Earnings call transcript: Douglas Elliman Q3 2025 misses revenue forecast, stock dips

Douglas Elliman Inc. (NASDAQ:ELLM) reported its third-quarter 2025 earnings, revealing a revenue miss that led to a notable dip in its stock price. The company posted revenues of $262.8 million, falling short of the $315.85 million forecast, resulting in a revenue surprise of -16.78%. The stock reacted negatively, with premarket trading showing a decline of 6.14% to $2.309 per share.

Key Takeaways

• Douglas Elliman reported a revenue of $262.8 million, missing the forecast by 16.78%.
• The company’s stock dropped 6.14% in premarket trading following the earnings release.
• Despite the revenue miss, Douglas Elliman reduced its net loss and improved adjusted EBITDA year-over-year.
• The company launched several new products and expanded into international markets during the quarter.
• The luxury home market remains robust, with significant growth in high-value transactions.

Company Performance

Douglas Elliman’s overall performance in Q3 2025 showed mixed results. While the company experienced a decline in quarterly revenue compared to both the forecast and the previous year, it managed to reduce its net loss to $24.7 million from $27.2 million in 2024. The adjusted EBITDA improved to $2.7 million, indicating better operational efficiency. The company continues to focus on the luxury residential brokerage market, leveraging technological innovations and international expansion.

Financial Highlights

• Revenue: $262.8 million, down from $266.3 million in Q3 2024.
• Net loss: $24.7 million, reduced from $27.2 million in 2024.
• Adjusted EBITDA: $2.7 million, up from $2.3 million in 2024.
• Cash and cash equivalents: $126.5 million as of October 31, 2025.

Earnings vs. Forecast

Douglas Elliman’s Q3 2025 revenue of $262.8 million fell short of the $315.85 million forecast, resulting in a significant revenue surprise of -16.78%. This miss contrasts with the company’s previous quarters, where it had managed to meet or exceed expectations. The magnitude of this miss is substantial and reflects challenges in meeting market expectations.

Market Reaction

The market reacted swiftly to Douglas Elliman’s earnings report, with the stock price dropping by 6.14% in premarket trading to $2.309 per share. This decline reflects investor disappointment over the revenue miss. The stock’s performance is currently near its 52-week low of $1.475, with the latest close at $2.46, indicating a challenging period for the company in the stock market.

Outlook & Guidance

Looking forward, Douglas Elliman remains optimistic about its growth prospects. The company expects accelerated growth in 2026, driven by its development marketing pipeline, which is projected to generate commissions through 2031. The strategic focus will continue to be on the luxury segment and technological innovation, with ongoing international expansion plans.

Executive Commentary

CEO Michael S. Lebowitz highlighted the company’s strategic direction, stating, "2025 marked a bold evolution in our brand and our business model." He expressed confidence in the company’s future, noting, "We believe 2026 will mark the beginning of a new growth phase." Lebowitz emphasized the company’s commitment to being a leader in the luxury residential real estate market.

Risks and Challenges

• Economic uncertainty could impact luxury home sales.
• Increased competition in the luxury real estate market.
• Potential challenges in international expansion efforts.
• Reliance on technological innovations to drive growth.
• Market volatility affecting stock performance.

Douglas Elliman’s third-quarter results underscore the challenges and opportunities facing the company as it navigates a competitive luxury real estate market. While the revenue miss has impacted investor sentiment, the company’s strategic initiatives and focus on innovation provide a pathway for future growth.

Full transcript - Douglas Elliman Inc (DOUG) Q3 2025:

Conference Operator: Welcome to the Douglas Elliman’s Third Quarter twenty twenty five Earnings Conference Call. This call is being recorded and simultaneously webcast. An archived version of the webcast will be available on the Investor Relations section of the company’s website located at investors.ellmann.com for one year. I’d like to turn the conference over to Douglas Elliman, Vice President of Finance, Heather Capriola.

Heather Capriola, Vice President of Finance, Douglas Elliman Inc: Thank you, and good morning. On the call with me today is Michael Lebowitz, President and CEO of Douglas Elliman Inc, and Brian Kirkland, CFO of Douglas Elliman Inc. This call, the terms adjusted EBITDA and adjusted net income or loss will be used as well as last twelve months or LTM metrics. These terms are non GAAP financial measures and should be considered in addition to, but not as a substitute for, other measures of financial performance prepared in accordance with GAAP. Reconciliations to adjusted EBITDA and adjusted net income or loss are contained in the company’s earnings release, which has been posted to the Investor Relations section of the company’s website.

