DOUG

Douglas Elliman Inc.

NYSE · REAL ESTATE · REAL ESTATE AGENTS & MANAGERS (FOR OTHERS)

1.42

−0.03 −2.07%

USD · close Oct 21

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MKT CAP $129.1MP/E 4.9DIV YIELD —FCF YIELD -14.48%REV TTM $1B −2.7%NET INCOME $24.9MNET CASH $105.2M52W 1.40 – 2.85SEC XBRL · TTM TO Invalid Date

How DOUG rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

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Below we describe the known material risks that we face.
Each of the risks and uncertainties described below could lead to events or circumstances that have a material adverse effect on the business, results of operations, cash flows, prospects, as well as our financial condition, which in turn could negatively affect the value of our common stock.
Any of the following could be associated with cyclicality in the real estate market by halting or limiting a recovery in the residential real estate market, and consequently have an adverse effect on our business by causing periods of lower growth or a decline in the number of home sales and/or property prices which in turn could adversely affect our revenue and profitability: • periods of economic slowdown or recession; • rising interest rates and inflation; • the general availability and cost of mortgage financing; • a negative perception of the market for residential real estate; • commission pressure from brokers who discount their commissions; • an increase in the cost of homeowners’ insurance for owners of single-family homes and condominium associations; • weak credit markets; • a low level of consumer confidence in the economy and/or the real estate market; • instability of financial institutions, which may result in, among other things, depository banks not honoring escrow and trust deposits held by certain of our subsidiaries; • legislative, tax or regulatory changes that could adversely impact the real estate market, including, but not limited to, potential reform relating to Fannie Mae, Freddie Mac and other government sponsored entities that provide liquidity to the U.S. housing and mortgage markets, and potential limits on, or elimination of, the deductibility of certain mortgage interest expense and property taxes; • a decline in the affordability of homes; • declining demand for real estate; • declining home ownership rates, declining demand for real estate and changing social attitudes toward home ownership; • acts of God, such as hurricanes, earthquakes and other natural disasters, or acts or threats of war or terrorism; and/or • adverse changes in global, national, regional and local economic and market conditions, particularly in the New York metropolitan area and the other markets where we operate.
Our business significantly depends on sales transactions for residential property in t he New York metropolitan area, and we derived approximate ly 50% of our revenues in 2025, 49% of our revenues in 2024 and 51% of our revenues i n 2023 from the New York metropolitan area.
Beginning with the Tax Cuts and Jobs Act of 2017 (the “2017 Tax Act”) and continuing with the One Big Beautiful Bill Act (the “OBBBA”), mortgage interest deductions as well as state and local income and property tax deductions have been limited since 2018.
In 2025, approximately 64% of our closed sales occurred in New York, California, Connecticut, New Jersey and Massachusetts, and a migration of residents from these markets or a reduction in the attractiveness of these markets as a place to live could adversely impact demand for our products and services.
The attractiveness of New York City may also be negatively affected by other factors, including high residential property sales prices or rents (or a risk or perceived risk of a fall in sales prices in the future), high costs of living, the impact of the 2017 Tax Act and the OBBBA, the impact of changes in state tax law, such as the real estate transfer tax on luxury property, and negative perceptions surrounding quality of life, safety and security (including the risk or perceived risk of acts of terrorism or protests).
We believe that low mortgage rates were a significant factor in the trend in increased homeowner equity and growth in home prices and sales through 2021.
Consequently, mortgage interest rates significantly and rapidly increased.
As the Federal Reserve lowered the federal funds rate by a total of 100 basis points in 2024 and 75 basis points in 2025, mortgage rates have remained relatively high but have since been declining.
The high interest rate environment may negatively impact and, until the interest rate environment meaningfully improves, it would be expected to negatively impact multiple aspects of our business, as increases in mortgage rates (as well as prolonged periods of high mortgage rates) generally have an adverse impact on transaction volume, housing affordability, and title, escrow, mortgage and refinancing volumes.
If existing transactions were to remain at depressed levels or decline further (due to the high mortgage rate environment or otherwise), we would also expect to experience decreased title, escrow, mortgage origination and refinancing activity.
Changes in the Federal Reserve's policies, the interest rate environment, and the mortgage market are beyond our control, are difficult to predict, and could have a material adverse effect on our business, results of operations and financial condition.
A significant decline in the number of transactions or title, escrow, mortgage and refinancing activity due to any of the foregoing would adversely affect our financial and operating results, which may be material.
Further, we have licensed the use of our name and certain of our intellectual property in connection with our sale of our property management business and our Elliman International business.
Therefore, our brand may be negatively impacted by the actions of third parties as well.
