6 million, mainly due to lower financing and derivative‑related expenses and reduced general and administrative costs.
What were Douglas Elliman (DOUG)’s results for the first six months of 2026?
For the six months ended June 30, 2026, DOUG reported revenue of $497.8 million and a net loss of $19.0 million, compared with $524.8 million revenue and a $28.9 million net loss in the prior‑year period.
What is DOUG’s liquidity position and debt status as of June 30, 2026?
As of June 30, 2026, DOUG held $113.9 million in cash, cash equivalents and restricted cash and had no 7% convertible notes outstanding, following full repayment and redemption completed in October 2025.
How is Douglas Elliman (DOUG) affected by antitrust settlements and related liabilities?
DOUG has recorded obligations under a $17.75 million nationwide home‑seller settlement and an opt‑in home‑buyer settlement requiring $2.0 million of payments, along with business practice changes; related balances appear in current and non‑current antitrust litigation settlements.
What are DOUG’s key non‑GAAP metrics like Adjusted EBITDA and agent productivity?
Adjusted EBITDA attributed to Douglas Elliman was $(11.4) million for the first half of 2026. Over the last twelve months ended June 30, 2026, the company reported 21,078 transactions, $39.1 billion Gross Transaction Value, and an average transaction value of $1.85 million.
What long‑term commitments has Douglas Elliman (DOUG) made for technology and leases?
DOUG disclosed a multi‑year technology and cloud services commitment totaling $31.6 million through 2029 and operating lease payment obligations of $120.8 million (undiscounted) as of June 30, 2026, with a lease liability of $98.5 million after discounting.
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-Q
SECURITIES EXCHANGE ACT OF 1934
For The Quarterly Period Ended June 30, 2026
SECURITIES EXCHANGE ACT OF 1934
(Exact name of registrant as specified in its charter)
| (State or other jurisdiction of incorporation | Commission File Number | (I.R.S. Employer Identification No.) | ||||||
| incorporation or organization) | ||||||||
(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: | |||||||
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 | x | ☐ | 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 July 31, 2026, Douglas Elliman Inc. had 90,890,473 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 June 30, 2026 and December 31, 2025 | 2 | ||||
| Condensed Consolidated Statements of Operations for the three and six months ended June 30, 2026 and 2025 | 3 | ||||
| Condensed Consolidated Statements of Stockholders' Equity for the three and six months ended June 30, 2026 and 2025 | 4 | ||||
| Condensed Consolidated Statements of Cash Flows for the six months ended June 30, 2026 and 2025 | 6 | ||||
| Notes to Condensed Consolidated Financial Statements | 7 | ||||
| Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations | 25 | ||||
| Item 3. Quantitative and Qualitative Disclosures About Market Risk | 38 | ||||
| Item 4. Controls and Procedures | 38 | ||||
| PART II. OTHER INFORMATION | |||||
| Item 1. Legal Proceedings | 39 | ||||
| Item 1A. Risk Factors | 39 | ||||
| Item 2. Unregistered Sales of Equity Securities and Use of Proceeds | 40 | ||||
| Item 5. Other Information | 41 | ||||
| Item 6. Exhibits | 42 | ||||
| SIGNATURE | 43 | ||||
1
DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
| June 30, 2026 | December 31, 2025 | ||||||||||
| ASSETS: | |||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | $ | |||||||||
| Receivables | |||||||||||
| Agent receivables, net | |||||||||||
| Restricted cash and cash equivalents | |||||||||||
| Other current assets | |||||||||||
| Total current assets | |||||||||||
| Property and equipment, net | |||||||||||
| Operating lease right-of-use assets | |||||||||||
Long-term investments (includes $ | |||||||||||
| Contract assets, net | |||||||||||
| Goodwill | |||||||||||
| Other intangible assets, net | |||||||||||
| Equity-method investments | |||||||||||
| Other assets | |||||||||||
| Total assets | $ | $ | |||||||||
| LIABILITIES AND STOCKHOLDERS' EQUITY: | |||||||||||
| Current liabilities: | |||||||||||
| Current operating lease liabilities | $ | $ | |||||||||
| Current portion of antitrust litigation settlements | |||||||||||
| Accounts payable | |||||||||||
| Income taxes payable, net | |||||||||||
| Commissions payable | |||||||||||
| Accrued salaries and benefits | |||||||||||
| Contract liabilities | |||||||||||
| Other current liabilities | |||||||||||
| Total current liabilities | |||||||||||
| Non-current operating lease liabilities | |||||||||||
| Contract liabilities | |||||||||||
| Antitrust litigation settlements | |||||||||||
| Other liabilities | |||||||||||
| Total liabilities | |||||||||||
| Commitments and contingencies (Note 8) | |||||||||||
| Stockholders' equity: | |||||||||||
Preferred stock, par value $ | |||||||||||
Common stock, par value $ | |||||||||||
| Additional paid-in capital | |||||||||||
| Accumulated deficit | ( | ( | |||||||||
| Total Douglas Elliman Inc. stockholders' equity | |||||||||||
| Non-controlling interest | ( | ||||||||||
| Total stockholders' equity | |||||||||||
| Total liabilities and stockholders' equity | $ | $ | |||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
2
DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Revenues: | |||||||||||||||||||||||
| Commissions and other brokerage income | $ | $ | $ | $ | |||||||||||||||||||
| Property management | |||||||||||||||||||||||
| Other ancillary services | |||||||||||||||||||||||
| Total revenues | |||||||||||||||||||||||
| Expenses: | |||||||||||||||||||||||
| Real estate agent commissions | |||||||||||||||||||||||
| Sales and marketing | |||||||||||||||||||||||
| Operations and support | |||||||||||||||||||||||
| General and administrative | |||||||||||||||||||||||
| Technology | |||||||||||||||||||||||
| Depreciation and amortization | |||||||||||||||||||||||
| Antitrust litigation settlement expense | |||||||||||||||||||||||
| Restructuring | |||||||||||||||||||||||
| Gain on disposal of business | ( | ( | |||||||||||||||||||||
| Operating loss | ( | ( | ( | ( | |||||||||||||||||||
| Other income (expenses): | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Equity in (losses) earnings from equity-method investments | ( | ||||||||||||||||||||||
| Change in fair value of the derivative embedded within convertible debt | ( | ( | |||||||||||||||||||||
| Investment and other losses | ( | ( | ( | ( | |||||||||||||||||||
| Loss before provision for income taxes | ( | ( | ( | ( | |||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net loss | ( | ( | ( | ( | |||||||||||||||||||
| Net (income) loss attributed to non-controlling interest | ( | ||||||||||||||||||||||
| Net loss attributed to Douglas Elliman Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Per basic common share: | |||||||||||||||||||||||
| Net loss applicable to common shares attributed to Douglas Elliman Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Per diluted common share: | |||||||||||||||||||||||
| Net loss applicable to common shares attributed to Douglas Elliman Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
3
DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ 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 April 1, 2026 | $ | $ | $ | ( | $ | ||||||||||||||||||||||||||||||
Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||
| Restricted stock grants | ( | — | — | ||||||||||||||||||||||||||||||||
| Withholding of shares as payment of tax liabilities in connection with restricted stock vesting | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
| Douglas Elliman Inc. Stockholders' Equity | |||||||||||||||||||||||||||||||||||
| Additional Paid-In | Non- controlling | ||||||||||||||||||||||||||||||||||
| Common Stock | Accumulated | ||||||||||||||||||||||||||||||||||
| Shares | Amount | Capital | Deficit | Interest | Total | ||||||||||||||||||||||||||||||
| Balance as of April 1, 2025 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
| Net (loss) income | — | — | — | ( | ( | ||||||||||||||||||||||||||||||
| Restricted stock grants | ( | — | — | ||||||||||||||||||||||||||||||||
| Withholding of shares as payment of tax liabilities in connection with restricted stock vesting | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||
| Restricted stock grant cancelled | ( | ( | — | — | |||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
4
DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ 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, 2026 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Restricted stock grants | ( | — | — | ||||||||||||||||||||||||||||||||||||||||||||
Withholding of shares as payment of tax liabilities in connection with restricted stock vesting | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||||||||||||||
| Restricted stock grant cancelled | ( | ( | — | — | |||||||||||||||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||||||||||||||
Acquisition of subsidiary | — | — | ( | — | ( | ||||||||||||||||||||||||||||||||||||||||||
| Balance as of June 30, 2026 | $ | ( | $ | $ | |||||||||||||||||||||||||||||||||||||||||||
| 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 | $ | $ | $ | ( | $ | $ | |||||||||||||||||||||||||||||
| Net loss | — | — | — | ( | ( | ( | |||||||||||||||||||||||||||||
| Restricted stock grants | ( | — | — | ||||||||||||||||||||||||||||||||
| Withholding of shares as payment of tax liabilities in connection with restricted stock vesting | ( | ( | ( | — | — | ( | |||||||||||||||||||||||||||||
| Restricted stock grant cancelled | ( | ( | — | — | |||||||||||||||||||||||||||||||
| Stock-based compensation | — | — | — | — | |||||||||||||||||||||||||||||||
| Balance as of June 30, 2025 | $ | $ | $ | ( | $ | ( | $ | ||||||||||||||||||||||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
5
DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Dollars in Thousands)
Unaudited
| Six Months Ended | |||||||||||
| June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net loss | $ | ( | $ | ( | |||||||
Adjustments to reconcile net loss to net cash used in operating activities: | |||||||||||
| Depreciation and amortization | |||||||||||
| Non-cash stock-based compensation expense | |||||||||||
| (Gain) loss on sale of assets | ( | ||||||||||
| Gain on disposal of business | ( | ||||||||||
| Net losses on investment securities | |||||||||||
Equity in earnings from equity-method investments | ( | ( | |||||||||
Non-cash interest expense | |||||||||||
| Non-cash lease expense | |||||||||||
Change in fair value of the derivative embedded within convertible debt | |||||||||||
| Provision for credit losses | |||||||||||
| Changes in assets and liabilities: | |||||||||||
| Receivables | ( | ( | |||||||||
Income taxes payable, net | ( | ||||||||||
Contract assets, net | ( | ( | |||||||||
Operating lease liabilities | ( | ( | |||||||||
| Accounts payable and other current liabilities | |||||||||||
Other assets and liabilities | ( | ( | |||||||||
Accrued salaries and benefits | ( | ( | |||||||||
Contract liabilities | |||||||||||
| Antitrust litigation settlements | |||||||||||
Net cash used in operating activities | ( | ( | |||||||||
| Cash flows from investing activities: | |||||||||||
| Proceeds from sale or liquidation of long-term investments | |||||||||||
| Proceeds from sale or liquidation of short-term investments | |||||||||||
Purchase of short-term investments | ( | ||||||||||
Purchase of long-term investments | ( | ( | |||||||||
| Capital expenditures | ( | ( | |||||||||
Purchase of subsidiaries | ( | ||||||||||
| Proceeds from sale of equipment | |||||||||||
Net cash (used in) provided by investing activities | ( | ||||||||||
| Cash flows from financing activities: | |||||||||||
| Withholding of shares as payment of payroll tax liabilities in connection with restricted stock vesting | ( | ( | |||||||||
| Net cash used in financing activities | ( | ( | |||||||||
| Net (decrease) increase in cash, cash equivalents and restricted cash | ( | ||||||||||
| Cash, cash equivalents and restricted cash, beginning of period | |||||||||||
| Cash, cash equivalents and restricted cash, end of period | $ | $ | |||||||||
Supplemental Disclosure of Cash Flow Information: | |||||||||||
Interest payments | $ | $ | |||||||||
| Income taxes, net | $ | $ | |||||||||
The accompanying notes are an integral part of the condensed consolidated financial statements.
