ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
(All dollar amounts included herein are presented in thousands, except as otherwise noted)
The following discussion should be read in conjunction with the consolidated financial statements and corresponding notes, elsewhere in this Form 10-K. Any forward-looking statements are not historical facts, but rather they are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Any forward-looking statements are subject to several important factors, including those factors discussed under “Risk Factors” and “Special Note on Forward-Looking Statements,” that could cause our actual results to differ materially from those indicated in such forward-looking statements.
Overview
Douglas Elliman Inc. is a holding company that, through its subsidiaries, is engaged in the real estate services business, and is seeking to acquire or invest 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 conduct residential real estate brokerage operations in Florida, California, Texas, Colorado, Nevada, Massachusetts, Connecticut, Maryland, Virginia, New Jersey and Washington, D.C. We also offer, including through our subsidiaries and ventures, development marketing services and ancillary services, such as mortgage, title and escrow services. In addition, we have also invested in PropTech opportunities through our DOUG Ventures (f/k/a New Valley Ventures LLC) subsidiary.
See Item 1. “Business” for detailed overview and description of our principal operations.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) is designed to provide a reader of our financial statements with a narrative from our management’s perspective. Our MD&A is organized as follows:
Business Overview. This section provides a general description of our business, as well as other matters, including recent developments, that we believe are important in understanding our results of operations and financial condition and in anticipating future trends.
Critical Accounting Estimates. This section includes a discussion of accounting estimates considered to be important to our financial condition and results of operations and which require significant judgment and estimates on the part of management in their application. In addition, our significant accounting estimates, including our critical accounting estimates, are discussed in the notes to our audited consolidated annual financial statements included elsewhere in this Form 10-K.
Results of Operations. This section provides an analysis of our results of operations for the years ended December 31, 2025 and 2024.
Liquidity and Capital Resources. This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the years ended December 31, 2025 and 2024, as well as certain contractual obligations and off-balance sheet arrangements that existed at December 31, 2025.
Business Overview
Since its inception in 1911, Douglas Elliman has challenged the status quo of the real estate industry. We were founded on Douglas L. Elliman’s vision that New Yorkers would shift their preference for traditional homes to favor luxury apartments that were both sold and managed by comprehensive real estate companies. More than a century later, the Douglas Elliman brand is still associated with service, luxury and forward thinking — our markets are primarily international finance hubs that are densely populated and offer housing inventory at premium price points. The average transaction value of a home we sold in 2025 was approximately $1.86 million — significantly higher than our principal competitors.
Douglas Elliman boasts a prestigious luxury brand that is complemented by a comprehensive suite of technology-enabled real estate services and investments. These distinguishing qualities position us to capitalize on opportunities in the U.S. residential
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real estate market. We are bringing innovative technology driven solutions to our agents and their clients. Our model is to source and use best-of-breed products and services that we believe will increase our efficiency. In addition to entering business relationships with these technology companies, we have invested in property technology, or PropTech, companies and leveraged our relationships to provide these technology companies access to our agents and their clients, as well as our knowledge and experience. We believe these collaborative relationships have been mutually beneficial because they have kept Douglas Elliman both asset light and on the cutting edge by offering our agents innovative solutions and services that can be integrated into our technology. Furthermore, we maintain upside potential in the success of our PropTech partners in which we invest through minority stakes in their capital structures.
Industry trends in 2025. Since 2021, according to the NAR, existing home sales have declined or remained flat compared to the previous year. In 2025, existing home sales were 4.06 million, which was flat with 2024. Although sales in 2025 and 2024 were little changed from 2023, when sales of existing homes were 4.09 million units, existing home sales in 2025 were the lowest since 1995. Nonetheless, the national median home price for 2025 and 2024, respectively, rose 1.7% and 4.7% from the prior year, according to NAR. By comparison, our average sales price increased by 11% to $1.86 million in 2025 from $1.67 million in 2024.
We believe our competitive advantages in the luxury markets distinguish us from our competitors and our comprehensive suite of real estate solutions, the strength of our brand name, and our talented team of agents and employees set us apart in the industry. In 2025 and 2024, Douglas Elliman was named the most trusted real estate brokerage firm in the United States as part of the America's Most Trusted Series by Lifestory Research. As the real estate brokerage industry evolves and addresses challenges related to constrained inventory of homes as well as higher mortgage rates, we continue to pursue profitable growth opportunities through the expansion of our footprint and new ancillary real estate service offerings, continued recruitment of best-in-class talent, acquisitions (acqui-hires), and operational efficiencies. We will continue to employ a disciplined capital allocation strategy aimed at generating sustainable long-term value for our stockholders.
Change in Reportable Segments
Beginning in the first quarter of 2025, our business began to report our financial results as a single reportable segment. Presentation of our financial information for the year ended December 31, 2025 and 2024 is reported as one segment. The accounting policies of the segment are the same as those described in the summary of significant accounting policies. Prior year information has been recast to conform to the current presentation. For more information, see Note 18, “Segment Information” to our consolidated financial statements.
Key Business Metrics and Non-GAAP Financial Measures
In addition to our financial results, prepared in accordance with GAAP, we use the following business metrics to evaluate our business and identify trends affecting our business. To evaluate our operating performance, we also use Adjusted EBITDA attributed to Douglas Elliman Inc. and Adjusted EBITDA margin attributed to Douglas Elliman Inc. (“Non-GAAP Financial Measures”), which are financial measures not prepared in accordance with GAAP.
Year ended December 31,
Key Business Metrics
Gross Transaction Value (in billions) (2) $ 39.8 $ 36.4
Average transaction value per transaction (in thousands) (3) $ 1,863.4 $ 1,671.0
Annual Retention (5) 84 % 89 %
Certain GAAP Financial Information
Net income (loss) attributed to Douglas Elliman Inc. $ 15,219 $ (76,316)
Net income (loss) margin 1.47 % (7.67) %
Non-GAAP Financial Measures
Adjusted EBITDA attributed to Douglas Elliman Inc. $ (13,990) $ (24,106)
Adjusted EBITDA margin attributed to Douglas Elliman Inc. (1.35) % (2.42) %
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(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.
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(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 DEPM business (including the operations of DEPM and related corporate overhead prior to its disposal), impairment of fixed assets, litigation, settlement and related expenses, net, executive severance and separation expenses, restructuring and other items (interest expense, interest income, equity in earnings from equity-method investments, change in fair value of the derivative embedded within convertible debt, loss on extinguishment of liability and other income). Adjusted EBITDA margin attributed to Douglas Elliman Inc. is the quotient of (x) Adjusted EBITDA attributed to Douglas Elliman Inc. divided by (y) revenue.
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 operating performance of our business, and management and investors should review both the overall performance (GAAP net income) and the operating performance (Non-GAAP Financial Measures) of our business. While management considers Non-GAAP Financial Measures to be important, they should be considered in addition to, but not as substitutes for or superior to, other measures of financial performance prepared in accordance with GAAP, such as operating income, and net income. In addition, Non-GAAP Financial Measures are susceptible to varying calculations and our measurement of Non-GAAP Financial Measures may not be comparable to those of other companies.
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Reconciliations of these non-GAAP measures have been provided in the table below (in thousands).
Computation of Adjusted EBITDA attributed to Douglas Elliman Inc.
Year ended December 31,
Net income (loss) attributed to Douglas Elliman Inc. $ 15,219 $ (76,316)
Net loss attributed to non-controlling interest (909) (686)
Depreciation and amortization 8,377 7,736
Results from operations of disposed business (a) (6,621) (6,323)
Equity in earnings from equity-method investments (c) (187) (36)
Gain on disposal of business (81,655) —
Loss on extinguishment of liability 466 —
Litigation, settlement and related expenses, net (d) 7,637 33,333
Executive severance and separation expenses(e) (299) 2,010
Impairment of fixed assets 2,275 —
Investment and other gains (1,318) (5,289)
Adjusted EBITDA attributed to non-controlling interest 601 349
Adjusted EBITDA attributed to Douglas Elliman Inc. $ (13,990) $ (24,106)
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(a)Includes results from operations of Residential Management Group, LLC, which conducts business as Douglas Elliman Property Management (“DEPM”), which was disposed on October 24, 2025. This adjustment also includes the corporate allocation to Douglas Elliman Realty LLC (“DER”) from DEPM. The expenses associated with the corporate allocation to DEPM have continued at DER after the disposal.
(b)Represents amortization of stock-based compensation. 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 our investments in equity-method investments that are accounted for under the equity-method and are not consolidated in our financial results.
(d)Represents unusual litigation, settlement and related expenses, net incurred in connection with industry-wide antitrust class action lawsuits and other matters related to employees and agents. For the year ended December 31, 2025, we incurred unusual litigation expense, settlement and related expenses, net of insurance proceeds received, of $7,637 included in General and administrative expenses on the Consolidated Statement of Operations. For the year ended December 31, 2024, we incurred unusual litigation expense, settlement and related expenses, net of $33,333 with $17,750 included in Antitrust litigation settlement expense and $15,583 included in General and administrative expenses on the Consolidated Statement of Operations.