Before the call begins, I would like to read a safe harbor statement. The statements made during this conference call that are not historical facts are forward looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward looking statements. These risks are described in more detail in the company’s Securities and Exchange Commission filings. Any forward looking statements made during this call are made as of today, and the company undertakes no duty to update or revise any such statement, whether as a result of new information, future events or otherwise, except as required by law. Now I would like to turn the call over to the Chief Executive Officer of Douglas Elliman, Michael S.

Lebowitz.

Michael S. Lebowitz, President and CEO, Douglas Elliman Inc: Thank you, Heather. Good morning, and thank you for joining us. We have strong momentum as a result of the decisive steps we have taken this year to build a more focused pure play luxury brokerage. While others in the industry are pursuing consolidation and platform integration, we remain committed to deepening our leadership in the luxury segment, a category that is synonymous with our brand. This strategic focus positions Douglas Elliman well for long term success and value creation for our stakeholders.

On today’s call, we will discuss the current operating environment and Douglas Elliman’s financial results for the three nine months ended 09/30/2025. All numbers presented this morning will be as of 09/30/2025, unless otherwise stated. We will then provide closing comments. Before we turn to our third quarter twenty twenty five results, I would like to begin by discussing some of our recent strategic initiatives. For the first nine months of 2025, our revenues increased by 5% year over year to $787,600,000 We also made considerable progress toward restoring profitability, reducing our operating loss to $21,500,000 from $52,600,000 in the same period last year.

Taking a step back, 2025 has been a pivotal transitional year for Douglas Elliman so far. Our focus has been on building the foundation for sustainable long term growth and positioning the company to capture opportunities as market conditions improve. We have taken decisive steps to sharpen our competitive edge, enhance our service offerings and expand our reach. The groundwork we have laid in particular selling our property management division and eliminating the overhang of the in the money convertible debt, expanding our brand internationally and making investments in artificial intelligence that is helping our agents do what they do best, position us for accelerated growth and value creation in 2026 and beyond. 2025 marked a bold evolution in our brand and our business model.

Earlier this year, we announced the launch of Element International, extending our renowned service and network into key global markets. We are already making strides with our entry into France announced last week, which brings the Douglas Elliman brand and our high standard of service to the prestigious markets of Bordeaux, the French Riviera, Monaco and St. Bart’s with plans to expand into Paris and the French Alps in the near future. Our expansion into France and Monaco led by industry veterans Philippe Crucher, Frederic Lelot and Edward de Mallet Morgan is just the tip of the iceberg. Our international growth is complemented by the launch of new global property distribution partnerships, including Propco Luxury and Decay and expanding our reach to millions of high net worth individuals worldwide.

This strategy answers the growing demand from American and international buyers for seamless cross border luxury real estate expertise. We have also taken decisive steps to sharpen our business focus, strengthen our financial foundation and expand our suite of specialized client services. A major recent milestone was the sale of Douglas Elliman Property Management for $85,000,000 to Associa, the nation’s largest community association management firm. We believe we will recognize an after tax gain of approximately $75,000,000 on the sale. This transaction sharpens our focus as a pure play luxury residential brokerage and eliminates operational complexity.

With cash balances of approximately $126,500,000 at 10/31/2025 and no debt, we are strategically positioned to capitalize on market opportunities in our revolving industry. We are now uniquely positioned both financially and strategically to pursue further geographic expansion, technological advancement and strategic acquisitions from a position of strength. We have also introduced Element Capital, our in house mortgage platform developed in strategic alliance with associated mortgage bankers. This innovative platform is designed to streamline the home financing process for clients seeking both traditional and non traditional loan products. Our clients benefit from competitive rates, a diverse range of loan products and the seamless integration that comes from working with a single trusted source for both their real estate and financing needs.

Our new estate, trust and probate division, along with the launch of Element Private Listings, provides even more specialized client centric services, reinforcing our total commitment to choice, privacy and exceptional service for our discerning clientele. Central pillar of our strategy has always been investing in the agent experience, empowering our professionals with some of the most advanced tools in the industry. We recognize that real estate is and always will be a people business. That is why our approach to artificial intelligence is focused on augmenting, not replacing the agent expertise relationships that define business element. Earlier this month, we launched LE AI, a first of its kind AI powered assistant app designed to streamline the daily workflow of our agents.