6
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 business. The condensed consolidated financial statements of Douglas Elliman include the accounts of DER Holdings LLC and DOUG Ventures, LLC (“DOUG 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 DOUG Ventures consist of minority investments in 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.
Reclassification from the Company’s Form 10-Q for the quarterly period ended March 31, 2026 was as follows:
For the three months ended March 31, 2026, the Company recorded an expense of $2,041 associated with an antitrust lawsuit settlement and included such expense in the “General and Administrative” category on the condensed consolidated statement of operations in its quarterly report on Form 10-Q for the period ended March 31, 2026. For the six months ended June 30, 2026, the Company has reclassified such expense as “Antitrust litigation settlement expense” on the condensed consolidated statement of operations in this quarterly report on Form 10-Q.
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 DOUG Ventures, as well as all other entities in 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.
7
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
(c) Estimates and Assumptions:
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts and related disclosures of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant estimates, by their nature, are based on judgments and available information and are subject to material changes. These estimates include impairment charges and valuation of intangible assets. Accordingly, actual results could differ from such estimates.
(d) Loss Per Share (“EPS”):
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Net loss attributed to Douglas Elliman Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
| Income attributable to participating securities | |||||||||||||||||||||||
| Net loss available to common stockholders attributed to Douglas Elliman Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
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 | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Weighted-average shares for basic and diluted EPS | |||||||||||||||||||||||
Due to the redemption of all of the Company’s 7 % Convertible Notes due 2029 (the “Convertible Notes”), there was no weighted-average shares calculation related to the conversion of debt for the three and six months ended June 30, 2026. The following was outstanding during the three and six months ended June 30, 2025, but was not included in the computation of diluted EPS because the effect was anti-dilutive:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Weighted-average number of shares issuable upon conversion of debt | |||||||||||||||||||||||
| Weighted-average conversion price | $ | $ | $ | $ | |||||||||||||||||||
8
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:
The components of “Cash, cash equivalents and restricted cash” in the condensed consolidated statements of cash flows were as follows:
| June 30, 2026 | December 31, 2025 | ||||||||||||||||
| Cash and cash equivalents | $ | $ | |||||||||||||||
| Restricted cash and cash equivalents in current assets | |||||||||||||||||
| Restricted cash and cash equivalents included in other assets | |||||||||||||||||
Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows | $ | $ | |||||||||||||||
(f) Goodwill and Other Intangible Assets:
Goodwill and intangible assets with indefinite lives are not amortized, and 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.
(g) Investment and Other Losses:
Investment and other losses consist of the following:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net unrealized losses on PropTech convertible trading debt securities | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Net unrealized losses on long-term investments at fair value | ( | ( | ( | ( | |||||||||||||||||||
| Net (losses) gains on long-term investment securities without a readily determinable fair value that does not qualify for the NAV practical expedient | ( | ||||||||||||||||||||||
| Other income | |||||||||||||||||||||||
Investment and other losses | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
(h) Acquisitions:
Effective January 1, 2026, the Company acquired the remaining ownership interest of Real Estate Associates of Houston LLC, a licensed real estate service provider in Houston, Texas, for a purchase price of $100 . Upon obtaining 100 % ownership of the entity, the Company accounted for the transaction as an equity transaction in accordance with ASC 810. Accordingly, no gain or loss was recognized in the condensed consolidated statements of operations, and noncontrolling interest is no longer presented.
9
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
(i) Subsequent Events:
The Company has evaluated subsequent events through August 10, 2026, the date the financial statements were issued.
(j) New Accounting Pronouncements:
ASUs to be adopted in future periods:
In November 2024, the FASB issued ASU 2024-03, Income Statement (Topic 220) – Reporting Comprehensive Income - Expense Disaggregation Disclosures (Subtopic 220-40) - 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 reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements and anticipates adopting the standard in the year ended December 31, 2027.
In September 2025, the FASB issued ASU 2025-06, Intangibles, Goodwill and Other, Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software. ASU 2025-06 modernizes the accounting for internal-use software under ASC 350-40 by aligning it with current development practices, especially agile and iterative methods. ASU 2025-06 clarifies when to begin capitalizing costs, improves operability across different development approaches, and enhances disclosure requirements. ASU 2025-06 is effective for interim and annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements and anticipates adopting the standard in the period ending March 31, 2028.
In December 2025, the FASB issued ASU 2025-11, Interim Reporting: Narrow-Scope Improvements. This ASU improves clarity for interim financial reporting requirements under the existing guidance within Accounting Standards Codification ("ASC") Topic 270, Interim Reporting, by creating a comprehensive list of interim disclosure requirements, clarifying scope and applicability, along with adding a principle to disclose all material events that have occurred since the most recently filed Form 10-K. ASU 2025-11 is effective for interim and annual reporting periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements and anticipates adopting the standard in the period ending March 31, 2028.
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. The purpose of this ASU is to make incremental improvements to U.S. GAAP. The improvements include Codification updates for a broad range of Topics arising from technical corrections, unintended application of the Codification, clarifications, and other minor improvements. ASU 2025-12 is effective for annual reporting periods beginning after December 15, 2026, and interim periods within those annual reporting periods. The Company is currently evaluating the impact of the new guidance on its condensed consolidated financial statements and anticipates adopting the standard in the period ending March 31, 2027.
10
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 June 30, 2026 | |||||||||||||||||||||||||||||||||||
Total | New York City | Northeast | Southeast | West | International | ||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||
| Commission and other brokerage income - existing home sales | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Commission and other brokerage income - development marketing | |||||||||||||||||||||||||||||||||||
Other ancillary services | |||||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Three Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
Total | New York City | Northeast | Southeast | West | International | ||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||
| Commission and other brokerage income - existing home sales | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Commission and other brokerage income - development marketing | |||||||||||||||||||||||||||||||||||
| Property management revenue | |||||||||||||||||||||||||||||||||||
Other ancillary services | |||||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Six Months Ended June 30, 2026 | |||||||||||||||||||||||||||||||||||
Total | New York City | Northeast | Southeast | West | International | ||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||
| Commission and other brokerage income - existing home sales | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Commission and other brokerage income - development marketing | |||||||||||||||||||||||||||||||||||
| Other ancillary services | |||||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Six Months Ended June 30, 2025 | |||||||||||||||||||||||||||||||||||
Total | New York City | Northeast | Southeast | West | International | ||||||||||||||||||||||||||||||
Revenues: | |||||||||||||||||||||||||||||||||||
| Commission and other brokerage income - existing home sales | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
| Commission and other brokerage income - development marketing | |||||||||||||||||||||||||||||||||||
| Property management revenue | |||||||||||||||||||||||||||||||||||
| Other ancillary services | |||||||||||||||||||||||||||||||||||
| Total revenues | $ | $ | $ | $ | $ | $ | |||||||||||||||||||||||||||||
11
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
Contract Balances
The following table provides information about contract assets and contract liabilities from development marketing and commercial leasing contracts with customers:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Receivables, which are included in receivables | $ | $ | |||||||||
| Contract assets, net, which are included in other current assets | |||||||||||
| Contract assets, net, non-current | |||||||||||
| Payables, which are included in commissions payable | |||||||||||
| Contract liabilities, current | |||||||||||
| Contract liabilities, non-current | |||||||||||
The Company recognized revenues of $10,237 and $13,209 for the three and six months ended June 30, 2026, respectively, that were included in the contract liabilities balances at December 31, 2025. The Company recognized revenues of $4,465 and $10,846 for the three and six months ended June 30, 2025, respectively, that were included in the contract liabilities balances at December 31, 2024.
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 pipeline, 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 $5,726 and $4,746 at June 30, 2026 and December 31, 2025, respectively.
The following table summarizes changes in the allowance for credit losses for the six months ended June 30, 2026:
| January 1, 2026 | Current Period Provision | Write-offs | Recoveries | June 30, 2026 | |||||||||||||||||||||||||
| Allowance for credit losses: | |||||||||||||||||||||||||||||
| Real estate broker agent receivables | $ | $ | (1) | $ | $ | $ | |||||||||||||||||||||||
_____________________________
(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 six months ended June 30, 2025:
| January 1, 2025 | Current Period Provision | Write-offs | Recoveries | June 30, 2025 | |||||||||||||||||||||||||
| Allowance for credit losses: | |||||||||||||||||||||||||||||
| Real estate broker agent receivables | $ | $ | (1) | $ | $ | $ | |||||||||||||||||||||||
_____________________________
(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.
12
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
4. LEASES
The Company has operating leases for corporate and sales offices as well as equipment. The components of lease expense were as follows:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Operating lease cost | $ | $ | $ | $ | ||||||||||||||||||||||
| Short-term lease cost | ||||||||||||||||||||||||||
| Variable lease cost | ||||||||||||||||||||||||||
| Less: Sublease income | ( | ( | ( | ( | ||||||||||||||||||||||
| Total lease cost | $ | $ | $ | $ | ||||||||||||||||||||||
Supplemental cash flow information related to leases was as follows:
| Six Months Ended | |||||||||||
| June 30, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash paid for amounts included in measurement of lease liabilities: | |||||||||||
| Operating cash flows from operating leases | $ | $ | |||||||||
| Right-of-use assets obtained in exchange for lease obligations: | |||||||||||
| Operating leases | $ | $ | |||||||||
Supplemental balance sheet information related to leases was as follows:
| June 30, | December 31, | ||||||||||
| 2026 | 2025 | ||||||||||
Weighted average remaining lease term in years: | |||||||||||
| Operating leases | |||||||||||
| Weighted average discount rate: | |||||||||||
| Operating leases | % | % | |||||||||
| Operating Leases | ||||||||
| Period Ending December 31: | ||||||||
Remainder of 2026 | $ | |||||||
2027 | ||||||||
2028 | ||||||||
2029 | ||||||||
2030 | ||||||||
2031 | ||||||||
| Thereafter | ||||||||
| Total lease payments | ||||||||
| Less imputed interest | ( | |||||||
| Total | $ | |||||||
As of June 30, 2026, the Company had no executed real estate leases that have not yet commenced.