(e) The benefit of $299 includes insurance proceeds received during the year ended December 31, 2025 and is included within general and administrative expenses on the Consolidated Statement of Operations for the year ended December 31, 2025. $2,010 is included within general and administrative expenses on the Consolidated Statement of Operations for the year ended December 31, 2024.
Recent Developments
Sale of Douglas Elliman Property Management. On October 24, 2025, DER sold its subsidiary, Residential Management Group, LLC, which conducts business as Douglas Elliman Property Management, for a base purchase price of $85,000, subject to adjustments for cash, indebtedness, transaction expenses and working capital amounts at closing. The tax impact of the sale of our property management business was treated as a discrete item in the fourth quarter of 2025. For more information, see Note 1(ab) “Sale of Douglas Elliman Property Management.”
Repayment and Redemption of 7% Senior Secured Convertible Debt. On October 24, 2025, we repaid and redeemed all of our senior secured convertible promissory notes due on July 2, 2029 (the “Convertible Notes”) for an aggregate payment of $95,000, including approximately $1,400 of accrued interest. The liens on the assets of the Company and the subsidiary guarantors were released upon redemption.
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Critical Accounting Estimates
General. The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant estimates subject to material changes in the near term include revenue recognition, impairment charges, valuation of intangible assets, deferred tax liabilities, and valuation of investments, including other-than-temporary impairments to such investments. Actual results could differ from those estimates.
Revenue Recognition. Revenue is measured based on a consideration specified in a contract with a customer and excludes any sales incentives. Revenue is recognized when (a) an enforceable contract with a customer exists, that has commercial substance, and collection of substantially all consideration for services is probable; and (b) the performance obligations to the customer are satisfied either over time or at a point in time.
Real estate commissions earned by our Real Estate brokerage businesses are recognized as revenue when the real estate sale is completed or lease agreement is executed, which is the point in time that the performance obligation is satisfied. Any commission and other payments received in advance are deferred until the satisfaction of the performance obligation. Corresponding agent commission expenses, including any advance commission or other direct expense payments, are deferred and recognized as cost of sales concurrently with related revenues.
Contracts in our development marketing business provide us with the exclusive right to sell units in a subject property for a commission fee per unit sold calculated as a percentage of the sales price of each unit. Accordingly, a performance obligation exists for each unit in the development marketing property under contract, and a portion of the total contract transaction price is allocated to and recognized at the time each unit is sold.
Under development marketing service arrangements, dedicated staff are required for a subject property and these costs are typically reimbursed from the customer through advance payments that are recoupable from future commission earnings. Advance payments received and associated direct costs paid are deferred, allocated to each unit in the subject property, and recognized at the time of the completed sale of each unit.
Development marketing service arrangements also include direct fulfillment costs incurred in advance of the satisfaction of the performance obligation. We capitalize costs incurred in fulfilling a contract with a customer if the fulfillment costs 1) relate directly to an existing contract or anticipated contract, 2) generate or enhance resources that will be used to satisfy performance obligations in the future, and 3) are expected to be recovered. These costs are amortized over the estimated customer relationship period which is the contract term. We use an amortization method that is consistent with the pattern of transfer of goods or services to its customers by allocating these costs to each unit in the subject property and expensing these costs as each unit sold is closed over the contract.
Commission revenue is recognized at the time the performance obligation is met for our Real Estate commercial leasing contracts, which is when the lease agreement is executed, as there are no further performance obligations, including any amounts of future payments under extended payment terms.
Our Real Estate property management revenue arrangements consist of providing operational and administrative services to manage a subject property. Fees for these services are typically billed and collected monthly. Property management service fees are recognized as revenue over time using the output method as the performance obligations under the customer arrangement are satisfied each month. Our Real Estate title insurance commission fee revenue is earned when the sale of the title insurance is completed, which corresponds to the point in time when the underlying real estate sale transaction closes and the payment is received.
Accounting for Leases. Under Accounting Standards Committee (“ASC”) 842, we determine if an arrangement is a lease at contract inception. At lease commencement, we record and recognize right-of-use (“ROU”) assets for the lease liability amount and initial direct costs incurred, offset by lease incentives received. We record lease liabilities for the net present value of future lease payments over the lease term. The discount rate we use is generally our estimated incremental borrowing rate unless the lessor’s implicit rate is readily determinable. We calculate discount rates periodically to estimate the rate we would pay to borrow the funds necessary to obtain an asset of similar value, over a similar term, with a similar security. The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We recognize operating lease expense on a straight-line basis over the lease term. Operating leases are included in operating lease ROU assets and lease liabilities on the consolidated balance sheets.
Embedded Derivative. We measure all derivatives, including certain derivatives embedded in other contracts, at fair value and recognize them in the consolidated balance sheet as an asset or a liability, depending on our rights and obligations under the applicable derivative contract. During 2024, we issued variable interest senior convertible debt in a private placement where a portion of the total interest payable on the debt was computed by reference to our common stock. This portion of the interest payment was considered an embedded derivative within the convertible debt, which we were required to value
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separately. As a result, we bifurcated this embedded derivative and estimated the fair value of the embedded derivative liability. The resulting discount created by allocating a portion of the issuance proceeds to the embedded derivative was then amortized to interest expense over the term of the debt using the effective interest method.
On October 24, 2025, we redeemed the Convertible Notes and no longer report a fair value of the derivative liabilities. Prior to the redemption, changes to the fair value of the embedded derivative were reflected on our consolidated statements of operations as “Changes in fair value of the derivative embedded within convertible debt.” We recognized a loss of $28,482 and $14,978 in 2025 and 2024, respectively, due to changes in the fair value of the embedded derivative.
In 2025 and 2024, we recognized non-cash interest expense of $1,814 and $983, respectively, due to the amortization of the debt discount attributable to the embedded derivative and $148 and $80, respectively, due to the amortization of the debt discount attributable to the beneficial conversion feature.
Stock-Based Compensation. We have granted stock-based compensation to employees and recognize expense on such grants. Our stock-based compensation uses a fair-value-based method to recognize non-cash compensation expense for share-based transactions. Under the fair value recognition provisions, we recognize stock-based compensation net of an estimated forfeiture rate and only recognize compensation cost for those shares expected to vest on a straight-line basis over the requisite service period of the award.
Current Expected Credit Losses. We are exposed to credit losses for various amounts due from real estate agents, which are included in Agent receivables, net on the consolidated balance sheets, net of an allowance for credit losses. We historically estimated our allowance for credit losses on receivables from agents based on an evaluation of aging, agent sales in pipeline, any security, specific exposures, and historical experience of collections from the individual agents. We estimated that the credit losses for these receivables were $4,746 and $4,783 at December 31, 2025 and December 31, 2024, respectively.
Goodwill and Indefinite Life 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. We follow ASC 350, Intangibles — Goodwill and Other, and subsequent updates including Accounting Standards Update (“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 we conclude that it is more likely than not that a reporting unit’s fair value is less than its carrying value or choose to bypass the optional qualitative assessment, we will then assess recoverability by comparing the fair value of the reporting unit to our carrying amount; otherwise, no further impairment test would be required. The fair value of the intangible asset associated with the Douglas Elliman trademark is determined using a “relief from royalty payments” method. This approach involves two steps: (i) estimating reasonable royalty rates for its trademark associated with the Douglas Elliman trademark and (ii) applying these royalty rates to a net sales stream and discounting the resulting cash flows to determine fair value. This fair value is then compared with the carrying value of the trademark.
As part of our annual impairment test, we utilized third-party valuation specialists to prepare a quantitative assessment of the Company’s goodwill and trademark intangible assets, based on the current market conditions in the residential real estate brokerage industry which did not result in impairment charges related to its goodwill or trademark for the year ended December 31, 2025. If we fail to achieve the financial projections used in the quantitative assessments of fair value and current market conditions deteriorate, impairment charges could result in future periods, and such impairment charges could be material.
Income Taxes. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. Therefore, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time and, as a result, changes in our subjective assumptions and judgments may materially affect amounts recognized in our consolidated financial statements.
We are taxed as a corporation for purposes of U.S. and state and local income taxes and calculate our provision for income taxes based upon our consolidated taxable income at current income tax rates.
ASC 740, Income Taxes, requires us to establish a valuation allowance to reduce the deferred tax assets reported if, based on the weight of available evidence, it is more likely than not that some portion or all the deferred tax assets will not be realized. We have established a valuation allowance because we believe it will be more likely than not that the benefits of these deductible differences will not be realized, and as a result are required to maintain a valuation allowance for the full amount of the deferred tax assets.
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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 consolidated financial statements and related notes included elsewhere in this Form 10-K.
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 and, including, until December 2024, transition service fees paid to our former parent, Vector Group, for the use of office space and employees, professional services fees for legal and finance, insurance expenses and talent acquisition expenses.
•Technology. Technology 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.
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As discussed previously, effective on January 1, 2025, we began to report our financial results as a single operating and reportable segment. Therefore, the presentation of our business’s financial information for the year ended December 31, 2025 and 2024 will be reported as one segment. For more information, see Note 18, “Segment Information” to our consolidated financial statements.
