DOUG

Welcome to Douglas Elliman's fourth quarter and full year 2025 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 An archived version of the webcast will be available on the investor relations section of the company's website located at investors.elliman.com for one year. I would like to turn the conference over to Douglas Elliman's Vice President of Finance, Heather Capriola.

Thank you and good morning. On the call with me today is Michael S. Liebowitz, President and CEO of Douglas Elliman Inc., and J. Bryant Kirkland III, CFO of Douglas Elliman Inc. During this call, the terms adjusted EBITDA and adjusted net loss or income will be used. 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. Liebowitz.

Thank you, Heather. Good morning, and thank you for joining us. Douglas Elliman continues to build on the strong momentum established by the decisive steps we took in 2025, including strategic alignment and disciplined financial management underpinned by our unwavering commitment to luxury service. The fourth quarter was a period of bold execution and meaningful progress on our long-term vision to be the leading independent luxury real estate brokerage driven by innovation, talent, and a relentless focus on our clients and agents. This progress 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 months and year ended December 31st, 2025. All numbers presented this morning will be as of December 31st, 2025, unless otherwise stated.

Before we turn to our results, I want to highlight several key developments from the past quarter that underscore our differentiated strategy and the unique strengths that set Douglas Elliman apart. First, we continue to actively pursue opportunities to deepen our footprint in existing markets while strategically entering new high-potential regions. We continued expanding our brand internationally with our recent entry into the French Alps, building on our successful launches in Bordeaux, the French Riviera, and Monaco. Under the leadership of Rich Green, our brand's presence in these globally recognized luxury destinations is already generating significant interest from high-net-worth clients seeking exclusive cross-border expertise. By partnering with seasoned industry leaders and local specialists, we believe we have further enhanced our ability to deliver best-in-class service and bespoke solutions in the world's most coveted markets.

We currently operate in nine markets in the United States and believe there is a significant opportunity to further expand our presence as well as the Douglas Elliman brand in our existing and new markets. To support this strategy, Douglas Elliman recently launched two growth teams. The market growth team focused on expanding our footprint within current markets, and the new markets team responsible for driving our expansion into new domestic and international markets. These teams will strategically recruit agents by highlighting our competitive advantage in serving the luxury real estate sector. Second, we have continued to expand our core service offerings. The successful launch of Elliman Capital in New York following its debut in Florida marks a significant step forward in our mission to deliver a seamless, integrated real estate and financing experience for our clients.

By leveraging our strategic alliance with Associated Mortgage Bankers, Elliman Capital provides agents and clients with a comprehensive suite of lending solutions, competitive rates, and the streamlined support that only an in-house platform can offer. This initiative strengthens our value proposition in our flagship markets and positions us to capture new opportunities among traditional and non-traditional borrowers alike. Third, we have reinforced our leadership team with appointments that signal our commitment to growth and innovation, operational excellence, and agent empowerment. Our brokerage subsidiary has appointed Wendy Purvey as Chief Strategy Officer, and her appointment further strengthens our capacity to drive growth through agent acquisitions, international partnerships, and new service lines.

Our brokerage subsidiary has also welcomed the return of Natalie Passerini as Chief Marketing Officer and the addition of Chris Reyes as Chief Technology Officer. Natalie and Chris bring deep expertise and fresh vision to our brand evolution, digital strategy, and agent support platforms. We are excited to welcome these accomplished leaders to the Douglas Elliman team and look forward to the energy, insight, and collaboration they will bring as we continue to elevate our company and support our agents. Finally, we have also made significant investments in market intelligence, technology, and agent resources. We recently launched a new market data report program, which will provide agents and clients with timely, transparent insights tailored to our markets. Our ongoing rollout of agent-centric technology, including Elli AI, Elliman Private Listings, and enhanced marketing tools, ensures our professionals remain at the forefront of the industry, equipped to deliver exceptional value and results.

Now turning to our 2025 results was a pivotal year in which we advanced our strategic transformation and strengthened our financial position. Our revenues for 2025 increased by 3.8% year-over-year to $1.033 billion. We made considerable progress toward restoring profitability, reporting operating income of $45.5 million, a significant improvement from our operating loss of $68.8 million in 2024. This year's operating income was positively impacted by an $81.7 million gain from the sale of our property management division in October. After adjusting for this gain and other items, our adjusted EBITDA for 2025 improved to a loss of $14 million, compared to a loss of $24.1 million in 2024.

With cash and cash equivalents of approximately $115.5 million at December 31, 2025, and no long-term debt following the redemption of our convertible notes, we are strategically positioned to capitalize on market opportunities in our evolving industry. We believe 2026 will mark the beginning of a new growth phase as the investments and strategic moves we made in 2025 begin to yield results. Our strengthened balance sheet and enhanced operational capabilities give us flexibility to enter new markets, scale our innovative offerings, and attract top talent. This foundation enables us to respond proactively to emerging opportunities and evolving client needs, helping us in our quest to drive long-term growth and deliver sustainable value to 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.