13
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:
| June 30, 2026 | December 31, 2025 | ||||||||||
| PropTech convertible trading debt securities | $ | $ | |||||||||
Long-term investment securities at fair value (1) | |||||||||||
| PropTech investments at cost | |||||||||||
PropTech investments under equity-method | |||||||||||
| Total investments | |||||||||||
Less PropTech current convertible trading debt securities (2) | |||||||||||
Less PropTech investments accounted for under the equity-method (3) | |||||||||||
| Total long-term investments | $ | $ | |||||||||
_____________________________
(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 on long-term investment securities were as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net unrealized losses on PropTech convertible trading debt securities | $ | $ | ( | $ | $ | ( | |||||||||||||||||
Net unrealized losses on long-term investments at fair value | ( | ( | ( | ( | |||||||||||||||||||
Net (losses) gains on long-term investment securities without a readily determinable fair value that does not qualify for the NAV practical expedient | ( | ||||||||||||||||||||||
Net realized and unrealized losses on long-term investment securities | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
(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 net unrealized losses on long-term investment securities at fair value during the three and six months ended June 30, 2026 and 2025, respectively:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
Net unrealized losses on long-term investments at fair value | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
The Company has unfunded commitments of $385 related to long-term investment securities at fair value as of June 30, 2026.
(c) Equity Securities Without Readily Determinable Fair Values That Do Not Qualify for the NAV Practical Expedient
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 June 30, 2026. The total carrying values of equity securities without readily determinable fair values that do not qualify for the NAV practical expedient were $6,117 as of June 30, 2026 and $6,150 as of December 31, 2025. No impairment or other adjustments related to observable price changes in orderly transactions for identical or similar investments were identified for the three and six months ended June 30, 2026 and 2025.
14
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:
| June 30, 2026 | December 31, 2025 | ||||||||||
| Ancillary services ventures | $ | $ | |||||||||
At June 30, 2026, 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, related to these investments, the Company accounts for these investments under the equity-method of accounting.
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 earnings or losses from its equity-method investments consists of the net carrying value of the investments adjusted for any future capital commitments and/or guarantee arrangements and was $2,595 as of June 30, 2026.
7. NOTES PAYABLE AND OTHER OBLIGATIONS
In connection with and upon consummation of the sale of the Company’s property management business (the “DEPM Sale”), on October 24, 2025, the Company repaid and redeemed all of its Convertible Notes for an aggregate payment of $95,000 , including approximately $1,400 of accrued interest (the “Redemption”). The liens on the assets of the Company and the subsidiary guarantors were released upon Redemption. The Redemption was effected because the noteholders informed the Company that they were not willing to waive their contractual redemption rights with respect to the Convertible Notes but would agree to a redemption of the Convertible Notes in connection with the consummation of the DEPM Sale.
15
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
Embedded Derivative on the Convertible 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 that was fully settled in October 2025 is as follows:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Convertible Notes | $ | $ | $ | $ | ||||||||||||||||||||||
Interest expense associated with embedded derivative | $ | $ | $ | $ | ||||||||||||||||||||||
A summary of non-cash changes in fair value of the derivative embedded within convertible debt that was fully settled in October 2025 is as follows:
| Three Months Ended | Six Months Ended | |||||||||||||||||||||||||
| June 30, | June 30, | |||||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | |||||||||||||||||||||||
| Convertible Notes | $ | $ | $ | $ | ||||||||||||||||||||||
Loss on changes in fair value of the derivative embedded within convertible debt | $ | $ | $ | $ | ||||||||||||||||||||||
Letters of Credit:
As of June 30, 2026 and December 31, 2025, the Company had outstanding $2,811 and $2,645 of letters of credit, respectively, collateralized by certificates of deposit. The letters of credit have been issued as security deposits for leases of office space.
8. COMMITMENTS AND CONTINGENCIES
Lease Commitments:
The Company leases office space under non-cancellable operating lease agreements. See Note 4. “Leases” to the Company’s condensed consolidated financial statements for further discussion.
Technology Adoption and Implementation:
In June 2026, the Company executed an agreement to purchase technology licenses, products related to its workspace platform and certain cloud computing services. The amounts due under the agreement as of June 30, 2026 are as follows:
| 2026 | $ | ||||
2027 | |||||
2028 | |||||
| 2029 | |||||
| Total | $ | ||||
As part of the agreement, the Company has received various credits, which may offset or reduce the commitment (above), as well as other discounts. The Company may elect to cancel the remaining commitment (above) in return for a cancellation fee of 35 % of the total remaining commitment amount and loss of any discounts, remaining credits or other incentives provided under the agreement.
16
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
Legal Matters:
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 “Gibson 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 Gibson 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 Gibson Settlement Agreement received final court approval and became effective as of that date. The Gibson Settlement Agreement is currently being challenged on appeal in the U.S. Court of Appeals for the Eighth Circuit.
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 Gibson Settlement Agreement, the Company paid $7,750 into an escrow fund on June 12, 2024, $5,000 into an escrow fund on December 29, 2025, and agreed to pay an additional $5,000 contingent payment subject to certain financial contingencies on or before December 31, 2027. The contingent payments may be accelerated under certain circumstances. The Company recognized the full $17,750 expense associated with the Gibson Settlement Agreement during 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
17
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
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.
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 U.S. 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, 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 Gibson 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. On July 15, 2025, all of the Lutz plaintiffs’ claims against the Company were dismissed. The federal antitrust claim was dismissed with prejudice, and the state antitrust, consumer protection, and unjust enrichment claims were dismissed without prejudice with 21 days to replead. The Lutz plaintiffs filed their Third Amended Complaint on August 5, 2025, which the Company moved to dismiss. On April 17, 2026, the Court granted the Company’s motion to dismiss the claim that was made under California’s Unfair Competition Law, while the Court deferred ruling on the motion to dismiss as to antitrust standing and directed the parties to file supplemental briefing, and otherwise denied the Company’s motion to dismiss in all other respects. On June 23, 2026, the Lutz court ordered that the case be stayed in its entirety until the Tuccori court issues a final decision whether to approve the Tuccori Settlement Agreement (as defined below).
In October 2025, the U.S. District Court for the Northern District of Illinois preliminarily approved a nationwide settlement entered by several real estate brokerage companies in Tuccori v. At World Properties, LLC, et al. (N.D. Ill.) (the “Tuccori case”), a case that consolidated certain purported class action lawsuits filed by home buyers. The settlement included an opt-in procedure pursuant to which other companies subject to similar home buyer antitrust claims could opt into the Tuccori settlement, subject to court approval. In April 2026, the Company opted into a settlement agreement (the “Tuccori Settlement Agreement”) with the purported class of home buyers in the Tuccori case, which is structured to resolve the claims asserted against the Company in, or arising from the same factual predicates as, the Lutz case. Although the Company was not a defendant in the Tuccori action, the opt‑in settlement releases the Company, its subsidiaries, and affiliated agents from the claims against it in the Lutz case. The settlement is not an admission of liability, nor does the Company concede or validate any of the claims asserted against it. Under the Tuccori Settlement Agreement, the Company paid $100 into an escrow fund on June 23, 2026 and agreed to make three additional $647
The Tuccori Settlement Agreement is subject to court approval. On May 26, 2026, the Tuccori court granted preliminary approval of the settlement. On June 29, 2026, the court scheduled a final approval hearing for November 2, 2026. Upon such approval, the Company expects the settlement to fully resolve the claims asserted against it in Lutz. Until such time, the Lutz action remains pending against the Company.
18
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
Court for the Southern District of Florida, in which Plaintiff brought claims against the Company under federal sex trafficking and Florida human trafficking laws. On April 29, 2026, the plaintiff filed a stipulation voluntarily dismissing the Florida human trafficking claims. The federal trafficking claims remain. The Company denies liability and is defending vigorously against that claim. The Company has filed a motion to dismiss which is scheduled to be heard by the court on August 31, 2026.
On November 14, 2025, a Verified Stockholder Derivative Complaint, Barbara Strougo derivatively on behalf of Douglas Elliman, Inc. vs. Howard M. Lorber, et al. (the “Strougo Litigation”), was filed in the Court of Chancery of the State of Delaware (the “Chancery Court”) on behalf of the Company, as nominal defendant, against certain of the Company’s current and former directors and officers (the “Individual Defendants”). The complaint alleged breach-of-fiduciary duty claims against the Individual Defendants. The parties to the Strougo Litigation reached an agreement to settle the Strougo Litigation on the terms and conditions set forth in a Stipulation and Agreement of Compromise, Settlement, and Release that was filed with the Chancery Court on February 19, 2026 (the “Strougo Settlement Agreement”). The Strougo Settlement Agreement provides for the final dismissal of the Strougo Litigation in exchange for (i) a settlement payment to the Company of $17,500 , subject to reductions for attorneys’ fees and expenses, and (ii) the implementation by the Company of certain corporate-governance enhancements and reforms. Certain of the Company’s insurers agreed to fund the settlement. The Chancery Court held a settlement fairness hearing related to the Strougo Settlement Agreement on June 29, 2026 and, on July 7, 2026, entered a Final Order and Judgment approving the Strougo Settlement Agreement and awarding plaintiff’s counsel attorneys’ fees and expenses in the amount of $1,870 , to be deducted from the $17,500 settlement payment to the Company. The Company received $2,500 of the settlement payment in June 2026 which has been recorded and deferred within other current liabilities as of June 30, 2026 because the Strougo Settlement Agreement had not been approved by the Chancery Court on June 30, 2026. The additional $15,000 was received by the Company in July 2026.
Litigation is subject to uncertainties, 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 June 30, 2026, the Company incurred legal expenses and settlement costs totaling $1,155 (consists of legal expenses of $2,404 and settlement expenses of $447 included within “General and administrative expenses,” as well as reimbursement of settlement of $1,696 on the condensed consolidated statement of operations). For the six months ended June 30, 2026, the Company incurred legal expenses and settlement costs totaling $8,395 (consists of legal expenses of $5,934 and settlement expenses of $2,116 included within “General and administrative expenses,” $2,041 in “Antitrust litigation settlement expense” and reimbursement of settlement of $1,696 on the condensed consolidated statement of operations.” For the three and six months ended June 30, 2025, the Company incurred legal expenses and settlement costs totaling $3,241 and $7,808 (included within “General and administrative expenses,” of which $1,482 and $1,274 are net benefits from settlement expense, due to amounts recovered from insurance, on the condensed consolidated statement 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.
19
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
9. INCOME TAXES
There was no
Calculation of provision for income taxes in interim periods. The Company calculates its provision for income taxes for interim reporting periods by estimating its annual effective income tax rate based on full year projections, which do not include the impact of discrete items. It then applies the annual effective income tax rate against year-to-date pretax income to record income tax expense and then adjusts its provision for income tax expense for any discrete items. There were no discrete items for the three and six months ended June 30, 2026 and 2025, respectively.