Year Ended December 31, 2025 Compared to Year Ended December 31, 2024
The following table sets forth our revenue and operating income (loss) for the year ended December 31, 2025 compared to the year ended December 31, 2024:
% of Total Revenue
(Dollars in thousands, except percentages)
Operating expenses:
Net loss attributed to non-controlling interest 909 686 223 33 —% — %
Year ended December 31, 2025 Compared to Year ended December 31, 2024
Unless the context suggests otherwise, figures in the discussion in this section are presented in thousands.
Revenues. Our revenues were $1,033,055 for the year ended December 31, 2025 compared to $995,627 for the year ended December 31, 2024. The $37,428 (4%) increase was primarily related to an increase of $43,285 in our commissions and other brokerage income. The increase in revenues was driven by an increased average price per transaction of $1.86 million per home sale in 2025 compared to $1.67 million per home sale in 2024. This increase was partially offset by a decrease of approximately $5,193 in our property management revenues, primarily as a result of the sale of our property management business in October 2025. Excluding our property management revenues, our revenues were $1,001,463 and $958,842 for the years ended December 31, 2025 and 2024, respectively.
Our revenues from commission and other brokerage income were $989,842 for the year ended December 31, 2025 compared to $946,557 for the year ended December 31, 2024, an increase of $43,285. In 2025, our commission and other brokerage income generated from the sales of existing homes increased by $17,489 in the Northeast region, which excludes New York City, $5,947 in New York City, $3,789 in our Florida market and $3,406 in the West region, in each case compared to the 2024 period. In addition, our revenues from our development marketing division increased by $12,604 in 2025 compared to 2024 and this was primarily related to increased closings in our Florida and New York City markets.
Operating expenses. Our operating expenses include the gain on disposal of business of $81,655 related to the sale of our property management business for the year ended December 31, 2025. Please refer to “Recent Developments - Sale of Douglas Elliman Property Management.” for more information. Our operating expenses, excluding gain on disposal of business, were
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$1,069,228 for the year ended December 31, 2025 compared to $1,064,453 for the year ended December 31, 2024. The $4,775 increase was due primarily to the increase in real estate brokerage commissions of $28,152, offset by the absence in 2025 of $17,750 related to the Antitrust litigation settlement expense that occurred in 2024 and $6,822 decline in general and administrative expenses. The primary components of operating expenses are described below.
Real Estate Agent Commissions. Because of increases in commissions and other brokerage income, our real estate agent commissions expense was $771,971 for the year ended December 31, 2025 compared to $743,819 for the year ended December 31, 2024, an increase of $28,152 (4%). Real estate agent commissions expense, as a percentage of revenues, remained consistent at 75% for both years ended December 31, 2025 and 2024. Additionally, the increase in commissions expense of 4% is consistent with the increase in commissions and other brokerage income of 5%, when compared to the prior period.
Gross profit. We define gross profit as the remaining portion after real estate agent commissions are subtracted from our revenues. Gross profit was $261,084 for the year ended December 31, 2025 compared to $251,808 for the year ended December 31, 2024, an increase of $9,276 (4%). This increase primarily resulted from increased existing home sales in our Northeast region as well as our Development Marketing division, in which sales of developer-represented units for the year ended December 31, 2025 contributed to an increase in gross profit.
Sales and Marketing. Sales and marketing expenses were $80,708 for the year ended December 31, 2025 compared to $82,606 for the year ended December 31, 2024.
Operations and support. Operations and support expenses were $70,720 for the year ended December 31, 2025 compared to $70,342 for the year ended December 31, 2024.
General and administrative. General and administrative expenses were $110,951 for the year ended December 31, 2025 compared to $117,773 for the year ended December 31, 2024. The decline is primarily related to reductions in personnel and related expenses of $3,887, and litigation, settlement and related expenses of $4,652.
Technology. Technology expenses were $22,590 for the year ended December 31, 2025 compared to $23,386 for the year ended December 31, 2024.
Impairment of fixed assets. Impairment of fixed assets was $2,275 for the year ended December 31, 2025 due to the abandonment of an agent onboarding application. There was no impairment of fixed assets for the year ended December 31, 2024.
Operating income (loss). Operating income was $45,482 for the year ended December 31, 2025 compared to a loss of $68,826 for the year ended December 31, 2024. The $114,308 increase was primarily due to the gain on disposal of $81,655 as a result of the sale of our property management business, the increase in gross profit (above) of $9,276 as well as a decline in general and administrative expenses of $6,822 and the absence in 2025 of a $17,750 expense related to the antitrust litigation settlement expense that occurred in 2024. These declines were offset by the impairment of fixed assets of $2,275.
Other expenses. Other expense was $27,612 for the year ended December 31, 2025 compared to $7,059 for the year ended December 31, 2024. For the year ended December 31, 2025, other expenses primarily consisted of the change in fair value of the derivative embedded within convertible debt of $28,482, interest expense of $5,069 and loss on extinguishment of convertible debt of $466. This was partially offset by interest income of $4,900 and investment and other gains associated with our PropTech investments of $1,318. For the year ended December 31, 2024, other expenses primarily consisted of the change in fair value of the derivative embedded within convertible debt of $14,978. This was partially offset by interest income of $5,533 and investment and other gains associated with our PropTech investments of $5,289.
Income (loss) before provision for income taxes. Income before provision for income taxes was $17,870 for the year ended December 31, 2025 compared to loss before provision for income taxes of $75,885 for the year ended December 31, 2024.
Income tax expense. Income tax expense was $3,560 for the year ended December 31, 2025 compared to $1,117 for the year ended December 31, 2024. Our income tax rates for the years ended December 31, 2025 and 2024 do not bear a customary relationship to statutory income tax rates due to the impact of the utilization of net operating loss carryforwards, which impact changes in valuation allowances and state income taxes, as well as certain nondeductible expenses and excess tax benefits of stock-based compensation. During 2025, we analyzed the likelihood of utilizing our deferred tax assets, which were primarily related to the benefits of remaining net operating loss carryforwards, and determined it will be more likely than not that the benefits of these deductible differences will not be realized, and as a result we continued to maintain a valuation allowance for the full amount of the deferred tax assets. The full valuation allowance had been established during 2024, when we analyzed the likelihood of utilizing our deferred tax assets, which were primarily related to the benefits of net operating loss carryforwards, and determined it will be more likely than not that the benefits of these deductible differences will not be realized. We will
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continue to evaluate the realizability of our net deferred tax assets using all available evidence, which may result in a future change to our valuation allowances.
Liquidity and Capital Resources
Cash and cash equivalents was $115,510 and $135,657 as of December 31, 2025 and 2024, respectively, a decrease of $20,147. Restricted cash was $7,199 and $6,564 as of December 31, 2025 and 2024, respectively.
Cash used in operations was $13,878 and $25,962 in 2025 and 2024, respectively. The decline in the cash used in the 2025 period was attributable to lower liability payments (primarily cash bonuses paid in 2025 were lower compared to those paid in 2024), as well as the net impact of increased development marketing closings in 2025, offset by the $5,000 payment related to the antitrust litigation settlement in 2025.
Cash provided by investing activities was $90,461 in 2025, compared to cash used in investing activities of $6,786 in 2024. In 2025, cash provided by investing activities was primarily comprised of $97,677 of proceeds from the sale of short-term investments, $82,494 of proceeds from the sale of our property management business, and $1,654 of proceeds from the sale of long-term investments. This was offset by the purchase of short-term investments of $87,873 and capital expenditures of $3,353. In 2024, cash used in investing activities was comprised of the purchase of investment securities at fair value of $9,804 and capital expenditures of $5,534. This was offset by $8,882 of proceeds from the sale of long-term investments.
Cash used in financing activities was $96,095 in 2025, compared to cash provided by financing activities of $45,452 in 2024. In 2025, cash used in financing activities was primarily a result of the repayment of the Convertible Notes of $94,067. In 2024, cash provided by financing activities was primarily a result of the proceeds of the debt issuance of $48,750. This was partially offset by the deferred finance charges of $1,997 related to the issuance of the Convertible Notes.
Convertible Notes. On July 2, 2024, we issued the Convertible Notes in the aggregate principal amount of $50,000 that bore interest at a rate of 7.0% per annum, payable in cash, or, at our election, 8.0% per annum paid in kind, due semi-annually. In connection with and upon consummation of the sale of our property management business, on October 24, 2025, we repaid and redeemed all of our Convertible Notes for an aggregate payment of $95,000, including approximately $1,400 of accrued interest. For more information, see Note 10, “Notes Payable and Other Obligations” to our consolidated financial statements.
We had cash and cash equivalents of approximately $115,510 as of December 31, 2025 and, in addition to any cash provided from operations, such cash is available to be used to fund such liquidity requirements as well as other anticipated liquidity needs in the normal course of business. Management currently anticipates that these amounts, 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.
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.
On June 12, 2023, we announced that our Board had suspended the quarterly cash dividend, effective immediately; the final cash dividend was paid for the period ending March 31, 2023. We do not expect to pay a cash dividend in the foreseeable future.
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 into an escrow fund on June 12, 2024, $5,000 into an escrow fund on December 29, 2025, and 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.