LE AI enables natural language MLS searches, generates branded reports and lifestyle maps, and aggregates real time data from MLS public records and the web, giving our agents the insights they need to deliver truly personalized data driven service. Our new Element Inspirations platform on element.com takes us even further, offering an AI powered home discovery tool that personalizes property searches and deepens agent client collaboration. By putting advanced technology in the hands of our agents, we are freeing them from repetitive tasks, equipping them with real time market intelligence and enabling them to focus on what matters most, building relationships and delivering exceptional outcomes for clients. We intend to continue to partner with leading technology providers, scale our internal talent pool and maintain rigorous governance to ensure our AI roadmap supports both growth and trust. We believe 2026 will mark the beginning of a new growth phase as the investments and strategic moves we have made in 2025 begin to yield results.

We are confident that our focus on innovation, international expansion and luxury service will drive sustainable value for our clients, agents and stockholders. With that, I will turn it over to Bryant, who will provide more details on our financial performance and the trends shaping the residential real estate market. Brian?

Brian Kirkland, CFO, Douglas Elliman Inc: Good morning and thank you, Michael. We are confident that our positive momentum is continuing and has positioned Douglas Elliman for long term success. Before discussing results for the three and nine months ended 09/30/2025, I would like to discuss the strength of Douglas Elliman’s balance sheet and the competitive advantage it provides the management team and executing its growth strategy. In October 2025, in connection with the sale of our property management division for approximately $85,000,000 the company redeemed all of its convertible notes for an aggregate payment of $95,000,000 which included accrued interest. As Michael noted, we believe this strengthened our financial position as after the redemption, the company had approximately $126,500,000 of cash and no debt at 10/31/2025.

We believe our strong balance sheet gives Douglas Elliman a competitive advantage by providing optionality to expand into new markets where appropriate and strengthen our services platform as opportunities arise in our ever changing industry. Results from the first nine months of 2025 indicate that our core operations are reflecting the impact of the strategic actions we have been taking over the past two years. In particular, the first nine months benefited from a favorable sales mix, highlighted by strong contributions from development marketing in the Northeast Region. Specifically, revenues from our development marketing division increased by $17,200,000 from the first nine months of 2024 as we began to see the benefits of the investments we have made in the division in recent years. As a reminder, we generally recognize commission income from development marketing contracts when the underlying units close.

Looking to the future, at 09/30/2025, our balance sheet reported $90,200,000 in deferred revenue liabilities from development marketing contracts, which were offset by deferred assets from development marketing contracts of $52,800,000 to net amount of $37,400,000 plus future commissions received at closings will be recognized as income when units in these developments close. In addition to our development marketing division, I am pleased to report that because of among other things, a targeted recruiting effort, revenues from existing home sales in our Northeast market increased by $12,400,000 or 9% from the first nine months of twenty twenty four. Even with these accomplishments, our operations faced ongoing challenges from economic pressures, including geopolitical uncertainties and the continuation of elevated mortgage rates when compared to recent history. Although not included in our third quarter results, cash receipts from existing home sales in October 2025 were 6% more than October 2024 and total brokerage cash receipts, which include existing home sales and receipts from our development marketing division were 2.5% more than October 2024. Before discussing third quarter results, we would like to highlight a few key trends.

First, Douglas Elliman continues to set the standard in the luxury market and luxury home pricing remains strong. Our average price per transaction year to date rose to $1,870,000 compared to $1,680,000 per home in the same period last year. Over the last twelve months, this average was $1,800,000 per home, up from $1,600,000 in 2024. In the 2025, our agents sold three thirty three homes priced at more than $5,000,000 representing 5.9% of total transactions and ten sixteen such homes in the first nine months of the year. These are increases of twenty percent and thirty two percent respectively over last year.

We also sold 87 homes for more than $10,000,000 in the third quarter and February year to date. These are increases of 1928% respectively from the last year. These results clearly demonstrate Douglas Elliman remains the definitive name in luxury real estate. Our development marketing division remains the preeminent industry player with an active pipeline totaling $25,500,000,000 of gross transaction value. This includes approximately $16,600,000,000 of gross transaction value in Florida alone.