Income Taxes Paid
The table below presents amounts of income taxes paid, net of refunds, by jurisdiction:
| Three Months Ended | Six Months Ended | ||||||||||
| June 30, 2026 | |||||||||||
| U.S. Federal | $ | $ | |||||||||
| U.S. State and local | |||||||||||
| Total U.S. | |||||||||||
| Foreign | |||||||||||
| Total cash income taxes paid, net of refunds | $ | $ | |||||||||
10. FAIR VALUE MEASUREMENTS
The Company’s financial assets and liabilities subject to fair value measurements were as follows:
| Fair Value Measurements as of June 30, 2026 | ||||||||||||||||||||||||||||||||||||||
| 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) | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Certificates of deposit (2) | ||||||||||||||||||||||||||||||||||||||
| PropTech convertible trading debt securities | ||||||||||||||||||||||||||||||||||||||
| Long-term investments | ||||||||||||||||||||||||||||||||||||||
Long-term investment securities at fair value (3) | ||||||||||||||||||||||||||||||||||||||
| Total long-term investments | ||||||||||||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
_____________________________
(1)Amounts included in Cash and cash equivalents on the condensed consolidated balance sheets, except for $5,995 that is included in current restricted cash and cash equivalents and $2,649 that is included in non-current restricted assets within Other assets.
(2)$162 included in Other current assets on the condensed consolidated balance sheets.
(3)In accordance with ASC Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.
20
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, 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) | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Certificates of deposit (2) | ||||||||||||||||||||||||||||||||||||||
| Long-term investments | ||||||||||||||||||||||||||||||||||||||
PropTech convertible trading debt securities | ||||||||||||||||||||||||||||||||||||||
Long-term investment securities at fair value (3) | ||||||||||||||||||||||||||||||||||||||
| Total long-term investments | ||||||||||||||||||||||||||||||||||||||
| Total assets | $ | $ | $ | $ | ||||||||||||||||||||||||||||||||||
Liabilities: | ||||||||||||||||||||||||||||||||||||||
Fair value of the derivative embedded within convertible debt | ( | |||||||||||||||||||||||||||||||||||||
Total liabilities | $ | $ | $ | $ | $ | ( | ||||||||||||||||||||||||||||||||
_____________________________
(1)Amounts included in Cash and cash equivalents on the consolidated balance sheets, except for $4,716 that is included in current restricted assets and $2,483 that is included in non-current restricted assets within Other assets.
(2)$162 included in Other assets on the consolidated balance sheets.
(3)In accordance with ASC Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.
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 the derivative embedded within the convertible debt and the fair value of the convertible debt itself was derived using a binomial lattice valuation model. The derivative had been classified as Level 3. A change in the fair value of the derivative embedded within the convertible debt was presented in the consolidated statements of operations. The value of the embedded derivative was 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 were based on market observable inputs. The interest rate component of the value of the note was computed by calibrating the yield as of the issuance date, such that the value of the convertible note was equal to the principal net of the original issue discount. This yield was adjusted by the change in spreads from the discount curve equivalent to the Company’s implied credit rating.
There were no changes in the fair value of the Level 3 assets for the three and six months ended June 30, 2026.
21
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
The unobservable inputs related to the valuation of the Level 3 assets were as follows as of June 30, 2026:
| Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||||||||||||||
| Fair Value at | ||||||||||||||||||||||||||
| June 30, 2026 | Valuation Technique | Unobservable Input | Range (Actual) | |||||||||||||||||||||||
| PropTech convertible trading debt securities | $ | Discounted cash flow | Interest rate | |||||||||||||||||||||||
| Maturity | Feb 2027 | |||||||||||||||||||||||||
| Volatility | ||||||||||||||||||||||||||
| Discount rate | ||||||||||||||||||||||||||
The unobservable inputs related to the valuation of the Level 3 assets were as follows as of December 31, 2025:
| Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||||||||||||||
| Fair Value at | ||||||||||||||||||||||||||
| December 31, 2025 | Valuation Technique | Unobservable Input | Range (Actual) | |||||||||||||||||||||||
| PropTech convertible trading debt securities | $ | Discounted cash flow | Interest rate | |||||||||||||||||||||||
| Maturity | Feb 2027 | |||||||||||||||||||||||||
| Volatility | ||||||||||||||||||||||||||
| Discount rate | ||||||||||||||||||||||||||
There were no Level 3 liabilities as of June 30, 2026 and December 31, 2025 at fair value to be measured due to repayment of the Convertible Notes. 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 or liabilities subject to fair value measurements as of June 30, 2026 and December 31, 2025.
22
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
11. SEGMENT INFORMATION
The Company is managed as a single operating and reporting segment and its CODM evaluates the operating results and revenues of the Company to make decisions. Consequently, the measure of segment profit or loss is the condensed consolidated net income (loss). The measure of segment assets is reported on the Company’s condensed consolidated balance sheets.
Financial information for the Company’s revenues and expenses for the three and six months ended June 30, 2026 and 2025 were as follows:
| Three Months Ended | Six Months Ended | ||||||||||||||||||||||
| June 30, | June 30, | ||||||||||||||||||||||
| 2026 | 2025 | 2026 | 2025 | ||||||||||||||||||||
| Total Revenues | $ | $ | $ | $ | |||||||||||||||||||
Operating expenses: | |||||||||||||||||||||||
Real estate agent commissions | |||||||||||||||||||||||
Sales and marketing | |||||||||||||||||||||||
Operations and support | |||||||||||||||||||||||
General and administrative | |||||||||||||||||||||||
Technology | |||||||||||||||||||||||
Depreciation and amortization | |||||||||||||||||||||||
| Antitrust litigation settlement expense | |||||||||||||||||||||||
Restructuring | |||||||||||||||||||||||
Gain on disposal of business | ( | ( | |||||||||||||||||||||
Operating loss | ( | ( | ( | ( | |||||||||||||||||||
Other income (expenses): | |||||||||||||||||||||||
| Interest expense | ( | ( | ( | ( | |||||||||||||||||||
| Interest income | |||||||||||||||||||||||
| Equity in (losses) earnings from equity-method investments | ( | ||||||||||||||||||||||
Change in fair value of the derivative embedded within convertible debt | ( | ( | |||||||||||||||||||||
Investment and other losses | ( | ( | ( | ( | |||||||||||||||||||
Loss before provision for income tax | ( | ( | ( | ( | |||||||||||||||||||
| Income tax expense | |||||||||||||||||||||||
| Net loss | ( | ( | ( | ( | |||||||||||||||||||
| Net (income) loss attributed to non-controlling interest | ( | ||||||||||||||||||||||
| Net loss attributed to Douglas Elliman Inc. | $ | ( | $ | ( | $ | ( | $ | ( | |||||||||||||||
For the three months ended June 30, 2026, $1,583 of stock-based compensation is included within General and administrative expenses and $71 is included within Operations and support expenses on the condensed consolidated statements of operations. For the three months ended June 30, 2025, $1,856 of stock-based compensation is included within General and administrative expenses and $268 is included within Operations and support expenses on the condensed consolidated statements of operations.
For the six months ended June 30, 2026, $2,682 of stock-based compensation is included within General and administrative expenses and $140 is included within Operations and support expenses on the condensed consolidated statements of operations. For the six months ended June 30, 2025, $3,626 of stock-based compensation is included within General and administrative expenses and $533 is included within Operations and support expenses on the condensed consolidated statements of operations.
23
DOUGLAS ELLIMAN INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS – (Continued)
(Dollars in Thousands, Except Per Share Amounts)
Unaudited
The Company’s identifiable assets and capital expenditures for June 30, 2026 and December 31, 2025 were as follows:
| Six Months Ended June 30, 2026 | ||||||||
Identifiable assets | $ | |||||||
| Capital expenditures | $ | |||||||
Year Ended December 31, 2025 | ||||||||
Identifiable assets | $ | |||||||
| Capital expenditures | $ | |||||||
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 $36,283
24
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, 2025 and Notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), and our Condensed Consolidated Financial Statements and related Notes as of and for the three and six months ended June 30, 2026. Any forward-looking statements are not historical facts, but rather they are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Any forward-looking statements are subject to several important factors, including those factors discussed under “Risk Factors” in our 2025 Annual Report and this Quarterly Report and “Special Note Regarding Forward-Looking Statements,” that could cause our actual results to differ materially from those indicated in such forward-looking statements. References to “Douglas Elliman” or “Company” refer to Douglas Elliman Inc. Certain references to “Douglas Elliman Realty” refer to the Company’s residential real estate brokerage business, including the operations of Douglas Elliman Realty, LLC and Douglas Elliman of California Inc., unless otherwise specified.
Overview
Douglas Elliman Inc. is a holding company that, through its subsidiaries, is engaged in the real estate services business, and invests in additional real estate services businesses.
We conduct residential real estate brokerage services through our subsidiary, Douglas Elliman Realty, which operates one of the largest residential brokerage companies in the New York metropolitan area and also conducts residential real estate brokerage operations in Florida, California, Texas, Colorado, Nevada, Massachusetts, Connecticut, Maryland, Virginia, New Jersey, New Hampshire and Washington D.C. We also offer, including through our subsidiaries and ventures, development marketing services (“Development Marketing”) and ancillary services, such as mortgage, title and escrow services. In addition, we have also invested in PropTech opportunities through our DOUG Ventures subsidiary.
25
Key Business Metrics and Non-GAAP Financial Measures
In addition to our financial results, prepared in accordance with U.S. GAAP, we use the following business metrics to evaluate our business and identify trends affecting our business. To evaluate our operating performance, we also use Adjusted EBITDA attributed to Douglas Elliman Inc., Adjusted EBITDA margin attributed to Douglas Elliman Inc. and financial measures for the last twelve months ended June 30, 2026 (“Non-GAAP Financial Measures”), which are financial measures not prepared in accordance with U.S. GAAP.
| Last twelve months ended | Six months ended June 30, | Year ended December 31, 2025 | |||||||||||||||||||||
| June 30, 2026 | 2026 | 2025 | |||||||||||||||||||||
Total transactions (1) | 21,078 | 10,178 | 10,438 | 21,338 | |||||||||||||||||||
Gross Transaction Value (in billions) (2) | $ | 39.1 | $ | 19.4 | $ | 20.1 | $ | 39.8 | |||||||||||||||
Average transaction value per transaction (in thousands) (3) | $ | 1,853.6 | $ | 1,904.2 | $ | 1,923.1 | $ | 1,863.4 | |||||||||||||||
Number of Principal Agents (4) | 4,393 | 4,393 | 4,714 | 4,492 | |||||||||||||||||||
Annual Retention (5) | 84 | % | N/A | N/A | 84 | % | |||||||||||||||||
Certain GAAP Financial Information | |||||||||||||||||||||||
Net income (loss) attributed to Douglas Elliman Inc. | $ | 24,867 | $ | (19,010) | $ | (28,658) | $ | 15,219 | |||||||||||||||
Net income (loss) margin | 2.47 | % | (3.82) | % | (5.46) | % | 1.47 | % | |||||||||||||||
Non-GAAP Financial Measures | |||||||||||||||||||||||
Adjusted EBITDA attributed to Douglas Elliman Inc. | $ | (20,957) | $ | (11,432) | $ | (4,465) | $ | (13,990) | |||||||||||||||
Adjusted EBITDA margin attributed to Douglas Elliman | (2.08) | % | (2.30) | % | (0.85) | % | (1.35) | % | |||||||||||||||
_____________________________
(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 Inc. is a non-GAAP financial measure that represents net income (loss) attributed to Douglas Elliman Inc. adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, gain on disposal of the Douglas Elliman Property Management (“DEPM”) business (including the operations of DEPM and related corporate overhead prior to its disposal), impairment of fixed assets, litigation, settlement and related expenses, net, executive severance and separation expenses, restructuring and other items (interest expense, interest income, equity in earnings (losses) from equity-method investments, change in fair value of the derivative embedded within convertible debt, loss on extinguishment of liability and investment and other (losses) gains). Adjusted EBITDA margin attributed to Douglas Elliman Inc. is the quotient of (x) Adjusted EBITDA attributed to Douglas Elliman Inc. 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 (loss)) 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 U.S. GAAP, such as operating income (loss), and net income (loss). 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.