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Other litigation. Litigation is subject to uncertainty and it is possible that there could be adverse developments in the Gibson/Umpa appeals and other pending cases. These cases include (i) the buyer-side class action Lutz vs. HomeServices of America, Inc. et al lawsuit, pending in the U.S. District Court for the Southern District of Florida, No. 4:24-cv-10040 (KMM) as well as (ii) 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 defending vigorously claims made against us in the Koste and Rodriguez cases. For more information, see Note 14, “Commitments and Contingencies,” to our consolidated financial statements.
Management cannot predict the cash requirements related to any future settlements or judgments, including cash required to bond any appeals, and there is a risk that those requirements will not be able to be met. Management is unable to make a reasonable estimate of the amount or range of loss that could result from an unfavorable outcome of the cases pending against 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.
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 December 31, 2025, we were not aware of any indemnification agreements that would or are reasonably expected to have a current or future material adverse impact on our financial position, results of operations or cash flows.
As of December 31, 2025, we had outstanding approximately $2,645 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 and $37,967 as of December 31, 2025 and December 31, 2024, 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 consolidated balance sheets), the subsidiary of ours remains contingently liable for the disposition of these deposits.
Market Risk
We are exposed to market risks principally from fluctuations in interest rates and could be exposed to market risks from foreign currency exchange rates and equity prices in the future. We seek to minimize these risks through our regular operating and financing activities and our long-term investment strategy. Our market risk management procedures cover material market risks for our market risk sensitive financial instruments.
New Accounting Pronouncements
Refer to Note 1, Summary of Significant Accounting Policies, to our consolidated financial statements for further information on New Accounting Pronouncements.
Legislation, Regulation, Taxation and Litigation
See Item 1. “Business,” Item 1A. “Risk Factors,” Item 3. “Legal Proceedings” and Note 14 to our consolidated financial statements, which contain a description of litigation.
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SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS
In addition to historical information included in this annual report on Form 10-K, this report contains “forward-looking statements” within the meaning of the federal securities law. Forward-looking statements include information relating to our intent, belief or current expectations, primarily with respect to, but not limited to, economic outlook, capital expenditures, cost reduction, cash flows, operating performance, growth expectations, competition, legislation and regulations, litigation, and related industry developments (including trends affecting our business, financial condition and results of operations).
We identify forward-looking statements in this report by using words or phrases such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may be,” “objective,” “opportunistically,” “plan,” “potential,” “predict,” “project,” “prospects,” “seek,” and “will be” and similar words or phrases or their negatives.
Forward-looking statements involve important risks and uncertainties that could cause our actual results, performance or achievements to differ materially from our anticipated results, performance or achievements expressed or implied by the forward-looking statements. Factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, without limitation, the following:
•general economic and market conditions and any changes therein, including due to macroeconomic conditions, interest rate fluctuations, inflation, acts of war and terrorism or otherwise;
•governmental regulations and policies, including with respect to regulation of the real estate market or monetary and fiscal policy and its effect on overall economic activity, in particular, mortgage interest rates;
•the impact of enacted and proposed tariffs and other trade policies, and related uncertainties in the global economy resulting from such policies;
•the impacts of banks not honoring the escrow and trust deposits held by our subsidiaries;
•litigation risks, the costs associated with, and the outcome of, litigation and other proceedings to the extent uninsured, including litigation or other claims against companies we invest in, 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;
•the tax-free treatment of Vector Group’s distribution of our common stock to its stockholders; and
•the additional factors described under “Risk Factors” in this annual report on Form 10-K.
Further information on the risks and uncertainties to our business includes the risk factors discussed above under Item 1A. “Risk Factors” and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations.”
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 annual report. New factors may emerge, and it is not possible to predict all factors that may affect our business and operations.
ITEM 7A.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 8.FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
Our consolidated financial statements and notes thereto, together with the report thereon of Deloitte & Touche LLP dated March 16, 2026, are set forth beginning on page F-1 of this report.
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ITEM 9.CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
None.
ITEM 9A.CONTROLS AND PROCEDURES
Evaluation of Disclosure Controls and Procedures
The Company maintains disclosure controls and procedures that are designed to ensure that information required to be disclosed, in the reports the Company files or submits under the Exchange Act, is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.
In connection with the preparation of this Form 10-K, the Company evaluated under the supervision of and with the participation of the Company’s management, including the Chief Executive Officer and Chief Financial Officer, as of December 31, 2025, the effectiveness of the design and operation of the Company’s disclosure controls and procedures, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based upon this evaluation, the Chief Executive Officer and Chief Financial Officer concluded that the Company’s disclosure controls and procedures were effective as of December 31, 2025.
Management’s Annual Report on Internal Control Over Financial Reporting
Management is responsible for establishing and maintaining adequate internal control over financial reporting for the Company, as such term is defined in Rules 13a-15(f) and 15d-15(f) under the Exchange Act. Internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles and includes those policies and procedures that (i) pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company, (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company, and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.
Because of inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
Management, including the Chief Executive Officer and Chief Financial Officer, has assessed the effectiveness of the Company’s internal control over financial reporting as of December 31, 2025, based on the criteria in Internal Control - Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“COSO”). Based on this assessment, management concluded that the Company’s internal control over financial reporting was effective as of December 31, 2025 based on the criteria in Internal Control - Integrated Framework (2013) issued by COSO. The effectiveness of the Company’s internal control over financial reporting as of December 31, 2025 has been audited by Deloitte & Touche LLP, an independent registered public accounting firm, as stated in its report which appears herein.
Changes in Internal Control Over Financial Reporting
There were no changes in the Company’s internal control over financial reporting during the three months ended December 31, 2025 that have materially affected or are reasonably likely to materially affect the Company’s internal control over financial reporting.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Douglas Elliman Inc.
Opinion on Internal Control over Financial Reporting
We have audited the internal control over financial reporting of Douglas Elliman Inc. and subsidiaries (the "Company") as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Company maintained, in all material respects, effective internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by COSO.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as of and for the year ended December 31, 2025, of the Company and our report dated March 16, 2026, expressed an unqualified opinion on those financial statements.
Basis for Opinion
The Company's management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting, included in the accompanying Management's Annual Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company's internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.
Definition and Limitations of Internal Control over Financial Reporting
A company's internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company's internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company's assets that could have a material effect on the financial statements.
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
/s/ Deloitte & Touche LLP
Miami, Florida
March 16, 2026
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ITEM 9B.OTHER INFORMATION
Securities Trading Plans of Directors and Executive Officers
In the quarter ended December 31, 2025, none of our directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated a plan for the purchase or sale of our securities intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or a non-Rule 10b5-1 trading arrangement for the purchase or sale of our securities, within the meaning of Item 408 of Regulation S-K. However, certain of our officers or directors have made, and may from time to time make elections to have shares withheld to cover withholding taxes or pay the exercise price of options, which may be designed to satisfy the affirmative defense conditions of Rule 10b5-1(c) under the Exchange Act or may constitute non-Rule 10b5-1 trading arrangements.
ITEM 9C. DISCLOSURE REGARDING FOREIGN JURISDICTIONS THAT PREVENT INSPECTIONS
Not applicable.
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PART III
ITEM 10.DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
The information contained under the following headings in our definitive Proxy Statement for our 2026 Annual Meeting of Stockholders (the “2026 Proxy Statement”), to be filed with the SEC not later than 120 days after the end of our fiscal year covered by this report pursuant to Regulation 14A under the Securities Exchange Act of 1934, is incorporated herein by reference: “Proposal 1 — Nomination and Election of Directors.” See Item 5. “Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchase Equity Securities. Executive Officers of the Registrant" for information regarding our executive officers. We have adopted a policy statement entitled Code of Business Conduct and Ethics that applies to all of our directors, officers and employees. If an amendment to, or a waiver from, a provision of the Code of Business Conduct and Ethics is made or granted, we intend to post such information on our web site, which is investors.elliman.com.
We have adopted an Insider Trading Policy which governs the purchase, sale and/or any other dispositions of our securities by the Company and its directors, officers and employees and is reasonably designed to promote compliance with insider trading laws, rules and regulations and applicable exchange listing standards. A copy of our Insider Trading Policy is attached as Exhibit 19.1 to this Annual Report.
ITEM 11.EXECUTIVE COMPENSATION
The information contained under the headings “Executive Compensation” and “Compensation and Human Capital Committee Interlocks and Insider Participation” in our 2026 Proxy Statement is incorporated herein by reference.
ITEM 12.SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS
The information contained under the headings “Equity Compensation Plan Information” and “Security Ownership of Certain Beneficial Owners and Management” in our 2026 Proxy Statement is incorporated herein by reference.
ITEM 13.CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE
The information contained under the headings “Certain Relationships and Related Party Transactions” and “Board of Directors and Committees” in our 2026 Proxy Statement is incorporated herein by reference.
ITEM 14.PRINCIPAL ACCOUNTANT FEES AND SERVICES
The information contained under the headings “Audit and Non-Audit Fees” and “Pre-Approval Policies and Procedures” in our 2026 Proxy Statement is incorporated herein by reference.
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PART IV
ITEM 15.EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a)(1) INDEX TO 2025 CONSOLIDATED FINANCIAL STATEMENTS:
Our consolidated financial statements and the notes thereto, together with the report thereon of Deloitte & Touche LLP for the three years ended December 31, 2025, dated March 16, 2026 appear beginning on page F-1 of this report.