Thank you, Michael, and good morning. We are confident that our positive momentum is continuing and has positioned Douglas Elliman for long-term success. As Michael discussed, we believe our strong balance sheet provides Douglas Elliman with a competitive advantage as we implement our plans to grow in our existing markets, expand into new markets where appropriate, and strengthen our services platform as opportunities arise in our ever-changing industry. The results from the year ended December 31st, 2025 indicate that our core operations are starting to reflect the impact of strategic actions we have taken over the past two years. In particular, results from operations for the year ended December 31st, 2025 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 $12.6 million from the prior year as we began to see the benefits of the investments we have made in this division in recent years. As a reminder, we recognize commission income from development marketing contracts when the underlying units close. I would now like to discuss a few key trends. First, Douglas Elliman continues to set the standard in the luxury market, with luxury home pricing remaining strong. Our average price per transaction in 2025 increased to $1.86 million per home sold, compared to $1.67 million per home sold in 2024.

In the fourth quarter of 2025, our agents sold 282 homes priced at more than $5 million, representing 5.4% of total transactions and 1,282 such homes during the year ended December 31st, 2025. That's a 25% increase compared to the year ended December 31st, 2024. We also sold 102 homes for more than $10 million in the fourth quarter and 392 in 2025. Those are increases of 31% and 28% respectively from last year. These results clearly demonstrate Douglas Elliman remains the definitive name in luxury real estate. Next, our development marketing division remains a preeminent industry player with an active project pipeline totaling $25.3 billion in gross transaction value.

That includes $17.5 billion in gross transaction value in Florida alone. In addition to this pipeline, $7.5 billion 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 will recognize commission income from these projects upon closing, which is generally between 2026 and 2031. Development marketing's revenue increased to $80.4 million in the year ended December 31st, 2025, up from $67.8 million in 2024. I'm also pleased to report each of our geographic markets increased revenues from existing home sales in 2025. Consistent with the third quarter, leading the way was the Northeast market, which increased by $17.5 million or 9.2% from 2024.

Importantly, we achieved these results amid ongoing economic pressures, including geopolitical uncertainties and the continuation of elevated mortgage rates. Although not included in our fourth quarter results, cash receipts from existing home sales in January and February 2026 were 11% lower than January and February 2025. Total brokerage cash receipts, which include existing home sales and receipts from our development marketing division, were 12.4% lower than January and February 2025. As a reminder, the first quarter of 2025 is a difficult comparable because it had the highest revenues in a quarter since 2022. 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 months and year ended December 31st, 2025, we continued to target expenses with respect to office leases, professional services, and technology. Nonetheless, our expense structure was negatively impacted by inflationary trends and increased personnel expenses. The increase in personnel expenses was primarily attributable to our ongoing investment in the development marketing business, as well as increased bonus accruals associated with increased revenues from business performance in 2025. Next, the strength of Douglas Elliman's balance sheet continues to provide a competitive advantage as we focus on executing our growth strategy. In October 2025, in connection with and upon consummation of the sale of our property management business, the company agreed to repay and redeem all of our convertible notes for an aggregate payment of $95 million, which included accrued interest.

As Michael noted, this strengthened our financial position, and the company had $115.5 million of cash and cash equivalents and no long-term debt at December 31st, 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. Now, moving to the operating performance of the business in the fourth quarter. Douglas Elliman reported $245.4 million in revenues compared to $243.3 million in the 2024 period. Excluding revenues from our recently disposed property management business in both periods, revenues increased by 3.8% from the fourth quarter of 2024 to $243.3 million from $234.2 million.

Net income for the fourth quarter was $68.6 million or $0.68 per diluted share compared to net loss of $6 million or ($0.07) per diluted share in the 2024 period. Net income in the 2025 period included a gain of $81.7 million from the disposal of our property management business and a non-cash benefit of $4.7 million associated with the decline in fair value of derivatives embedded within our convertible debt. Net loss in the 2024 period included a non-cash benefit of $5.2 million associated with the decline in fair value of derivatives embedded within our convertible debt.

Adjusted EBITDA, which excludes the operations of our property management business in all periods for the quarter, was a loss of $10.6 million compared to a loss of $6.6 million in the 2024 period. Adjusted net loss in the fourth quarter was $14.2 million or $0.17 per share compared to adjusted net income of $1.3 million or $0.01 per share in the 2024 period. Now, turning to the operating performance of the business for the year ended December 31st, 2025, which will be compared to the year ended December 31st, 2024. Douglas Elliman reported $1.033 billion in revenues, up from $995.6 million in revenues in 2024.