26
Reconciliations of these non-GAAP measures have been provided in the table below (in thousands).
Computation of Adjusted EBITDA attributed to Douglas Elliman Inc.
| Last twelve months ended | Six months ended June 30, | Year ended December 31, 2025 | |||||||||||||||||||||||||||
| June 30, 2026 | 2026 | 2025 | |||||||||||||||||||||||||||
Net income (loss) attributed to Douglas Elliman Inc. | $ | 24,867 | $ | (19,010) | $ | (28,658) | $ | 15,219 | |||||||||||||||||||||
Interest expense | 1,999 | 5 | 3,075 | 5,069 | |||||||||||||||||||||||||
Interest income | (3,889) | (1,609) | (2,620) | (4,900) | |||||||||||||||||||||||||
Income tax expense | 3,560 | — | — | 3,560 | |||||||||||||||||||||||||
Net loss attributed to non-controlling interest | (658) | — | (251) | (909) | |||||||||||||||||||||||||
| Depreciation and amortization | 8,246 | 3,988 | 4,119 | 8,377 | |||||||||||||||||||||||||
EBITDA | 34,125 | (16,626) | (24,335) | 26,416 | |||||||||||||||||||||||||
Results from operations of disposed business (a) | (1,897) | — | (4,724) | (6,621) | |||||||||||||||||||||||||
Stock-based compensation (b) | 7,240 | 2,822 | 4,159 | 8,577 | |||||||||||||||||||||||||
Equity in earnings from equity-method investments (c) | (365) | (379) | (201) | (187) | |||||||||||||||||||||||||
Gain on disposal of business | (82,063) | (408) | — | (81,655) | |||||||||||||||||||||||||
Change in fair value of the derivative embedded within convertible debt | 10,767 | — | 17,715 | 28,482 | |||||||||||||||||||||||||
Loss on extinguishment of liability | 466 | — | — | 466 | |||||||||||||||||||||||||
Litigation, settlement and related expenses, net (d) | 7,588 | 2,909 | 2,958 | 7,637 | |||||||||||||||||||||||||
Executive severance and separation expense (benefit) (e) | 194 | — | (493) | (299) | |||||||||||||||||||||||||
Impairment of fixed assets | 2,275 | — | — | 2,275 | |||||||||||||||||||||||||
| Restructuring | 1,531 | 193 | 298 | 1,636 | |||||||||||||||||||||||||
Investment and other (losses) gains | (1,320) | 57 | 59 | (1,318) | |||||||||||||||||||||||||
| Adjusted EBITDA | (21,459) | (11,432) | (4,564) | (14,591) | |||||||||||||||||||||||||
| Adjusted EBITDA attributed to non-controlling interest | 502 | — | 99 | 601 | |||||||||||||||||||||||||
| Adjusted EBITDA attributed to Douglas Elliman | $ | (20,957) | $ | (11,432) | $ | (4,465) | $ | (13,990) | |||||||||||||||||||||
_____________________________
(a)Includes results from operations of Residential Management Group, LLC, which conducts business as DEPM, which was disposed on October 24, 2025. This adjustment also includes the corporate allocation to Douglas Elliman Realty, LLC (“DER”) from DEPM. The expenses associated with the corporate allocation to DEPM have continued at DER after the disposal.
(b)Represents amortization of stock-based compensation. For the last twelve months ended June 30, 2026, $6,594 of stock-based compensation is included within General and administrative expenses and $646 is included within Operations and support expenses on the condensed consolidated statements of operations. For the six months ended June 30, 2026, $2,682 of stock-based compensation is included within General and administrative expenses and $140 is included within Operations and support expenses on the condensed consolidated statements of operations. For the six months ended June 30, 2025, $3,626 of stock-based compensation is included within General and administrative expenses and $533 is included within Operations and support expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025, $7,538 of stock-based compensation is included within General and administrative expenses and $1,039 is included within Operations and support expenses on the consolidated statements of operations.
(c)Represents equity in earnings recognized from equity-method investments that are accounted for under the equity method and are not consolidated in our financial results.
(d)Represents unusual litigation, settlement and related expenses, net, incurred in connection with industry-wide antitrust class action lawsuits and other matters related to employees and agents. For the last twelve months ended June 30, 2026, we incurred such expenses of $7,588, net of amounts recovered from insurance, of which $2,041 is included in Antitrust litigation settlement expense and $5,547 is included within General and administrative expenses on the condensed consolidated statements of operations. For the six months ended June 30, 2026, we incurred such expenses of $2,909, net of amounts recovered from insurance, of which $2,041 is included in Antitrust litigation settlement expense and $868 is included within General and administrative expenses on the condensed consolidated statements of operations. For the six months ended June 30, 2025, we incurred such expenses of $2,958, which were included within General and administrative expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025, we incurred such expenses of $7,637, which were included within General and administrative expenses on the consolidated statements of operations.
(e) For the last twelve months ended June 30, 2026, expense of $194 is included within General and administrative expenses on the condensed consolidated statement of operations. For the six months ended June 30, 2025, benefit of $493, net of amounts recovered from insurance, is included within General and administrative expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025, the benefit of $299 includes insurance proceeds received and is included within General and administrative expenses on the consolidated statement of operations.
27
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 Form 10-Q.
The primary components of our operating expenses are summarized below:
•Sales and marketing. Sales and marketing expenses consist 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 expenses consist 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 expenses consist primarily of compensation, stock-based compensation expense and other personnel-related costs for administrative employees, including executives, finance and accounting, legal, human resources and communications, property management (prior to October 25, 2025) and escrow services as well as the occupancy costs for our headquarters and other offices supporting our administrative functions.
•Technology. Technology expenses consist primarily of compensation and other personnel-related costs for employees in the product, engineering and technology functions, website hosting expenses, software licenses and equipment, third-party consulting costs, technology data licenses and other related expenses associated with the implementation of our technology initiatives.
The presentation of our business’s financial information for the three and six months ended June 30, 2026 and 2025 is reported as one segment. For more information, see Note 11, “Segment Information” to our condensed consolidated financial statements.
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Three months ended June 30, 2026 Compared to the Three months ended June 30, 2025
The following table sets forth our revenues and operating loss for the three months ended June 30, 2026 compared to the three months ended June 30, 2025:
| % of Total Revenue | |||||||||||||||||||||||||||||||||||
| Three Months Ended June 30, | 2025 to 2026 | Three Months Ended June 30, | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | 2026 | 2025 | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 283,449 | $ | 271,366 | $ | 12,083 | 4 | % | 100 | % | 100 | % | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Real estate agent commissions | $ | 224,259 | $ | 204,594 | $ | 19,665 | 10 | % | 79 | % | 75 | % | |||||||||||||||||||||||
| Sales and marketing | 19,731 | 20,069 | (338) | (2) | % | 7 | % | 7 | % | ||||||||||||||||||||||||||
| Operations and support | 17,771 | 17,775 | (4) | — | % | 6 | % | 7 | % | ||||||||||||||||||||||||||
| General and administrative | 17,795 | 26,177 | (8,382) | (32) | % | 6 | % | 10 | % | ||||||||||||||||||||||||||
Technology | 5,591 | 5,766 | (175) | (3) | % | 2 | % | 2 | % | ||||||||||||||||||||||||||
Depreciation and amortization | 1,989 | 2,219 | (230) | (10) | % | 1 | % | 1 | % | ||||||||||||||||||||||||||
Restructuring | 146 | 298 | (152) | (51) | % | — | % | — | % | ||||||||||||||||||||||||||
Gain on disposal of business | (408) | — | (408) | — | % | — | % | — | % | ||||||||||||||||||||||||||
| Operating loss | (3,425) | (5,532) | 2,107 | (38) | % | (1) | % | (2) | % | ||||||||||||||||||||||||||
Other income (expenses), net | 691 | (17,093) | 17,784 | (104) | % | — | % | (6) | % | ||||||||||||||||||||||||||
Loss before provision for income taxes | (2,734) | (22,625) | 19,891 | (88) | % | (1) | % | (8) | % | ||||||||||||||||||||||||||
Income tax expense | — | — | — | — | % | — | % | — | % | ||||||||||||||||||||||||||
Net loss | (2,734) | (22,625) | 19,891 | (88) | % | (1) | % | (8) | % | ||||||||||||||||||||||||||
| Net income attributed to non-controlling interest | — | (48) | 48 | (100) | % | — | % | — | % | ||||||||||||||||||||||||||
Net loss attributed to Douglas Elliman Inc. | $ | (2,734) | $ | (22,673) | $ | 19,939 | (88) | % | (1) | % | (8) | % | |||||||||||||||||||||||
Revenues. Our revenues for the three months ended June 30, 2026 and 2025, respectively, were as follows:
| Three Months Ended June 30, | 2025 to 2026 | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Revenues | $ | 283,449 | $ | 271,366 | $ | 12,083 | 4.5 | % | |||||||||||||||
| Revenues from property management business | — | 10,465 | (10,465) | ||||||||||||||||||||
| Revenues excluding revenues from property management business | $ | 283,449 | $ | 260,901 | $ | 22,548 | 8.6 | % | |||||||||||||||
The increase in revenues, excluding revenues from the property management business, was primarily due to an increase in commissions and other brokerage income of $22,187, which was driven by an increase in revenues from existing home sales in Florida of $28,223, and $3,405 in the Northeast region, which excludes New York City. Additionally, revenues from Development Marketing increased by $4,179 and the increase was from our Florida and Texas markets. These increases were partially offset by declines from the sales of existing homes in the West region of $7,172, which were associated with Colorado and California, and New York City of $6,523 for the 2026 period compared to the 2025 period.
29
Operating expenses. Our operating expenses for the three months ended June 30, 2026 and 2025, respectively, were as follows:
| Three Months Ended June 30, | 2025 to 2026 | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Operating expenses | $ | 286,874 | $ | 276,898 | $ | 9,976 | 3.6 | % | |||||||||||||||
| Gain on disposal of property management business | (408) | — | (408) | ||||||||||||||||||||
| Operating expenses from property management business | — | 7,889 | (7,889) | ||||||||||||||||||||
| Operating expenses excluding property management business | $ | 287,282 | $ | 269,009 | $ | 18,273 | 6.8 | % | |||||||||||||||
The increase in operating expenses was due primarily to an increase in real estate brokerage commissions expense of $19,665 arising from the increase in revenues from commissions and other brokerage income, which was offset by the absence of expenses of our property management business, which was disposed in October 2025.