(a)(2) FINANCIAL STATEMENT SCHEDULES:
Schedule II — Valuation and Qualifying Accounts Page F-42
(a)(3) EXHIBITS:
(a) The following is a list of exhibits filed herewith as part of this Annual Report on Form 10-K:
INDEX OF EXHIBITS
EXHIBIT NO. DESCRIPTION
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EXHIBIT NO. DESCRIPTION
21.1 Subsidiaries of Douglas Elliman Inc.
23.1 Consent of Deloitte & Touche LLP.
101 Schema document
101 Calculation linkbase document
101 Labels linkbase document
101 Presentation linkbase document
101 Definition linkbase document
_____________________________
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* Incorporated by reference.
** Furnished herewith. These exhibits shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, or otherwise subject to the liability of that Section. Such exhibits shall not be deemed incorporated into any filing under the Securities Act of 1933 or the Securities Exchange Act of 1934.
Each management contract or compensatory plan or arrangement required to be filed as an exhibit to this report pursuant to Item 15(b) is listed in exhibit numbers 10.4 through 10.6, exhibit 10.8, exhibit 10.9, exhibit 10.11, exhibit 10.12 and exhibit 10.14.
ITEM 16.FORM 10-K SUMMARY.
Not applicable.
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SIGNATURES
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
POWER OF ATTORNEY
The undersigned directors and officers of Douglas Elliman Inc. hereby constitute and appoint Michael S. Liebowitz, J. Bryant Kirkland III and Bradley H. Brodie with full power to act without the other and with full power of substitution and resubstitutions, our true and lawful attorneys-in-fact with full power to execute in our name and behalf in the capacities indicated below, this Annual Report on Form 10-K and any and all amendments thereto and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, and hereby ratify and confirm all that such attorneys-in-fact, or any of them, or their substitutes shall lawfully do or cause to be done by virtue hereof.
Pursuant to the requirements of the Securities Exchange Act of 1934, this Report has been signed below by the following persons on behalf of the Registrant and in the capacities indicated on March 16, 2026.
SIGNATURE TITLE
Michael S. Liebowitz
J. Bryant Kirkland III
/s/ Richard J. Lampen Chairman of the Board of Directors
Richard J. Lampen
/s/ Perry Weitz Director
Perry Weitz
/s/ Wilson L. White Director
Wilson L. White
/s/ Mark D. Zeitchick Director
Mark D. Zeitchick
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DOUGLAS ELLIMAN INC.
FORM 10-K FOR THE YEAR ENDED DECEMBER 31, 2025
ITEMS 8, 15(a)(1) AND (2), 15(c)
INDEX TO FINANCIAL STATEMENTS
AND FINANCIAL STATEMENT SCHEDULES
Financial Statements and Schedules of the Registrant and its subsidiaries required to be included in Items 8, 15(a) (1) and (2), 15(c) are listed below:
Page
FINANCIAL STATEMENTS:
Douglas Elliman Inc. Consolidated Financial Statements
Report of Independent Registered Public Accounting Firm (PCAOB ID No. 34) F-2
Consolidated Balance Sheets as of December 31, 2025 and 2024 F-4
Notes to Consolidated Financial Statements F-8
FINANCIAL STATEMENT SCHEDULE:
Schedule II — Valuation and Qualifying Accounts F-42
Financial Statement Schedules not listed above have been omitted because they are not applicable or the required information is contained in our consolidated financial statements or accompanying notes.
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REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Stockholders and the Board of Directors of Douglas Elliman Inc.
Opinion on the Financial Statements
We have audited the accompanying consolidated balance sheets of Douglas Elliman Inc. and subsidiaries (the "Company") as of December 31, 2025 and 2024, the related consolidated statements of operations, stockholders' equity, and cash flows, for each of the three years in the period ended December 31, 2025, and the related notes and the financial statement schedule listed in the Index at Item 15 (collectively referred to as the "financial statements"). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2025 and 2024, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2025, in conformity with accounting principles generally accepted in the United States of America.
We have also audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2025, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 16, 2026, expressed an unqualified opinion on the Company's internal control over financial reporting.
Basis for Opinion
These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.
We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.
Critical Audit Matter
The critical audit matter communicated below is a matter arising from the current-period audit of the financial statements that was communicated or required to be communicated to the audit committee and that (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective, or complex judgments. The communication of critical audit matters does not alter in any way our opinion on the financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.
Goodwill and Other Intangible Assets – Douglas Elliman Realty, LLC Reporting Unit — Refer to Notes 1 and 9 to the financial statements.
Critical Audit Matter Description
The Company’s evaluation of goodwill and the trademark intangible asset, recorded within other intangible assets, is performed at least annually by comparing the fair value of each respective reporting unit or asset to its carrying value. The Company determines the fair value of goodwill using the discounted cash flow model and the market approach, which require management to make significant estimates and assumptions related to forecasts of future revenues, expenses, EBITDA margins, discount rates, as well as revenue multiples and EBITDA multiples. The Company determines the fair value of the trademark intangible asset using the relief-from royalty method, which requires management to make significant estimates and assumptions related to forecasts of future revenues, discount rate, and royalty rate. Changes in these assumptions could have a significant impact on either the fair value, the amount of any impairment charge, or both. The goodwill and trademark intangible asset balances recorded as of December 31, 2025, were $32.2 million and $68.0 million, respectively. These assets pertain to the Douglas Elliman Realty, LLC Reporting Unit (“DER”). The Company’s impairment tests did not result in impairment charges for the year ended December 31, 2025.
We identified management’s estimates of the fair value of the DER goodwill and trademark intangible asset as a critical audit matter because of the significant judgments made by management to estimate the respective fair values. This required a high degree of auditor judgment and an increased extent of effort, including the need to involve our fair value specialists, when performing audit procedures to evaluate the reasonableness of management’s valuation methodologies and the selection of valuation assumptions.
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How the Critical Audit Matter Was Addressed in the Audit
Our audit procedures related to the projected future cash flows and selection of valuation assumptions for goodwill and trademark intangible asset included the following, among others:
– We tested the effectiveness of controls over management’s goodwill and trademark intangible asset impairment evaluation, including those over the determination of the fair values of the reporting unit and trademark intangible asset, such as controls related to management’s forecasts and selection of the discount rates and royalty rate.
– We evaluated management’s ability to accurately forecast future revenues, expenses and EBITDA margins by comparing actual results to management’s historical forecasts.
– We assessed the reasonableness of management’s projected future cash flows by comparing the forecasts to (1) historical results, (2) internal communications to management, and (3) certain industry and market trends.
– With the assistance of our fair value specialists, we evaluated the reasonableness of the income approach valuation methodologies and assumptions, including the discount rates and royalty rates. We developed a range of independent estimates and compared those to the discount rate valuation assumptions developed by management.
– With the assistance of our fair value specialists, we evaluated the reasonableness of the market approach valuation methodology and assumptions, including the revenue and EBITDA multiples, as well as tested the underlying source information and mathematical accuracy of the calculations, and compared the multiples selected by management to its guideline companies.
– We tested the mathematical accuracy of the calculation.
/s/ Deloitte & Touche LLP
Miami, Florida
March 16, 2026
We have served as the Company’s auditor since 2021.
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DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Dollars in thousands, except per share amounts)
ASSETS:
Current assets:
Investment securities at fair value — 9,804
Restricted cash and cash equivalents 4,716 4,081
LIABILITIES AND STOCKHOLDERS' EQUITY:
Current liabilities:
Current operating lease liabilities $ 20,593 $ 21,672
Income taxes payable, net 3,560 —
Notes payable and other obligations less current portion — 32,670
Fair value of the derivative embedded within convertible debt — 30,253
Commitments and contingencies (Note 14)
Stockholders' equity:
Preferred stock, par value $0.01 per share, 10,000,000 shares authorized — —
Total Douglas Elliman Inc. stockholders' equity 183,950 162,188
Non-controlling interest (672) 237
Total liabilities and stockholders' equity $ 444,409 $ 493,888
The accompanying notes are an integral part of the consolidated financial statements.
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DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Year Ended December 31,
(Dollars in thousands, except per share amounts)
Revenues:
Expenses:
Antitrust litigation settlement expense — 17,750 —
Impairment of fixed assets 2,275 — —
Gain on disposal of business (81,655) — —
Other income (expenses):
Equity in earnings (losses) from equity-method investments 187 36 (168)
Loss on extinguishment of liability (466) — —
Net loss attributed to non-controlling interest 909 686 614
Per basic common share:
Per diluted common share:
The accompanying notes are an integral part of the consolidated financial statements.
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DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENT OF STOCKHOLDERS’ EQUITY
Shares Amount Total
(Dollars in thousands)
Restricted stock grant canceled (4,365,500) (44) 44 — — —
Stock-based compensation — — 6,574 — — 6,574
Restricted stock grants 718,509 7 (7) — — —
Restricted stock grant canceled (587,095) (6) 6 — — —
Stock-based compensation — — 8,577 — — 8,577
The accompanying notes are an integral part of the consolidated financial statements.