Excluding revenues from our recently disposed property management business in both periods, revenues for the year increased by 4.4% from 2024 to $1 billion from $958.8 million. Net income for 2025 was $15.2 million or $0.17 per diluted share compared to net loss of $76.3 million or $0.91 per diluted share. Net income in the 2025 period included a gain from the disposal of our property management business of $81.7 million, which was offset by a non-cash charge of $28.5 million associated with the increase in fair value of derivatives embedded within our convertible debt.

Net loss in the 2024 period included a $17.75 million litigation settlement charge and a non-cash charge of $15 million associated with the increase in fair value of the derivatives embedded within our convertible debt. Adjusted EBITDA for 2025 was a loss of $14 million compared to a loss of $24.1 million in the 2024 period, both of these amounts exclude operations of our recently disposed property management business. Adjusted net loss for 2025 was $27.1 million or $0.32 per share compared to $29.6 million or $0.35 per share in the 2024 period.

As noted earlier, Douglas Elliman has maintained ample liquidity with cash and cash equivalents at December 31st, 2025 of approximately $115.5 million. Thank you for your attention. Now back to you, Michael.

Thanks, J. Bryant Kirkland III. We have implemented strategic initiatives to advance our market leadership, elevate our service offerings, and expand our reach both domestically and internationally. Our 2025 results demonstrate that our recent investments are already delivering tangible benefits, and we expect these positive impacts to continue into 2026 and beyond. Thank you for your continued trust in Douglas Elliman. With that, we will turn the call over to the operator. Operator.

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

Welcome to the Douglas Elliman's Third Quarter 2025 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.elliman.com for 1 year. I would like to turn the conference over to Douglas Elliman Vice President of Finance, Heather Capriola.

Thank you, and good morning. On the call with me today is Michael Liebowitz, President and CEO of Douglas Elliman Inc.; and Bryant Kirkland, CFO of Douglas Elliman Inc. During this call, the terms adjusted EBITDA and adjusted net income or loss will be used as well as last 12 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. Liebowitz.

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 3 and 9 months ended September 30, 2025. All numbers presented this morning will be as of September 30, 2025, unless otherwise stated. We will then provide closing comments. Before we turn to our third quarter 2025 results, I would like to begin by discussing some of our recent strategic initiatives. For the first 9 months of 2025, our revenues increased by 5% year-over-year to $787.6 million. We also made considerable progress toward restoring profitability, reducing our operating loss to $21.5 million from $52.6 million 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 Elliman 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. Barths 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 Curutchet, Fredrik Lilloe, 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 the Kay ] 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 million to Associa, the nation's largest community association management firm. We believe we will recognize an after-tax gain of approximately $75 million on the sale. This transaction sharpens our focus as a pure-play luxury residential brokerage and eliminates operational complexity. With cash balances of approximately $126.5 million at October 31, 2025, and no debt, we are strategically positioned to capitalize on market opportunities in our evolving 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 Elliman 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 nontraditional 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 & Probate division, along with the launch of Elliman Private Listings provides even more specialized client-centric services, reinforcing our total commitment to choice, privacy and exceptional service for our discerning clientele. A 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 Douglas Elliman. Earlier this month, we launched Elli AI, a first-of-its-kind AI-powered assistant app designed to streamline the daily workflow of our agents. Elli 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 Elliman Inspirations platform on elliman.com takes this 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 road map 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. Bryant?