Real Estate Agent Commissions. As a result of an increase in our commissions and other brokerage income, our real estate agent commissions expense was $224,259 for the three months ended June 30, 2026 compared to $204,594 for the three months ended June 30, 2025, representing an increase of $19,665. Real estate agent commissions expense, as a percentage of revenues, increased to 79.1% for the three months ended June 30, 2026 compared to 75.4% (78.4% excluding property management revenues) for the three months ended June 30, 2025. The increase in real estate agent commissions expense as a percentage of revenues in the 2026 period was primarily driven by a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which customarily pay higher commission rates.
Gross profit. We define gross profit as the remaining portion after real estate agent commissions are subtracted from our revenues. Our gross profit for the three months ended June 30, 2026 and 2025, respectively, was as follows:
| Three Months Ended June 30, | 2025 to 2026 | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Revenues | $ | 283,449 | $ | 271,366 | $ | 12,083 | |||||||||||||||||
| Real estate agent commission expense | 224,259 | 204,594 | 19,665 | ||||||||||||||||||||
| Gross profit | 59,190 | 66,772 | (7,582) | (11.4) | % | ||||||||||||||||||
| Gross profit from property management business | — | 10,465 | (10,465) | ||||||||||||||||||||
| Gross profit excluding property management business | $ | 59,190 | $ | 56,307 | $ | 2,883 | 5.1 | % | |||||||||||||||
| Gross profit as a percentage of revenues | 20.9 | % | 24.6 | % | (3.7) | % | |||||||||||||||||
| Gross profit, excluding property management business, as a percentage of revenues | 20.9 | % | 21.6 | % | (0.7) | % | |||||||||||||||||
Our gross profit, as a percentage of revenues, declined due to the absence of property management revenues as well as a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which customarily pay higher commission rates.
30
Operating expenses, excluding real estate agent commissions expense. Our operating expenses, excluding real estate agent commissions expense, for the three months ended June 30, 2026 and 2025, respectively, were as follows:
| Three Months Ended June 30, | 2025 to 2026 | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Operating expenses | $ | 286,874 | $ | 276,898 | $ | 9,976 | 3.6 | % | |||||||||||||||
| Real estate agent commission expense | 224,259 | 204,594 | 19,665 | 9.6 | % | ||||||||||||||||||
| Operating expenses, excluding real estate agent commissions expense | 62,615 | 72,304 | (9,689) | (13.4) | % | ||||||||||||||||||
| Gain on disposal of property management business | (408) | — | (408) | ||||||||||||||||||||
| Operating expenses from property management business | — | 7,889 | (7,889) | ||||||||||||||||||||
| Operating expenses, excluding real estate agent commissions expense and property management business | $ | 63,023 | $ | 64,415 | $ | (1,392) | (2.2) | % | |||||||||||||||
Sales and Marketing. Sales and marketing expenses were $19,731 for the three months ended June 30, 2026 compared to $20,069, which included $280 associated with our property management business, for the three months ended June 30, 2025.
Operations and support. Operations and support expenses were $17,771 for the three months ended June 30, 2026 compared to $17,775, which included $795 associated with our property management business, for the three months ended June 30, 2025.
General and administrative. General and administrative expenses were $17,795 for the three months ended June 30, 2026 compared to $26,177 for the three months ended June 30, 2025, representing a decrease of $8,382, of which $6,209 was associated with our property management business, for the six months ended June 30, 2025 and also reflects a decline in expenses associated with professional services in the 2026 period.
Technology. Technology expenses were $5,591 for the three months ended June 30, 2026 compared to $5,766, which included $535 associated with our property management business, for the three months ended June 30, 2025.
Operating loss. Our operating loss for the three months ended June 30, 2026 and 2025, respectively, was as follows:
| Three Months Ended June 30, | 2025 to 2026 | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Operating loss | $ | (3,425) | $ | (5,532) | $ | 2,107 | |||||||||||||||||
| Gain on disposal of property management business | (408) | — | (408) | ||||||||||||||||||||
| Operating income from property management business | — | 2,576 | (2,576) | ||||||||||||||||||||
| Operating loss excluding property management business | $ | (3,833) | $ | (8,108) | $ | (4,275) | (52.7) | % | |||||||||||||||
The decline in operating loss was primarily due to the increase in gross profit, after excluding our property management business as well as lower operating expenses in the 2026 period and was partially offset by the absence of operating income from our property management business in the 2026 period.
Other income (expenses). Other income was $691 for the three months ended June 30, 2026 compared to other expense of $17,093 for the three months ended June 30, 2025. For the three months ended June 30, 2026, other income consisted primarily of interest income of $719. For the three months ended June 30, 2025, other expense primarily consisted of a $16,969 loss from the change in fair value of the derivative embedded within convertible debt and interest expense of $1,545, partially offset by interest income of $1,259.
Loss before provision for income taxes. Loss before income taxes was $2,734 and $22,625 for the three months ended June 30, 2026 and 2025, respectively.
Income tax expense. There was no income tax expense for the three months ended June 30, 2026 and 2025. We calculate our provision for income taxes for interim reporting periods based upon our estimate of the annual effective income tax rate based on full year projections, which does not include the impact of discrete items. We then apply the annual effective income tax rate against year-to-date pretax income to record income tax expense and then adjust our provision for income tax expense for any discrete items, if any. We did not record a provision for income taxes during the three months ended June 30, 2026 and 2025, respectively, because we had established a valuation allowance for the full amount of our deferred tax assets.
31
Six months ended June 30, 2026 Compared to Six months ended June 30, 2025
The following table sets forth our revenues and operating loss for the six months ended June 30, 2026 compared to the six months ended June 30, 2025:
| % of Total Revenue | |||||||||||||||||||||||||||||||||||
| Six Months Ended June 30, | 2025 to 2026 | Six Months Ended June 30, | |||||||||||||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | 2026 | 2025 | ||||||||||||||||||||||||||||||
| (Dollars in thousands) | |||||||||||||||||||||||||||||||||||
| Revenues | $ | 497,782 | $ | 524,769 | $ | (26,987) | (5) | % | 100 | % | 100 | % | |||||||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||||||||||||||
| Real estate agent commissions | $ | 391,650 | $ | 391,119 | $ | 531 | — | % | 79 | % | 75 | % | |||||||||||||||||||||||
| Sales and marketing | 37,468 | 39,808 | (2,340) | (6) | % | 8 | % | 8 | % | ||||||||||||||||||||||||||
| Operations and support | 34,011 | 35,503 | (1,492) | (4) | % | 7 | % | 7 | % | ||||||||||||||||||||||||||
| General and administrative | 38,946 | 53,502 | (14,556) | (27) | % | 8 | % | 10 | % | ||||||||||||||||||||||||||
| Technology | 10,829 | 11,301 | (472) | (4) | % | 2 | % | 2 | % | ||||||||||||||||||||||||||
| Depreciation and amortization | 3,988 | 4,119 | (131) | (3) | % | 1 | % | 1 | % | ||||||||||||||||||||||||||
| Antitrust litigation settlement expense | 2,041 | — | 2,041 | 100 | % | — | % | — | % | ||||||||||||||||||||||||||
| Restructuring | 193 | 298 | (105) | (35) | % | — | % | — | % | ||||||||||||||||||||||||||
Gain on disposal of business | (408) | — | (408) | 100 | % | — | % | — | % | ||||||||||||||||||||||||||
| Operating loss | (20,936) | (10,881) | (10,055) | 92 | % | (4) | % | (2) | % | ||||||||||||||||||||||||||
| Other income (expenses), net | 1,926 | (18,028) | 19,954 | (111) | % | — | % | (3) | % | ||||||||||||||||||||||||||
Loss before provision for income taxes | (19,010) | (28,909) | 9,899 | (34) | % | (4) | % | (6) | % | ||||||||||||||||||||||||||
Income tax expense | — | — | — | — | % | — | % | — | % | ||||||||||||||||||||||||||
Net loss | (19,010) | (28,909) | 9,899 | (34) | % | (4) | % | (6) | % | ||||||||||||||||||||||||||
Net loss attributed to non-controlling interest | — | 251 | (251) | (100) | % | — | % | — | % | ||||||||||||||||||||||||||
Net loss attributed to Douglas Elliman Inc. | $ | (19,010) | $ | (28,658) | $ | 9,648 | (34) | % | (4) | % | (5) | % | |||||||||||||||||||||||
Revenues. Our revenues for the six months ended June 30, 2026 and 2025, respectively, were as follows:
| Six Months Ended June 30, | 2025 to 2026 | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Revenues | $ | 497,782 | $ | 524,769 | $ | (26,987) | (5.1) | % | |||||||||||||||
| Revenues from property management business | — | 19,957 | (19,957) | ||||||||||||||||||||
| Revenues excluding revenues from property management business | $ | 497,782 | $ | 504,812 | $ | (7,030) | (1.4) | % | |||||||||||||||
The decline in revenues, excluding revenues from our property management business, was primarily due to lower revenues from commissions and other brokerage income. For the six months ended June 30, 2026, our commissions and other brokerage income from existing homes sales decreased by $21,248 in New York City, $14,782 in the West region, and $339 in the Northeast region (excluding New York City). Additionally, our revenues from Development Marketing decreased by $2,942, primarily related to the Florida and New York City markets, during the 2026 period compared to 2025. However, these declines were partially offset by an increase in commissions and other brokerage income from existing home sales in the Florida market of $32,087 during the six months ended June 30, 2026 compared to the 2025 period.
32
Operating expenses. Our operating expenses for the six months ended June 30, 2026 and 2025, respectively, were as follows:
| Six Months Ended June 30, | 2025 to 2026 | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Operating expenses | $ | 518,718 | $ | 535,650 | $ | (16,932) | (3.2) | % | |||||||||||||||
| Gain on disposal of property management business | (408) | — | (408) | ||||||||||||||||||||
| Operating expenses from property management business | — | 15,500 | (15,500) | ||||||||||||||||||||
| Operating expenses excluding property management business | $ | 519,126 | $ | 520,150 | $ | (1,024) | (0.2) | % | |||||||||||||||
The decrease was primarily due to the absence of expenses of our property management business, as well as a decline in expenses from professional services.
Real Estate Agent Commissions. Our real estate agent commissions expense was $391,650 for the six months ended June 30, 2026, compared to $391,119 for the six months ended June 30, 2025, representing an increase of $531. Real estate agent commissions expense, as a percentage of revenues, increased to 78.7% for the six months ended June 30, 2026, compared to 74.5% (77.5% excluding property management revenues) for the six months ended June 30, 2025. This increase in real estate agent commissions expense as a percentage of revenues in 2026 period was primarily driven by a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which customarily pay higher commission rates.