The ability of our brokerage offices to retain agents is generally subject to numerous factors, including the sales commissions they receive, advertising support, technology and ancillary real estate service offerings and perception of brand value.
Some of our competitors may have greater financial resources than we do to enhance their value proposition to agents and consumers.
Recent consolidation in our industry also could allow larger competitors, which have greater access to capital, the ability to scale and pursue strategies to outperform their competitors.
This could include offering exclusive programs or the broad adoption of private listings accessible only through their agents, which could harm our ability to recruit and retain agents and/or limit the supply of listings our agents have access to.
In April 2024, the FTC enacted a rule that prohibited employers from entering into non-compete clauses with workers and require employers to rescind existing non-compete clauses.
As of December 31, 2025 , we had approximately $32.2 million of goodwill and $71.7 million of trademarks and other intangible assets related to Douglas Elliman.
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.
Under the Settlement Agreement, we paid $7.75 million into an escrow fund on June 12, 2024, $5.0 million into an escrow fund on December 29, 2025, and agreed to pay an additional $5.0 million contingent payment subject to certain financial contingencies on or before December 31, 2027 (collectively, the “Settlement Amount”).
In addition, we may become involved in additional legal proceedings concerning the same or similar claims and currently are a defendant in the buyer-side class action Lutz lawsuit, pending in the U.S.
District Court for the Southern District of Florida, No. 4:24-cv-10040 (KMM).
Our international expansion and launch of Elliman International may subject us to different or greater risks from those associated with our operations in the United States.
In June 2025, we launched Elliman International after the end of our strategic alliance with Knight Frank Residential.
Elliman International is intended to enable us to directly serve our agents, clients, and developer’s international real estate needs, with an initial focus on luxury destinations in Latin America, the Middle East, Europe, Asia Pacific, and other emerging wealth centers outside the United States.
While we continue to develop and refine our approach to international operations, there can be no assurance that these efforts will be successful.
Entering foreign markets independently presents significant risks and operational challenges that may adversely affect our financial condition and operating results.
Our international operations may face risks that are different from those that affect domestic operations.
These risks include: • Exposure to economic conditions and federal, state and local as well as potential international laws and regulations, including those relating to our agents; • Potential adverse changes in the political stability of foreign countries or in their diplomatic relations with the United States; • The effect of enacted and proposed tariffs and other trade policies, and related uncertainties in the global economy resulting from such policies; • Economic instability, and related uncertainties in the global economy, from pressured banking systems, inflation and currency risk, lack of capital, and changing or inconsistent economic policies; • Costs and incremental expenses associated with complying with a wide variety of foreign laws including laws with respect to real estate brokerage arrangements, agents, employment, corporate governance, operations, taxes, and litigation; • Difficulties in managing international operations, including difficulties that arise from ambiguities in contracts written in foreign languages and difficulties that arise in enforcing such contracts; • Aligning international operations with our existing corporate infrastructure and the need to adapt and localize our business platform(s) for specific countries; • The geographic, time zone, language and cultural differences among personnel in different areas of the world; • Tax uncertainty, including tax law changes, limited tax guidance and difficulty determining tax exposure or planning tax-efficient structures; • Restrictions on the ability to obtain or retain licenses, permits and other regulatory approvals required for operation; • Establishing brand recognition in new markets; and • Difficulties with managing international operations, including costs and staffing.
We may expand our footprint in such markets by pursuing acquisitions, joint ventures, or other strategic arrangements with local or regional operators in those markets.
These partners may have economic or other business interests or goals which are inconsistent with our business interests and goals.
Disputes between us and our partners may result in litigation or arbitration that would increase our expenses, affect our brand, and prevent our officers and directors from focusing their time and effort on our business.
Further, improper actions taken by any such third parties that we have strategic arrangements with may negatively impact our brand and reputation and potentially lead to direct claims against us and subject us to liability.
If we fail to identify, establish, and maintain such relationships or successfully identify and acquire businesses, we may be unable to execute our expansion plans.
We expect that our international activities may grow in the future as we pursue opportunities in international markets, which may require significant dedication of management attention and may require significant upfront investment.
In the event that we expand into new international markets, we may have only limited experience in marketing and conducting business in those markets.