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DOUGLAS ELLIMAN INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Year Ended December 31,
(Dollars in thousands)
Cash flows from operating activities:
Impairment of fixed assets 2,275 — —
Gain on disposal of business (81,655) — —
Net gains on investment securities (1,226) (5,289) (633)
Equity in (earnings) losses from equity-method investments (187) (36) 168
Loss on extinguishment of liability 466 — —
Changes in assets and liabilities:
Antitrust litigation settlement (5,000) ` 10,000 —
Cash flows from investing activities:
Purchase of debt securities — — (25)
Purchase of equity securities — — (300)
Proceeds from sale or liquidation of long-term investments 1,654 8,882 1,420
Purchase of long-term investments (138) (330) (190)
Proceeds from sale or liquidation of short-term investments 97,677 — —
Purchase of short-term investments (87,873) — —
Purchase of investment securities at fair value — (9,804) —
Proceeds from disposal of business, less cash distributed 82,494 — —
Net cash provided by (used in) investing activities 90,461 (6,786) (5,238)
Cash flows from financing activities:
Proceeds from debt issuance — 48,750 —
Repayments of convertible note (94,067) — —
Deferred financing charges — (1,997) —
Dividends on common stock — — (4,222)
Net cash (used in) provided by financing activities (96,095) 45,452 (6,212)
The accompanying notes are an integral part of the consolidated financial statements.
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DOUGLAS ELLIMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
(Dollars in Thousands, Except Per Share Amounts)
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. Douglas Elliman owns Douglas Elliman Realty, LLC, one of the largest residential brokerage companies in the New York metropolitan area. Douglas Elliman has 114 offices with approximately 5,800 real estate agents in the New York metropolitan area, which includes New York City, Long Island, the Hamptons, Westchester, Connecticut and New Jersey, as well as in Florida, California, Texas, Colorado, Nevada, Massachusetts, Maryland, Virginia and Washington D.C.
The accompanying consolidated financial statements include the accounts and transactions of Douglas Elliman, as well as the entities in which Douglas Elliman directly or indirectly has a controlling financial interest. These entities include DER Holdings LLC and DOUG Ventures, LLC (“DOUG Ventures,” previously known as New Valley Ventures). DER Holdings LLC owns Douglas Elliman Realty, LLC and Douglas Elliman of California, Inc. DOUG Ventures consists of minority investments in PropTech companies. The accompanying consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”).
(b) Principles of Consolidation:
The consolidated financial statements presented herein 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 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.
(c) Estimates and Assumptions:
The preparation of financial statements in conformity with 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) Cash and Cash Equivalents:
Cash includes cash on hand, cash on deposit in banks, and money market accounts. Cash equivalents include short-term investments which have an original maturity of three months or less. Interest income from short-term investments is recognized when earned. The Company places its cash and cash equivalents with large commercial banks. The Federal Deposit Insurance Corporation and Securities Investor Protection Corporation insure these balances, up to $250 and $500, respectively. Substantially all the Company’s cash balances at December 31, 2025 are uninsured.
(e) Reconciliation of Cash, Cash Equivalents and Restricted Cash:
Restricted cash amounts in current assets and included in other assets represent cash and cash equivalents required to be deposited into escrow for amounts required for letters of credit related to office leases, and certain deposit requirements for banking arrangements. The restrictions related to the letters of credit will remain in place for the duration of the respective lease. The restrictions related to the banking arrangements will remain in place for the duration of the arrangement.
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DOUGLAS ELLIMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
The components of “Cash, cash equivalents and restricted cash” in the consolidated statements of cash flows were as follows:
Restricted cash and cash equivalents in current assets 4,716 4,081 7,171
Restricted cash and cash equivalents included in other assets 2,483 2,483 2,538
(f) Investment Securities:
The Company classifies investments in debt securities as trading. Investments classified as trading are recorded at fair value, with changes in fair value recognized in net income. Gains and losses are recognized when realized in the Company’s consolidated statements of operations. The cost of securities sold is determined based on average cost.
(g) Significant Concentrations of Credit Risk:
Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and receivables. The Company believes it places its temporary cash in money market securities (investment grade or better) with high credit quality financial institutions. Credit risk with respect to receivables is distributed across numerous accounts and we maintain an allowance for doubtful accounts such that receivables are stated at net realizable value.
(h) Receivables:
Receivables primarily consist of commissions earned on sales transactions which closed prior to the Company’s year-end but the related commissions had not yet been received. The Company provides an allowance for credit losses on uncollectible receivables based principally on the specific identification method. There are no allowances for credit losses for commission receivables as of December 31, 2025 and December 31, 2024. Uncollectible accounts are written off when the likelihood of collection is remote and when collection efforts have been abandoned.
(i) Property and equipment, net:
Property and equipment, net are stated at cost and are depreciated using the straight-line method over the estimated useful lives of the respective assets, which are 3 to 10 years for furniture and equipment.
The cost and related accumulated depreciation of property and equipment, net are removed from the accounts upon retirement or other disposition and any resulting gain or loss is reflected in operations.
The cost of leasehold improvements is amortized over the lesser of the related leases or the estimated useful lives of the improvements. Costs of major additions and betterments are capitalized, while expenditures for routine maintenance and repairs are charged to expense as incurred.
(j) Investments accounted for under the equity-method of accounting:
In accounting for its equity-method investments, the Company identified its participation in VIEs, which are defined as (a) entities in which the equity investment at risk is not sufficient to finance its activities without additional subordinated financial support; (b) as a group, the equity investors at risk lack 1) the power to direct the activities of a legal entity that most significantly impact the entity’s economic performance, 2) the obligation to absorb the expected losses of the entity, or 3) the right to receive the expected residual returns of the entity; or (c) as a group, the equity investors have voting rights that are not proportionate to their economic interests and the entity’s activities involve or are conducted on behalf of an investor with a disproportionately small voting interest.
The Company’s interest in VIEs is primarily in the form of equity ownership. The Company examines specific criteria and uses judgment when determining if the Company is the primary beneficiary of a VIE. Factors considered include risk and reward sharing, experience and financial condition of other partner(s), voting rights, involvement in day-to-day capital and operating decisions, representation on a VIE’s executive committee, existence of unilateral kick-out rights exclusive of protective rights or voting rights and level of economic disproportionality between the Company and its other partner(s).
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DOUGLAS ELLIMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Accounting guidance requires the consolidation of VIEs in which the Company is the primary beneficiary. The guidance requires consolidation of VIEs that an enterprise has a controlling financial interest. A controlling financial interest will have both of the following characteristics: (a) the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance and (b) the obligation to absorb losses of the VIE that could potentially be significant to the VIE or the right to receive benefits from the VIE that could potentially be significant to the VIE.
The Company’s maximum exposure to loss in its investments in unconsolidated VIEs is limited to its investment in the VIE, any unfunded capital commitments to the VIE, and, in some cases, guarantees in connection with debt on the specific project.
On a quarterly basis, the Company evaluates its equity-method investments to determine if there are indicators of impairment. If so, the Company further investigates to determine if an impairment has occurred and whether such impairment is considered temporary or other than temporary. The Company believes that the assessment of temporary or other-than-temporary impairment is facts-and-circumstances driven.
(k) 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. The fair value of the intangible asset associated with the Douglas Elliman trademark is determined using a “relief from royalty payments” method. This approach involves two steps: (i) estimating reasonable royalty rates for its trademark associated with the Douglas Elliman trademark and (ii) applying these royalty rates to a net sales stream and discounting the resulting cash flows to determine fair value. This fair value is then compared with the carrying value of the trademark. As discussed in Note 9, as part of our annual impairment test, the Company utilized third-party valuation specialists to prepare a quantitative assessment of its goodwill and trademark intangible assets, based on the current market conditions in the residential real estate brokerage industry which did not result in impairment charges related to its goodwill or trademark for the year ended December 31, 2025. If the Company fails to achieve the financial projections used in the quantitative assessments of fair value and current market conditions deteriorate, impairment charges could result in future periods, and such impairment charges could be material.
Goodwill from acquisitions represents the excess of the purchase price over the fair value of the underlying acquired net tangible and intangible assets. Factors that contribute to the recognition of goodwill in the Company’s acquisitions include (i) expected growth rates and profitability of the acquired companies, (ii) securing buyer-specific synergies that increase revenue and profits and are not otherwise available to market participants, (iii) significant cost savings opportunities, (iv) experienced workforce and (v) the Company’s strategies for growth in sales, income and cash flows.
Intangible assets with finite lives are amortized over their respective estimated useful lives. Identifiable intangible assets that are subject to amortization are evaluated for impairment using a process similar to that used to evaluate long-lived assets described below.
(l) Impairment of Long-Lived Assets:
The Company reviews long-lived assets for impairment whenever events or changes in business circumstances indicate that the carrying amount of the assets may not be fully recoverable. The Company performs a test for recoverability, comparing projected undiscounted cash flows to the carrying value of the asset group to determine if impairment exists. If impairment is determined to exist, any related impairment loss is calculated based on fair value of the asset on the basis of discounted cash flow. Impairment losses on assets to be disposed of, if any, are based on the estimated proceeds to be received, less costs of disposal.