Gross profit. We define gross profit as the remaining portion after real estate agent commissions are subtracted from our revenues. Our gross profit for the six months ended June 30, 2026 and 2025, respectively, was as follows:
| Six Months Ended June 30, | 2025 to 2026 | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Revenues | $ | 497,782 | $ | 524,769 | $ | (26,987) | |||||||||||||||||
| Real estate agent commission expense | 391,650 | 391,119 | 531 | ||||||||||||||||||||
| Gross profit | 106,132 | 133,650 | (27,518) | (20.6) | % | ||||||||||||||||||
| Gross profit from property management business | — | 19,957 | (19,957) | ||||||||||||||||||||
| Gross profit excluding property management business | $ | 106,132 | $ | 113,693 | $ | (7,561) | (6.7) | % | |||||||||||||||
| Gross profit as a percentage of revenues | 21.3 | % | 25.5 | % | (4.2) | % | |||||||||||||||||
| Gross profit, excluding property management business, as a percentage of revenues | 21.3 | % | 22.5 | % | (1.2) | % | |||||||||||||||||
Our gross profit, as a percentage of revenues, declined due to the absence of property management revenues and was also attributable to a shift in the revenue mix, driven by a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which had a lower gross margin during the period.
Operating expenses, excluding real estate agent commissions expense. Our operating expenses, excluding real estate agent commissions expense, for the six months ended June 30, 2026 and 2025, respectively, were as follows:
| Six Months Ended June 30, | 2025 to 2026 | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Operating expenses | $ | 518,718 | $ | 535,650 | $ | (16,932) | (3.2) | % | |||||||||||||||
| Real estate agent commission expense | 391,650 | 391,119 | 531 | 0.1 | % | ||||||||||||||||||
| Operating expenses, excluding real estate agent commissions expense | 127,068 | 144,531 | (17,463) | (12.1) | % | ||||||||||||||||||
| Gain on disposal of property management business | (408) | — | (408) | ||||||||||||||||||||
| Operating expenses from property management business | — | 15,500 | (15,500) | ||||||||||||||||||||
| Operating expenses, excluding real estate agent commissions expense and property management business | $ | 127,476 | $ | 129,031 | $ | (1,555) | (1.2) | % | |||||||||||||||
Sales and Marketing. Sales and marketing expenses were $37,468 for the six months ended June 30, 2026, compared to $39,808, which included $555 associated with our property management business, for the six months ended June 30, 2025. The decline in expenses is attributable to expense rationalization efforts to streamline our sales and marketing process.
Operations and support. Operations and support expenses were $34,011 for the six months ended June 30, 2026, compared to $35,503, which included $1,736 associated with our property management business, for the six months ended June 30, 2025.
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General and administrative. General and administrative expenses were $38,946 for the six months ended June 30, 2026, compared to $53,502 for the six months ended June 30, 2025, representing a decline of $14,556, of which $11,945 was associated with our property management business, for the six months ended June 30, 2025 and also reflects a decline in expenses associated with professional services in the 2026 period.
Technology. Technology expenses were $10,829 for the six months ended June 30, 2026, compared to $11,301, which included $1,124 associated with our property management business, for the six months ended June 30, 2025.
Operating loss. Our operating loss for the six months ended June 30, 2026 and 2025, respectively, was as follows:
| Six Months Ended June 30, | 2025 to 2026 | ||||||||||||||||||||||
| 2026 | 2025 | $ Change | % Change | ||||||||||||||||||||
| Operating loss | $ | (20,936) | $ | (10,881) | $ | (10,055) | |||||||||||||||||
| Gain on disposal of property management business | (408) | — | (408) | ||||||||||||||||||||
| Operating income from property management business | — | 4,457 | (4,457) | ||||||||||||||||||||
| Operating loss excluding property management business | $ | (21,344) | $ | (15,338) | $ | 6,006 | 39.2 | % | |||||||||||||||
The increase in operating loss was primarily due to the decline in gross profit, after excluding our property management business, as well as the absence of operating income from our property management business in the 2026 period, which was offset by a decline of operating expenses, after excluding real estate agent commissions expense and our property management business, in the 2026 period.
Other income (expenses). Other income was $1,926 for the six months ended June 30, 2026, compared to other expense of $18,028 for the six months ended June 30, 2025. For the six months ended June 30, 2026, other income primarily consisted of interest income of $1,609. For the six months ended June 30, 2025, other expense primarily consisted of the $17,715 loss from the change in fair value of the derivative embedded within convertible debt and interest expense of $3,075, partially offset by interest income of $2,620.
Loss before provision for income taxes. Loss before income taxes was $19,010 and $28,909 for the six months ended June 30, 2026 and 2025, respectively.
Income tax expense. There was no income tax expense for the six months ended June 30, 2026 and 2025. We calculate our provision for income taxes for interim reporting periods based upon our estimate of the annual effective income tax rate based on full year projections, which does not include the impact of discrete items. We then apply the annual effective income tax rate against year-to-date pretax income to record income tax expense and then adjust our provision for income tax expense for any discrete items, if any. We did not record a provision for income taxes during the six months ended June 30, 2026 and 2025, respectively, because we had established a valuation allowance for the full amount of our deferred tax assets.
Liquidity and Capital Resources
Cash, cash equivalents and restricted cash declined by $8,840 to $113,869, which included $8,644 of restricted cash, during the six months ended June 30, 2026. This compares to an increase of $2,488, to $144,709, which included restricted cash of $8,375, during the six months ended June 30, 2025.
Cash used in operations was $7,739 for the six months ended June 30, 2026, compared to $4,974 for the six months ended June 30, 2025. The increase in the cash used in operations in the 2026 period was attributable to an increase in operating loss as well as increased payments of accrued compensation in 2026 and income tax liabilities, which were attributable to the gain on the October 2025 disposal of our property management business, in the 2026 period. These amounts were offset by an increase to the net changes in contract liabilities and related contract assets, which was associated with increased progress payments from our development marketing business, as well as the receipt of a portion of the settlement related to the Strougo litigation for the six months ended June 30, 2026.
Cash used in investing activities was $1,071 for the six months ended June 30, 2026, compared to cash provided by investing activities of $7,548 for the six months ended June 30, 2025. For the six months ended June 30, 2026, cash used in investing activities was comprised primarily of capital expenditures of $943 and the purchase of subsidiaries of $100 due to the acquisition of the non-controlling interest of Real Estate Associates of Houston LLC. For the six months ended June 30, 2025, cash provided by investing activities was comprised of proceeds from the sale of short-term investments of $97,677 and was partially offset by the purchase of short-term investments of $87,873 and capital expenditures of $2,251.
Cash used in financing activities was $30 for the six months ended June 30, 2026, compared to $86 for the six months ended June 30, 2025, which was comprised of withholding of shares as payment of payroll tax liabilities.
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We continue to evaluate our capital structure and current market conditions related to our capital structure. We regularly review and evaluate potential acquisitions, joint ventures, divestitures and other strategic transactions. For example, 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, the repurchase of our common stock in open market transactions. These initiatives may limit liquidity otherwise available to us.
We had cash and cash equivalents of approximately $105,225 as of June 30, 2026 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, as well as expected cash flows from our operations and proceeds from any financings to the extent available, should be sufficient to meet our liquidity needs over the next twelve months.
Real Estate Brokerage Antitrust Litigation Settlements. On April 26, 2024, we entered into a settlement agreement to resolve all claims on a nationwide basis in the pending seller class action litigations, Gibson v. NAR, No. 4:23-cv-00788-SRB (W.D. Mo.) and Umpa v. NAR, 4:23-cv-00945-SRB (W.D. Mo.) alleging claims on behalf of sellers against Douglas Elliman Inc. and our subsidiaries. That settlement agreement is currently being challenged on appeal in the U.S. Court of Appeals for the Eighth Circuit. Under the settlement agreement, we paid $7,750 and $5,000 into an escrow fund on June 12, 2024 and December 29, 2025, respectively, and have also agreed to pay $5,000 contingent payment subject to certain financial contingencies on or before December 31, 2027. The remaining contingent payment may be accelerated under certain circumstances.
In April 2026, the Company opted into a settlement agreement with the purported class of home buyers in Tuccori v. At World Properties, LLC, et al. (N.D. Ill.), a case that consolidated certain purported class actions lawsuits filed by home buyers. This settlement is structured to resolve the claims asserted against us in, or arising from the same factual predicates as, the Lutz vs. HomeServices of America, Inc. et al lawsuit, pending in the U.S. District Court for the Southern District of Florida, No. 4:24-cv-10040 (KMM). Although we were not a defendant in Tuccori, the opt‑in settlement releases us, our subsidiaries and affiliated agents from the claims against us in Lutz. Under the Tuccori settlement agreement, we paid $100 into an escrow fund on June 23, 2026 and agreed to make three additional $647 payments within one, two and three years of the effective date of the settlement, respectively. The amount payable by us under the Tuccori settlement agreement was recorded as a noncurrent liability at June 30, 2026. The Tuccori settlement agreement is subject to court approval, and a final approval hearing is scheduled for November 2, 2026.
Derivative Litigation Settlement. On November 14, 2025, a Verified Stockholder Derivative Complaint, Barbara Strougo derivatively on behalf of Douglas Elliman, Inc. vs. Howard M. Lorber, et al., also known as the Strougo Litigation, was filed in the Court of Chancery of the State of Delaware on behalf of Douglas Elliman Inc., as nominal defendant, against certain of its current and former directors and officers. The parties to the Strougo Litigation reached an agreement to settle it on the terms and conditions set forth in a Stipulation and Agreement of Compromise, Settlement, and Release that was filed with the Chancery Court on February 19, 2026. The Strougo settlement agreement provides for the final dismissal of the Strougo Litigation in exchange for (i) a settlement payment to us of $17,500, subject to reductions for attorneys’ fees and expenses, and (ii) the implementation by us of certain corporate-governance enhancements and reforms. Certain of our insurers agreed to fund the settlement. The Chancery Court held a settlement fairness hearing related to the Strougo settlement agreement on June 29, 2026 and, on July 7, 2026, entered a Final Order and Judgment approving the Strougo settlement agreement and awarding plaintiff’s counsel attorneys’ fees and expenses in the amount of $1,870, to be deducted from the $17,500 settlement payment. We received $2,500 of the settlement payment in June 2026 and we recorded and deferred within other current liabilities as of June 30, 2026 because the Strougo settlement agreement had not been approved by the Chancery Court on June 30, 2026. The additional $15,000 was received in July 2026.
Other litigation. Litigation is subject to uncertainties and it is possible that there could be adverse developments in the Gibson/Umpa appeals, the buyer-side class action Lutz lawsuit, the Strougo lawsuit and other pending cases. These cases include cases related to two real estate sales persons formerly associated with us, who have been accused of sexual assault and related wrongdoing, where Douglas Elliman Inc., DER and our former Chief Executive Officer have been named as defendants (Koste et al vs. Alexander et al in the Supreme Court of the State of New York and Rodriguez vs. Alexander et al in the U.S. District Court for the Southern District of Florida). We deny liability and are vigorously defending claims made against us in the Koste and Rodriguez cases. For more information, see Note 8, “Commitments and Contingencies,” to our condensed consolidated financial statements.