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Gone since FY2024

Below we described the known material risks that we face.
Each of the risks and uncertainties described below could lead to events or circumstances that have a material adverse effect on the business, results of operations, cash flows, prospects, financial condition of us, which in turn could negatively affect the value of our common stock.
Any of the following could be associated with cyclicality in the real estate market by halting or limiting a recovery in the residential real estate market, and have an adverse effect on our business by causing periods of lower growth or a decline in the number of home sales and/or property prices which in turn could adversely affect our revenue and profitability: • periods of economic slowdown or recession; • rising interest rates and inflation; • the general availability and cost of mortgage financing; • a negative perception of the market for residential real estate; • commission pressure from brokers who discount their commissions; • an increase in the cost of homeowners’ insurance for owners of single-family homes and condominium associations; • weak credit markets; • a low level of consumer confidence in the economy and/or the real estate market; • instability of financial institutions, which may result in, among other things, depository banks not honoring escrow and trust deposits held by certain of our subsidiaries; • legislative, tax or regulatory changes that could adversely impact the real estate market, including, but not limited to, potential reform relating to Fannie Mae, Freddie Mac and other government sponsored entities that provide liquidity to the U.S. housing and mortgage markets, and potential limits on, or elimination of, the deductibility of certain mortgage interest expense and property taxes; • adverse changes in economic and general business conditions in the New York metropolitan area or the other markets in which we operate; • a decline in the affordability of homes; • declining demand for real estate; • declining home ownership rates, declining demand for real estate and changing social attitudes toward home ownership; • acts of God, such as hurricanes, earthquakes and other natural disasters, or acts or threats of war or terrorism; and/or • adverse changes in global, national, regional and local economic and market conditions, particularly in the New York metropolitan area and the other markets where we operate, including those relating to pandemics and health crises.
Our business significantly depends on sales transactions for residential property in the New York metropolitan area, and we derived approximately 48% of our revenues in 2024, 50% of our revenues in 2023 and 52% of our revenues in 2022 from the New York metropolitan area.
The Tax Cuts and Jobs Act of 2017 (the “Tax Act”) limited mortgage interest deductions as well as state and local income and property tax deductions.
In 2024, approximately 63% of our closed sales occurred in New York, California, Connecticut, New Jersey and Massachusetts, and a migration of residents from these markets or a reduction in the attractiveness of these markets as a place to live could adversely impact demand for our products and services.
The attractiveness of New York City may also be negatively affected by other factors, including high residential property sales prices or rents (or a risk or perceived risk of a fall in sales prices in the future), high costs of living, the impact of the Tax Act, the impact of changes in state tax law, such as the real estate transfer tax on luxury property, and negative perceptions surrounding quality of life, safety and security (including the risk or perceived risk of acts of terrorism or protests).
We believe that low mortgage rates were a significant factor in the trend in increased homeowner equity and growth in home prices and sales in 2021.
Consequently, mortgage interest rates have significantly and rapidly increased.
The ability of our brokerage offices to retain agents is generally subject to numerous factors, including the sales commissions they receive, advertising support and perception of brand value.
While we cannot predict how the initiatives set forth in the executive order will be implemented or, as a result, the impact that the executive order will have on our operations, there is now increased uncertainty regarding the long-term enforceability of our non-compete agreements.
In April 2024, the FTC enacted a rule that prohibited employers from entering non-compete clauses with workers and require employers to rescind existing non-compete clauses.
However, the FTC may appeal the discussion and the outcome of the FTC ruling is uncertain.
Douglas Elliman is subject to risks and operational limitations associated with its strategic alliance with Knight Frank Residential.
Douglas Elliman has entered into a strategic alliance with Knight Frank Residential, the world’s largest privately-owned property consultancy, to market certain luxury residential properties of at least $2 million to international audiences through co-branded offices, located in the various luxury markets where Douglas Elliman operates, and select top-tier agents.
The agreement provides for the sharing of commissions and certain other payments in respect of jointly marketed properties.
This strategic alliance subjects Douglas Elliman to risks, including risks associated with the sharing of proprietary information between parties, non-performance by Douglas Elliman or Knight Frank Residential of obligations under the strategic alliance agreement, disputes over strategic or operational decisions or other matters and reputational risks, as well as litigation risks associated therewith.
In particular, Douglas Elliman is subject to certain exclusivity and non-compete provisions in connection with marketing and selling properties outside the United States in various markets in which Knight Frank Residential operates, subject to certain exceptions.
Although Douglas Elliman believes that the strategic alliance enhances its ability to serve its luxury customers, such restrictions could limit Douglas Elliman’s growth prospects.
As of December 31, 2024 , we had approximately $32.2 million of goodwill and $72.3 million of trademarks and other intangible assets related to Douglas Elliman.
In the three months ended September 30, 2024, we utilized third-party valuation specialists to prepare a quantitative assessment of the Company’s goodwill and trademark intangible assets, based on the current market conditions in the residential real estate brokerage industry which did not result in impairment charges related to its goodwill or trademark for the year ended December 31, 2024.