Additionally, the Company performs impairment reviews on its long-term investments that are classified as equity securities without readily determinable fair values that do not qualify for the net asset value (“NAV”) practical expedient. On a quarterly basis, the Company evaluates the investments to determine if there are indicators of impairment. If so, a determination is made of whether there is an impairment and if it is considered temporary or other than temporary. The assessment of temporary or other-than-temporary impairment is facts-and-circumstances driven. The impairment indicators that are taken into
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DOUGLAS ELLIMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
consideration as part of the analysis include (a) a significant deterioration in the earnings performance, credit rating, asset quality, or business prospects of the investee, (b) a significant adverse change in the regulatory, economic, or technological environment of the investee, (c) a significant adverse change in the general market condition of either the geographical area or the industry in which the investee operates, and (d) factors that raise significant concerns about the investee’s ability to continue as a going concern, such as negative cash flows from operations, working capital deficiencies, or noncompliance with statutory capital requirements or debt covenants.
(m) Leases:
The Company determines if an arrangement is a lease at inception. Operating leases are included in operating lease right-of-use (“ROU”) assets and lease liabilities on the Company’s consolidated balance sheets.
ROU assets represent the Company’s right to use an underlying asset for the duration of the lease term. Lease liabilities represent the Company’s obligation to make lease payments as determined by the lease agreement. Lease liabilities are recorded at commencement for the net present value of future lease payments over the lease term. The discount rate used is the Company’s estimated incremental borrowing rate unless the lessor’s implicit rate is readily determinable. Discount rates are calculated periodically to estimate the rate the Company would pay to borrow the funds necessary to obtain an asset of similar value, over a similar term, with a similar security. ROU assets are recorded and recognized at commencement for the lease liability amount, initial direct costs incurred and are reduced for lease incentives received. While the Company’s lease terms may include options to extend or terminate the lease, these options are not included when calculating the leases ROU asset and lease liability unless the Company is reasonably certain it will exercise such options. Operating lease expense is recognized on a straight-line basis over the lease term.
The Company has lease agreements with lease and non-lease components; the Company has elected the accounting policy to combine lease and non-lease components for all underlying asset classes.
(n) Stock Awards:
The Company accounts for employee stock compensation plans by measuring compensation cost for share-based payments at fair value at the grant date. The fair value is recognized as compensation expense over the vesting period on a straight-line basis. The terms of restricted stock awarded under the 2021 Management Incentive Plan (the “2021 Plan”) provide for common stock dividend equivalents (paid in cash at the same rate as paid on the common stock) with respect to the shares underlying the unvested portion of the restricted stock award. The Company recognizes payments of the dividend equivalent rights on these restricted stock awards on the Company’s consolidated balance sheets as reductions in additional paid-in capital, which are included as “Distributions and dividends on common stock” in the Company’s consolidated statement of stockholders’ equity.
(o) Income Taxes:
The Company accounts for income taxes under the liability method and records deferred taxes for the impact of temporary differences between the amounts of assets and liabilities recognized for financial reporting purposes and the amounts recognized for tax purposes as well as tax credit carryforwards and loss carryforwards. These deferred taxes are measured by applying the enacted tax rates relative to when the deferred item is expected to reverse. A valuation allowance reduces deferred tax assets when it is deemed more likely than not that some portion or all deferred tax assets will not be realized. A current tax provision is recorded for income taxes currently payable.
The Company accounts for uncertainty in income taxes by recognizing tax liabilities when, despite the Company’s belief that its tax return positions are supportable, the Company believes that certain positions may not be fully sustained upon review by tax authorities. Benefits from tax positions are measured at the largest amount of benefit that is greater than 50 percent likely of being realized upon settlement. To the extent that the final tax outcome of these matters is different than the amounts recorded, such differences impact income tax expense in the period in which such determination is made. Interest and penalties, if any, related to accrued liabilities for potential tax assessments are included in income tax expense.
(p) Contingencies:
The Company records provisions for pending litigation when it determines that an unfavorable outcome is probable and the amount of loss can be reasonably estimated.
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DOUGLAS ELLIMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(q) Distributions and Dividends on Common Stock:
The Company records distributions on its common stock as dividends in its consolidated statement of stockholders’ equity to the extent of retained earnings. Any amounts exceeding retained earnings are recorded as a reduction to additional paid-in-capital to the extent paid-in-capital is available and then to retained earnings (accumulated deficit). The Company’s stock dividends are recorded as stock splits and given retroactive effect to earnings per share for all years presented.
(r) Revenue Recognition:
Commissions and other brokerage income: Real estate commissions earned by the Company’s real estate brokerage businesses are recognized as revenue when the real estate sale is completed or lease agreement is executed, which is the point in time that the performance obligation is satisfied. Any commission and other payments received in advance are deferred until the satisfaction of the performance obligation. Corresponding agent commission expenses, including any advance commission or other direct expense payments, are deferred and recognized as agent commission expenses concurrently with related revenues.
Property management: Property management revenue arrangements consist of providing operational and administrative services to manage a subject property. Fees for these services are typically billed and collected monthly. Property management service fees are recognized as revenue over time using the output method as the performance obligations under the customer arrangement are satisfied each month.
Ancillary services: Ancillary services revenue earned by the Company related primarily to title and escrow services. These services are recognized as revenue when the real estate sale is completed, which is the point in time that the performance obligation is satisfied.
See Note 2 — Revenue Recognition for additional information.
(s) Real estate agent commissions expense:
Real estate agent commissions expense consists of commissions paid to the Company’s agents, who are independent contractors, upon the closing of a real estate transaction and fees paid to external brokerages for client referrals, which are recognized and paid upon the closing of a real estate transaction.
(t) Sales and marketing expenses:
Sales and marketing expenses consists primarily of marketing and advertising expenses, compensation and other personnel-related costs for employees supporting sales, marketing, expansion and related functions, occupancy-related costs and agent acquisition incentives. Advertising expense primarily includes the cost of marketing activities such as print advertising, online advertising and promotional items, which are expensed as incurred. Compensation and other personnel-related costs include salaries, benefits, bonuses and other compensation expense.
Real estate advertising costs, which are expensed as incurred and included within sales and marketing expenses, were $24,219, $29,650 and $27,296 for the years ended December 31, 2025, 2024 and 2023, respectively.
(u) Operations and support expenses:
Operations and support expenses consists primarily of compensation and other personnel-related costs for employees supporting agents, third-party consulting and professional services costs (not included in general and administrative or technology), and other related expenses.
(v) General and administrative expenses:
General and administrative expenses consists primarily of compensation, stock-based compensation expense and other personnel-related costs for executive management and administrative employees, including finance and accounting, legal, human resources and communications, the occupancy costs for its headquarters and other offices supporting its administrative functions, and transition services paid to its Former Parent, Vector Group, for the use of office space and employees, professional services fees for legal and finance, insurance expenses and talent acquisition expenses.
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DOUGLAS ELLIMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
(w) Technology expenses:
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, data licenses of technology and other related expenses associated with the implementation of our technology initiatives.
(x) Impairment of Fixed Assets:
The Company recorded an impairment charge of $2,275for the year ended December 31, 2025 due to the abandonment of an agent onboarding application.
(y) Restructuring:
Restructuring expense primarily consists of employee severance and benefits expensed for the years ended December 31, 2025 and 2024 associated with the reduction in staff and are cash charges. All amounts expensed for the years ended December 31, 2025 and 2024 are included in Restructuring expense in the Company’s consolidated statements of operations.The following table presents the changes in the restructuring liability, included within other current liabilities, for the years ended December 31, 2025 and 2024.
Restructuring liability balance at January 1, 2024 $ 767
Severance expense 1,041
Severance payments (1,320)
Restructuring liability balance at December 31, 2024 $ 488
Severance expense 1,357
Other restructuring expense 279
Severance payments (848)
Other restructuring payments (58)
Restructuring liability balance at December 31, 2025 $ 1,218
(z) Investments and Other Gains:
Investment and other gains consists of the following:
Year Ended December 31,
Other income 92 — —
(aa) Other Comprehensive Income:
The Company does not have any activity that results in Other Comprehensive Income; therefore, no statement of Comprehensive Income is included in the consolidated financial statements.
(ab) Sale of Douglas Elliman Property Management:
On October 24, 2025 (the “Closing Date”), Douglas Elliman Realty, LLC (“DER”) sold its subsidiary, Residential Management Group, LLC, which conducts business as Douglas Elliman Property Management (“DEPM”), for a base purchase price of $85,000, subject to adjustments for cash, indebtedness, transaction expenses and working capital amounts at closing (the “DEPM Sale”). In the consolidated statement of operations, the operating expenses include the gain on disposal of business
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Table of Contents
DOUGLAS ELLIMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
of $81,655 related to the DEPM Sale for the year ended December 31, 2025. The tax impact of the DEPM Sale has been treated as a discrete item in the fourth quarter of 2025. The DEPM Sale is governed by an agreement (the “Equity Purchase Agreement”) that includes representations and warranties for a transaction of this type. The Purchaser has obtained a representations and warranties insurance policy with such coverage serving as the Purchaser’s sole remedy with respect to any breach of representations and warranties by DEPM and DER, except for claims related to fraud and specific indemnities.