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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. Except as otherwise discussed above, 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 us or our subsidiaries as well as 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 brokerage-related litigation. For more information, see Note 8, “Commitments and Contingencies” to our condensed consolidated financial statements.
Technology Adoption and Implementation. In June 2026, we executed an agreement to purchase technology licenses, products related to our workspace platform and certain cloud computing services. As part of the agreement, we have received various credits, which may offset or reduce the commitment, as well as other discounts. We may elect to cancel the remaining commitment in return for a cancellation fee of 35% of total remaining commitment amount and loss of any discounts, remaining credits or other incentives provided under the agreement. For additional information regarding our purchase obligations, see Note 8 “Commitments and Contingencies” 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 and, in connection with the sale of our property management division, certain known liabilities as of October 24, 2025. 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 June 30, 2026, 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 June 30, 2026 and December 31, 2025, we had outstanding approximately $2,811 and $2,645, respectively, of letters of credit, 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 of $36,283 as of each of June 30, 2026 and December 31, 2025, respectively, and corresponding escrow funds in holding of the same amount. While 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), the subsidiary of ours remains contingently liable for the disposition of these deposits.
Critical Accounting Estimates and Policies
Our condensed consolidated financial statements and accompanying notes have been prepared in accordance with U.S. GAAP. The preparation of these condensed consolidated financial statements requires us to make judgments, estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses and related disclosures. We base our estimates on historical experience and on various other assumptions that we believe are reasonable under the circumstances. We evaluate our estimates and assumptions on an ongoing basis. Actual results may differ from these estimates and therefore, if material, our future financial statements will be affected.
There have been no material changes to our critical accounting policies and estimates disclosed in our 2025 Form 10-K. For additional information about our critical accounting policies and estimates, see the disclosure included in our 2025 Form 10-K, as well as Note 1 to our condensed consolidated financial statements included in this Quarterly Report.
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.
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New Accounting Pronouncements
Refer to Note 1, “Summary of Significant Accounting Policies” to our condensed consolidated financial statements for further information on New Accounting Pronouncements.
Legislation, Regulation, Taxation and Litigation
There are no material changes from the Legislation, Regulation, Taxation and Litigation section set forth in Item 7, “Management's Discussion and Analysis of Financial Condition and Results of Operations,” of our 2025 Annual Report.
See Item 1A. “Risk Factors,” which describes risks associated with litigation and Note 8, “Commitments and Contingencies,” to our condensed consolidated financial statements, which contain a description of litigation.
SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information, this Form 10-Q 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, geopolitical instability, 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 ability of the Company to effectively develop and integrate artificial intelligence (“AI”) technologies into our business and expectations regarding the timing, cost and productivity improvements to be obtained by such initiatives;
•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, conduct business with or acquire;
•adverse changes in global, national, regional and local economic and market conditions,
•the impacts of the One Big Beautiful Bill Act of 2025 and the Inflation Reduction Act of 2022, including the continued impact on the markets of our business;
•effects of industry competition and consolidation;
•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; and
•the additional factors described under Item 1A, “Risk Factors,” in our 2025 Annual Report as updated in our quarterly 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” of our 2025 Annual Report, as updated in our quarterly report.
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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 and we undertake no obligation to update any of these statements to reflect events or circumstances occurring after the date of this quarterly report. New factors may emerge, and it is not possible to predict all factors that may affect our business and operations.
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.
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PART II
OTHER INFORMATION
ITEM 1. LEGAL PROCEEDINGS
Reference is made to Note 8, “Commitments and 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 2025 Annual Report, except as set forth below:
The failure of third-party vendors or partners to perform as we expect or appropriately manage risks, or our failure to adequately monitor third-party performance, could result in harm to our reputation and ability to generate revenue.
We engage with third-party vendors and partners in a variety of ways, including strategic collaborations and the development and delivery of applications, employing key internal operational processes and critical client systems. In many instances, these third parties are in direct contact with our agents and customers to deliver services on our behalf or to fulfill their role in the applicable collaboration. In some instances, these third parties may be in possession of personal information of our customers, agents or employees or other commercially sensitive business information. In other instances, these third parties may play a critical role in developing products and services central to our business strategy or in implementing information technology transformation. Our third-party partners may encounter difficulties in the provision of required deliverables or may fail to provide us with timely services, which may delay us, and also may make decisions that may harm us or that are contrary to our best interests, including by pursuing opportunities outside of the applicable Company project or program, to the detriment of such project or program.
If our third-party partners or vendors (or their respective vendors) were to fail to perform as we expect, fail to appropriately manage risks, provide diminished or delayed services to us or our customers or face cybersecurity breaches of their information technology systems, or if we fail to adequately monitor their performance, our operations and reputation could be materially adversely affected, in particular if any such failures related to the development of key products or the transformation of our information technology infrastructure. Depending on the function involved, vendor or third-party application failure or error may lead to increased costs, business disruption, distraction to management, processing inefficiencies, the loss of or damage to intellectual property or sensitive data through security breaches or otherwise, effects on financial reporting, loss of customers, damage to our reputation, or litigation, regulatory claims and/or remediation costs (including claims based on theories of breach of contract, vicarious liability, negligence or failure to comply with laws and regulations). Third-party vendors and partners (or their respective vendors) may also fail to maintain or keep adequate levels of insurance, which could result in a loss to us or expose us to litigation. The actions of our third-party vendors and unaffiliated third-party developers are beyond our control. We face the same risks with respect to subcontractors that might be engaged by our third-party vendors and partners or their subcontractors.
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The use of technology that incorporates AI presents various operational, regulatory and reputational risks and may lead to changes in our industry. If we fail to implement AI technology successfully or if any of such risks materialize, it may adversely affect our business and results of operations.
We have integrated, and plan to further integrate, AI technologies in our business, including the launch of our proprietary intelligence business, Elius, and our adoption of Google Cloud technology. We expect these initiatives to improve our productivity and operating efficiency, reduce costs and create potential new revenue opportunities. However, as with many technological innovations, AI presents great promise but also risks and challenges that could adversely affect our business. There can be no assurance that our implementation of AI technology will be successful or that we will realize the desired or anticipated benefits from AI technology. These benefits are based on assumptions and expectations that are inherently uncertain. We may not implement these initiatives on the anticipated timetables, and such initiatives may not achieve sufficient adoption by our employees, agents or clients. In addition, such technologies developed or deployed through these initiatives may also not perform as expected, may become obsolete, or may not generate the anticipated efficiencies, revenues or cost and productivity improvements. Also, capital expenditures and other costs associated with the initiatives may exceed our expectations or be incurred before, or without, the realization of corresponding benefits. We may also need to attract and retain personnel with specialized skills and expertise to support our AI technology initiatives.
As we integrate, use and apply AI technologies of third parties, we are dependent in part on the manner in which those third parties develop such AI technologies. Failures or changes in these systems, including errors, unreliable performance, cybersecurity incidents, changes to terms of use or unfavorable changes to contractual or pricing terms, could adversely affect our use and ability to obtain the expected benefits of AI technologies, as well as our business. We may also become dependent on particular providers or technologies, which could limit our ability to transition to alternative providers, negotiate favorable terms or adapt to technological or regulatory changes. Moreover, we may have limited visibility into how third-party AI models are trained, the integrity of their underlying datasets, and the adequacy of embedded controls. Sensitive, proprietary, or confidential information of Douglas Elliman, our clients, employees, agents and business partners could be leaked, disclosed, or revealed as a result of or in connection with the use of AI technologies by our clients, employees or agents. Any such information input into a third-party generative AI or machine learning platform could be revealed to others, including if information is used to train the third party's generative AI or machine learning models. Additionally, where a generative AI or machine learning model ingests personal information and makes connections using such data, those technologies may reveal other sensitive, proprietary, or confidential information generated by the model. Moreover, generative AI or machine learning models may create incomplete, inaccurate, or otherwise flawed outputs, which may appear correct, as well as unintentionally biased outputs, which may implicate fair housing and anti-discrimination laws. AI technologies are also known to exhibit “hallucinatory behavior” and may produce unexpected results and behave in unpredictable ways, including by generating irrelevant, nonsensical or factually incorrect content. Due to these issues, these models could lead us to make flawed decisions that could result in adverse consequences to us, including exposure to reputational and competitive harm, customer loss, and legal liability. In addition, uncertainty in the legal and regulatory regime relating to AI technologies may require significant resources to modify and maintain business practices to comply with applicable law, the nature of which cannot be determined at this time. Several jurisdictions have already proposed or enacted laws governing AI and may decide to adopt similar or more restrictive legislation that may render the use of such technologies challenging. These obligations may prevent or limit our ability to use AI technologies in our business, lead to regulatory fines or penalties, or require us to change our business practices. If we cannot use AI technologies, or that use is restricted, our business may be less efficient, or we may be at a competitive disadvantage. Any of these factors could adversely affect our business, financial condition, and results of operations.
If our competitors or new market entrants deploy AI technologies more quickly, more effectively or at a lower cost than us, have access to superior AI technologies or achieve higher acceptance of their AI technologies, our business may be adversely affected. Further, the development and use of AI technologies may enable consumers to search for, buy or sell homes independently, which may lead to a decline in the demand for full-service real estate professionals. To be successful and remain competitive, we must be able to adapt to changes in a timely and effective manner, and if we fail to do so, our business and results of operations may be adversely affected.
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 June 30, 2026.
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Issuer Purchases of Equity Securities
Our purchases of our common stock during the three months ended June 30, 2026 were as follows:
| Period | Total Number of Shares Purchased | Average Price Paid per Share | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | |||||||||||||||||||
| April 1 to April 30, 2026 | — | $ | — | — | — | ||||||||||||||||||
| May 1 to May 31, 2026 | 9,119 | 2.08 | (1) | — | — | ||||||||||||||||||
| June 1 to June 30, 2026 | 6,490 | 1.79 | (1) | — | — | ||||||||||||||||||
| Total | 15,609 | $ | 1.94 | — | — | ||||||||||||||||||
(1) Represents withholdings of shares as payment of payroll tax liabilities incident to the vesting of various employees’ shares of restricted stock. The shares were immediately canceled.
ITEM 5. OTHER INFORMATION
Securities Trading Plans of Directors and Executive Officers
In the quarter ended June 30, 2026, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted terminated
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ITEM 6. EXHIBITS:
** 10.1 | First Amendment to Employment Agreement, dated April 10, 2026, between Douglas Elliman Inc. and James B. Kirkland III. | |||||||
10.2 | First Amendment to Employment Agreement, dated April 10, 2026, between Douglas Elliman Inc. and Bradley H. Brodie. | |||||||
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 | |||||||
| 101.DEF | Inline XBRL Taxonomy Extension Definition Linkbase | |||||||
| 101.LAB | Inline XBRL Taxonomy Extension Label Linkbase | |||||||
| 101.PRE | Inline XBRL Taxonomy Extension Presentation Linkbase | |||||||
| 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.
** Certain portions of this exhibit have been omitted pursuant to Regulation S-K Item (601)(b)(10).
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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, Treasurer and Chief Financial Officer | ||||||||
| Date: | August 10, 2026 | |||||||
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