In addition, another $6,100,000,000 of gross transaction value is expected to come to market through December 2026. We believe this strong foundation positions us well for the future as we generally recognize mission income from these projects upon closing, which is generally between twenty twenty six and 2031. In addition to its strong fourth quarter in 2024, development marketing has continued this momentum for the first nine months of 2025 as its nine month revenues have increased from $42,300,000 in twenty twenty four to fifty nine point five million dollars in 2025. Now, let us move to updates on our expense structure and our continued focus on operational efficiency. We continue to manage investments across our markets with a strict focus on return on investment metrics.

For the three and nine months ended 09/30/2025, our operating expenses excluding commissions, depreciation and amortization, unusual litigation expense, settlement and related expenses, impairment on fixed assets, restructuring expenses and noncash compensation increased by $2,500,000 and $600,000 respectively compared to the 20 ’24 periods. The change was primarily due to increased personnel expenses, although targeted expense areas such as offline advertising continued to decline. The increase in compensation was attributable to our ongoing investment in the development marketing business as well as increased bonus accruals associated with increased revenues from the business performance. Moving to the operating performance of the business in the third quarter. Douglas Elliman reported $262,800,000 in revenues compared to $266,300,000 in the 2024 period.

Net loss for the quarter was $24,700,000 or $0.29 per diluted share compared with $27,200,000 or $0.33 per diluted share in the 2024 period. Net loss in the 2025 period included a non cash charge of $15,000,000 associated with the increase in fair value of derivatives embedded within our convertible debt and this was primarily driven by an increase in our stock price from $2.32 a share at 06/30/2025 to $2.86 per share at 09/30/2025. Net loss in the 2024 period included a non cash charge of $20,200,000 associated with the increase in fair value of derivatives embedded within our convertible debt. Adjusted EBITDA for the third quarter were 2,700,000 compared to $2,300,000 in the 2024 period. Adjusted net income for the third quarter was $156,000 compared to adjusted net loss of $2,700,000 or $03 per share in the 2024 period.

Now turning to the operating performance of the business for the nine months ended 09/30/2025, which will be compared to the nine months ended 09/30/2024. Net loss for the nine months ended 09/30/2025 was $53,300,000 or $0.63 per diluted share compared to $70,300,000 or $0.84 per diluted share. Net loss in the 2025 period included a non cash charge of $33,200,000 associated with the increase in fair value of derivatives embedded within our convertible debt, which was primarily driven by an increase in our stock price of $1.67 per share at 12/31/2024 to $2.8 per share at 09/30/2025. Net loss in the 2024 period included a $17,750,000 litigation settlement charge and a non cash charge of $20,200,000 with increases in fair value of derivatives embedded within our convertible debt. Adjusted EBITDA for the nine months ended 09/30/2025 was $2,900,000 compared to a loss of $12,400,000 in the 2024 period.

That is an increase of $15,300,000 Adjusted net loss for the nine months ended 09/30/2025 was $6,900,000 or $08 per share compared to $26,300,000 or $0.32 per share in the 2024 period. And as mentioned earlier, Douglas Elliman reported $787,600,000 in revenues, up from $752,300,000 in the twenty twenty four nine month period. As noted earlier, Douglas Elliman has maintained ample liquidity with cash and cash equivalents at 09/30/2025 of $143,000,000 And after the sale of our property management division and associated redemption of our convertible debt on 10/31/2025, we had approximately $126,500,000 of cash and cash equivalents and no debt. Thank you for your attention and back to you, Michael.

Michael S. Lebowitz, President and CEO, Douglas Elliman Inc: Thank you, Bryant. We have implemented strategic initiatives to advance our market leadership, elevate our service offerings and expand our reach both domestically and internationally. Our results for the first nine months of 2025 demonstrate that this year’s investments are already delivering tangible benefits and we expect these positive impacts to continue throughout the remainder of 2025 and well into 2026. Our strategy is clear, to be the preeminent luxury pure play residential real estate brokerage platform, powered by the best in class innovative technology with global reach. Thank you for your continued trust in Douglas Elliman.

With that, we will turn the call over to the operator. Operator?

Conference Operator: Thank you for joining us on Douglas Elliman’s quarterly earnings call. We hope you have a good day, and this will conclude our call.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.