The parties agreed to a five-year non-competition covenant applicable to DER in specified territories and a five-year non-solicitation covenant, in each case subject to exceptions. Pursuant to the non-competition covenant, DER has agreed not to own, manage, operate or control any entity engaged in the management of cooperative, condominium and rental apartment buildings in New York and Texas, as well as the other locations where the Purchaser and its affiliates provide services.
DER and DEPM also entered into a trademark license agreement pursuant to which DER will continue to own all right, title and interest in and to certain trademarks and names of DER and DEPM, including the trademark and name “Douglas Elliman,” as well as all logos used by DEPM as of the Closing Date. DEPM will have the right for five years to use certain trade names, marks and logos, which were being used as of October 24, 2025, in connection with certain commercial and real estate property management services as well as other ancillary services. In connection with the DEPM Sale, the Purchaser and DEPM have agreed to maintain a referral arrangement with the Company during the term of the trademark license to continue DEPM’s long-standing business relationship with the Company.
(ac) Acquisitions:
Effective January 1, 2026, the Company acquired the remaining 50% of the ownership interest of Real Estate Associates of Houston LLC, a licensed real estate service provider in Houston, Texas, for a purchase price of $100.
(ad) Subsequent Events:
The Company has evaluated subsequent events through March 16, 2026, the date the financial statements were issued.
(ae) New Accounting Pronouncements:
Accounting Standards Updates (“ASUs”) adopted in 2025:
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740), Improvements to Income Tax Disclosures. The ASU requires that all public entities on an annual basis (1) disclose specific categories in the rate reconciliation and (2) provide additional information for reconciling items that meet a quantitative threshold. The ASU is effective for annual periods beginning after December 15, 2024. The Company adopted the guidance for the year ended December 31, 2025. Refer to Note 12 for additional information relating to the Company’s income taxes reporting.
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 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 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 consolidated financial statements and anticipates adopting the standard in the period ending March 31, 2028.
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DOUGLAS ELLIMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
In December 2025, the FASB issued ASU 2025-12, Codification Improvements. The purpose of this ASU is to make incremental improvements to 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 consolidated financial statements and anticipates adopting the standard in the period ending March 31, 2027.
2.REVENUE RECOGNITION
Revenue Recognition Policies
Revenue is measured based on a consideration specified in a contract with a customer less any sales incentives. Revenue is recognized when (a) an enforceable contract with a customer exists, that has commercial substance, and collection of substantially all consideration for services is probable; and (b) the performance obligations to the customer are satisfied either over time or at a point in time.
Real estate sales: Real estate commissions earned by the Company’s real estate brokerage businesses are recognized as revenue when the real estate sale is completed or lease agreement is executed, which is the point in time that the performance obligation is satisfied. Any commission and other payments received in advance are deferred until the satisfaction of the performance obligation. Corresponding agent commission expenses, including any advance commission or other direct expense payments, are deferred and recognized as cost of sales concurrently with related revenues.
The Company’s revenue contracts with customers do not have multiple material performance obligations to customers under Topic 606, except for contracts in the Company’s development marketing business. Contracts in the development marketing business provide the Company with the exclusive right to sell units in a subject property for a commission fee per unit sold calculated as a percentage of the sales price of each unit. Accordingly, a performance obligation exists for each unit in the development marketing property under contract, and a portion of the total contract transaction price is allocated to and recognized at the time each unit is sold. The Company applies the optional exemption in paragraph 606-10-50-14A of Topic 606 and does not disclose the amount of the transaction price allocated to the remaining performance obligations for the Real Estate development marketing business because the transaction prices in these contracts are comprised entirely of variable consideration based on the ultimate selling price of each unit in the subject property. The total contract transaction price is allocated to each unit in the subject property and recognized when the performance obligation, i.e., the sale of each unit, is satisfied. Accordingly, the transaction price allocated to the remaining performance obligations for the development marketing business represents variable consideration allocated entirely to wholly unsatisfied performance obligations.
Under development marketing service arrangements, dedicated staff are required for a subject property and these costs are typically reimbursed from the customer through advance payments that are recoupable from future commission earnings. Advance payments received and associated direct costs paid are deferred, allocated to each unit in the subject property, and recognized at the time of the completed sale of each unit.
Development marketing service arrangements also include direct fulfillment costs incurred in advance of the satisfaction of the performance obligation. The Company capitalizes costs incurred in fulfilling a contract with a customer if the fulfillment costs 1) relate directly to an existing contract or anticipated contract, 2) generate or enhance resources that will be used to satisfy performance obligations in the future, and 3) are expected to be recovered. These costs are amortized over the estimated customer relationship period which is the contract term. The Company uses an amortization method that is consistent with the pattern of transfer of goods or services to its customers by allocating these costs to each unit in the subject property and expensing these costs as each unit sold is closed over the contract.
Commission revenue is recognized at the time the performance obligation is met for commercial leasing contracts, which is when the lease agreement is executed, as there are no further performance obligations, including any amounts of future payments under extended payment terms.
Property management revenue arrangements consist of providing operational and administrative services to manage a subject property. Fees for these services are typically billed and collected monthly. Property management service fees are recognized as revenue over time using the output method as the performance obligations under the customer arrangement are satisfied each month. The Company applies the optional exemption in paragraph 606-10-50-14 of Topic 606 and does not disclose the amount of the transaction price allocated to the remaining performance obligations for the Real Estate property management business because the contracts to provide property management services are typically annual contracts and provide cancellation rights to customers.
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DOUGLAS ELLIMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Title insurance commission fee revenue is earned when the sale of the title insurance policy is completed, which corresponds to the point in time when the underlying real estate sale is completed, which is when the performance obligation is satisfied. Escrow commission fee revenue is recorded at a point in time which occurs at the time a home sale transaction or refinancing closes.
Disaggregation of Revenue
In the following table, revenue is disaggregated by major services line and primary geographical market:
Total New York City Northeast Southeast West International
Revenues:
Total New York City Northeast Southeast West International
Revenues:
Total New York City Northeast Southeast West International
Revenues:
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DOUGLAS ELLIMAN INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS — (Continued)
Contract Balances
The following table provides information about contract assets and contract liabilities from development marketing and commercial leasing contracts with customers:
Receivables, which are included in receivables $ 3,141 $ 1,789
Contract assets, net, which are included in other current assets 8,775 10,935
Contract assets, net, which are in other assets 46,735 37,123
Payables, which are included in commissions payable 2,237 1,302
Contract liabilities, which are in current liabilities 15,966 18,225
Contract liabilities, which are in other liabilities 74,946 63,765
Receivables and payables relate to commission receivables and commissions payable from the Real Estate commercial leasing contracts for which the performance obligation has been satisfied, have extended payment terms and are expected to be received and paid in the next twelve months. Receivables increased $1,352 for the year ended December 31, 2025 primarily due to accrued revenues from satisfied performance obligations of $3,664, offset by cash collections. Correspondingly, payables increased by $935 primarily due to additional accrued expenses from satisfied performance obligations of $2,580, offset by cash payments.
Contract assets. For the year ended December 31, 2025, the Company recorded additional contract assets of $25,189 for payments made for direct fulfillment costs incurred in advance of the satisfaction of the performance obligations for Real Estate development marketing contracts. For the year ended December 31, 2025, the Company also reduced contract assets (and recognized real estate agent commission expense) by $17,737 for previously deferred costs of units closed.
Contract liabilities. Contract liabilities relate to payments received in advance of the performance obligations being satisfied under the Real Estate development marketing contracts and are recognized as revenue at the points in time when the Company performs under the contracts. Performance obligations related to the Real Estate development marketing contracts are considered satisfied when each unit is closed. Development marketing projects tend to span four to six yearsfrom the time the Company enters into the contract with the developer to the time that all of the sales of the units in a subject property are closed. The timing for sales closings is dependent upon several external factors outside the Company’s control, including, but not limited to, economic factors, seller and buyer actions, construction timing and other real estate market factors. Accordingly, all contract liabilities and contract costs associated with development marketing are considered long-term until closing dates for unit sales are scheduled. As of December 31, 2025, the Company estimates $15,966 of contract liabilities will be recognized as revenue within the next twelve months.
For the year ended December 31, 2025, the Company recorded additional contract liabilities of $42,339 for payments received from customers prior to the satisfaction of performance obligations for Real Estate development marketing contracts. For the year ended December 31, 2025, the Company also reduced contract liabilities (and recognized commissions and other brokerage income) by $33,417 for previously deferred revenue for units closed during the year.
The Company recognized revenue of $30,573, $14,449 and $16,675 for the years ended December 31, 2025, 2024, and 2023, respectively, that were included in the contract liabilities balances at December 31, 2024, December 31, 2023 and December 31, 2022, respectively.
Topic 606 requires an entity to disclose the revenue recognized in the reporting period from performance obligations satisfied (or partially satisfied) in previous periods (for example, due to changes in transaction price). There were no revenues recognized relating to performance obligations satisfied or partially satisfied in prior periods for the years ended December 31, 2025, 2024 and 2023, respectively.
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DOUGLAS ELLIMAN INC.