Under the Settlement Agreement, we paid $7.75 million into an escrow fund on June 12, 2024, and agreed to pay two $5.0 million contingent payments subject to certain financial contingencies on or before December 31, 2027 (collectively, the “Settlement Amount”).
In addition, we may become involved in additional legal proceedings concerning the same or similar claims and currently are a defendant in the buyer-side class action Lutz lawsuit, pending in the United States District Court for the Southern District of Florida, No. 4:24-cv-10040 (KMM).
We are unable to reasonably estimate the financial impact of any remaining matters.
While targeted returns should reflect the perceived level of risk in any investment, there can be no assurance that New Valley Ventures will be adequately compensated for risks taken, and the loss of its entire investment is possible.
Sensitive, proprietary, or confidential information of Douglas Elliman, our employees, agents and business partners could be leaked, disclosed, or revealed as a result of or in connection with the use of AI within the technology leveraged from our PropTech Investments.
Our debt obligations under our Convertible Notes could impair our financial condition, limit our operational flexibility and result in significant dilution.
On July 2, 2024, we issued Senior Secured Convertible Promissory Notes due July 2, 2029 (the “Convertible Notes”), pursuant to a Securities Purchase Agreement, dated as of July 2, 2024 (the “Purchase Agreement”), by and among the Company, Alter Domus (US) LLC, as collateral agent for the purchasers, and the purchasers named therein (such purchasers being funds affiliated with or managed by Kennedy Lewis Investment Management LLC (“KLIM”)), in an aggregate principal amount of $50.0 million.
The Convertible Notes mature on July 2, 2029, and are convertible into shares of our common stock.
The Convertible Notes were issued in a private placement pursuant to an exemption for transactions by an issuer not involving a public offering under Section 4(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”).
In connection with the Purchase Agreement and the Convertible Notes, certain of our subsidiaries (each a “Guarantor” and, collectively, the “Guarantors”) entered into a Security Agreement, dated as of July 2, 2024 (the “Security Agreement”), whereby the Guarantors agreed to guarantee the obligations and liabilities of the Company under the Convertible Notes.
As a result, our obligations under the Convertible Notes are secured by a perfected security interest in substantially all of our tangible and intangible assets (including our intellectual property assets).
Our indebtedness under the Convertible Notes could: • impair our ability to obtain financing or additional debt in the future for working capital, capital expenditures, acquisitions or general corporate purposes; • impair our ability to access capital and credit markets on terms that are favorable to us or at all; • require us to dedicate a substantial portion of our cash flow for interest payments on our indebtedness and other financial obligations, thereby reducing the availability of our cash flow to fund working capital and general corporate purposes; and • limit our flexibility in planning for, or reacting to, changes in our business and the industry in which we operate.
The Purchase Agreement contains certain affirmative and negative covenants (including restrictions on the Company’s ability to incur indebtedness, create liens, pay dividends or distributions, make investments and enter into certain affiliate transactions).
In addition, pursuant to the Purchase Agreement, if we have negative Consolidated Adjusted EBITDA (as defined in the Purchase Agreement) for any two consecutive fiscal quarters from and after the fiscal quarter commencing July 1, 2024, then we will be required to maintain Liquidity (as defined in the Purchase Agreement) of at least $20.0 million as of the end of each calendar month until we have positive Consolidated Adjusted EBITDA at the end of any subsequent fiscal quarter.
There is no guarantee that we will be able to pay the principal and interest under the Convertible Notes or that future working capital, borrowings or equity financing will be available to repay or refinance any amounts outstanding under the Convertible Notes.
The Convertible Notes are convertible at any time at the option of KLIM, at an initial conversion price of $1.50 per share of common stock, provided that KLIM is prohibited from converting the Convertible Notes into shares of common stock if, upon such conversion, so long as the aggregate number of shares of common stock beneficially owned by KLIM would exceed 4.99% (the “Beneficial Ownership Limitation”) of the number of shares of common stock outstanding immediately after giving effect to the conversion, as such percentage ownership is determined in accordance with the terms of the Convertible Note, and which may be increased up to 24.99% at the election of KLIM.
Assuming the Convertible Notes are converted in full (without issuance of any make-whole shares), and without giving effect to the Beneficial Ownership Limitation, the Convertible Notes would convert into 33,333,334 shares of common stock, or 40,854,085 shares of common stock upon issuance of all make-whole shares, which would result in significant dilution to our stockholders.
We may not have the ability to raise the funds necessary to settle conversions of our Convertible Notes in cash or to repurchase the Convertible Notes in connection with a Major Transaction, and any other indebtedness we may incur in the future may contain limitations on our ability to pay cash upon conversion or repurchase of the Convertible Notes.
In the event of certain Major Transactions (as defined in the Purchase Agreement), we will be required to repay the Convertible Notes on the date on which such transaction occurs at a price equal to the greater of (i) the outstanding principal and capitalized interest on the Convertible Note plus a make-whole premium and (ii) the sum of (a) the fair market value of the as-converted amount of the Convertible Note for common stock plus (b) the fair market value of additional make-whole shares calculated pursuant to a customary make-whole table.

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Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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