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 3 and 9 months ended September 30, 2025, I would like to discuss the strength of Douglas Elliman's balance sheet and the competitive advantage it provides the management team in executing its growth strategy. In October 2025, in connection with the sale of our property management division for approximately $85 million, the company redeemed all of its convertible notes for an aggregate payment of $95 million, which included accrued interest. As Michael noted, we believe this strengthened our financial position as after the redemption, the company had approximately $126.5 million of cash and no debt at October 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 9 months of 2025 indicate that our core operations are reflecting the impact of the strategic actions we have been taking over the past 2 years. In particular, the first 9 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 $17.2 million from the first 9 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 September 30, 2025, our balance sheet reported $90.2 million in deferred revenue liabilities from development marketing contracts, which were offset by deferred assets from development marketing contracts of $52.8 million. The net amount of $37.4 million, 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 $12.4 million or 9% from the first 9 months of 2024. 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 $1.87 million compared to $1.68 million per home in the same period last year. Over the last 12 months, this average was $1.8 million per home, up from $1.6 million in 2024. In the third quarter of 2025, our agents sold 333 homes priced at more than $5 million, representing 5.9% of total transactions and 1,016 such homes in the first 9 months of the year. These are increases of 20% and 32%, respectively, over last year. We also sold 87 homes for more than $10 million in the third quarter and 292 year-to-date. These are increases of 19% and 28%, 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 $25.5 billion of gross transaction value. This includes approximately $16.6 billion of gross transaction value in Florida alone. In addition, another $6.1 billion 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 commission income from these projects upon closing, which is generally between 2026 and 2031. In addition to a strong fourth quarter in 2024, development marketing has continued its momentum for the first 9 months of 2025 as its 9-month revenues have increased from $42.3 million in 2024 to $59.5 million 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 3 and 9 months ended September 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 $2.5 million and $600,000, respectively, compared to the 2024 periods. The change was primarily due to increased personnel expenses, although targeted expense areas such as off-line 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 $262.8 million in revenues compared to $266.3 million in the 2024 period. Net loss for the quarter was $24.7 million or $0.29 per diluted share compared with $27.2 million or $0.33 per diluted share in the 2024 period. Net loss in the 2025 period included a noncash charge of $15 million 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 June 30, 2025, to $2.86 per share at September 30, 2025. Net loss in the 2024 period included a noncash charge of $20.2 million associated with the increase in fair value of derivatives embedded within our convertible debt. Adjusted EBITDA for the third quarter were $2.7 million compared to $2.3 million in the 2024 period. Adjusted net income for the third quarter was $156,000 compared to adjusted net loss of $2.7 million or $0.03 per share in the 2024 period. Now turning to the operating performance of the business for the 9 months ended September 30, 2025, which will be compared to the 9 months ended September 30, 2024. Net loss for the 9 months ended September 30, 2025, was $53.3 million or $0.63 per diluted share compared to $70.3 million or $0.84 per diluted share. Net loss in the 2025 period included a noncash charge of $33.2 million 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 December 31, 2024, to $2.80 per share at September 30, 2025. Net loss in the 2024 period included a $17.75 million litigation settlement charge and a noncash charge of $20.2 million with increases in fair value of derivatives embedded within our convertible debt. Adjusted EBITDA for the 9 months ended September 30, 2025, was $2.9 million compared to a loss of $12.4 million in the 2024 period, that is an increase of $15.3 million. Adjusted net loss for the 9 months ended September 30, 2025, was $6.9 million or $0.08 per share compared to $26.3 million or $0.32 per share in the 2024 period. And as mentioned earlier, Douglas Elliman reported $787.6 million in revenues, up from $752.3 million in the 2024 9-month period. As noted earlier, Douglas Elliman has maintained ample liquidity with cash and cash equivalents at September 30, 2025, of $143 million. And after the sale of our property management division and associated redemption of our convertible debt, on October 31, 2025, we had approximately $126.5 million of cash and cash equivalents and no debt. Thank you for your attention, and back to you, Michael.

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 9 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 '25 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 a global reach. Thank you for your continued trust in Douglas Elliman. With that, we will turn the call over to the operator. 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.

Welcome to Douglas Elliman's Second Quarter 2025 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.elliman.com for 1 year. I would now like to turn the conference over to Douglas Elliman, Vice President of Finance, Heather Capriola.

Thank you, and good morning. On the call with me today is Michael Liebowitz, President and CEO of Douglas Elliman Inc.; and Bryant Kirkland, CFO of Douglas Elliman. During this call, the terms adjusted EBITDA and adjusted net loss will be used as well as last 12 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 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. Now I would like to turn the call over to the Chief Executive Officer of Douglas Elliman, Michael S. Liebowitz.

Thank you, Heather. Good morning, and thank you for joining us. I am pleased to share that Douglas Elliman continues to make meaningful progress as we execute our strategy to drive growth, improve profitability and position the company for long-term success. On today's call, we will discuss the current operating environment and Douglas Elliman's financial results for the 3 and 6 months ended June 30, 2025. All numbers presented this morning will be as of June 30, 2025, unless otherwise stated. We will then provide closing comments and open the call for questions. Before we turn to our second quarter 2025 results, I would like to begin by providing industry updates and summarizing some of our recent accomplishments. In the first half of 2025 our revenues increased by 8% year-over-year to $524.8 million, marking our strongest first half revenue performance since 2022. We also delivered significant improvement towards restoring our profitability with notable reductions in operating losses when compared to the first half of 2024. Our agents and employees remain at the center of everything we do. Their hard work and commitment to excellence drive our success. We are proud to support them with the tools and technology they need to excel in today's market. After a challenging period in the middle of the second quarter, which Bryant will discuss later, we remain optimistic about the third quarter and second half of 2025, thanks to encouraging recent trends including continued demand for luxury homes, rising average transaction values and a strong development marketing pipeline. These results reflect the strength of our iconic brands, the dedication of our agents and the resilience of the luxury markets we serve. Now let us look to the future. We are focused on executing our strategic growth initiatives, including the recent launches of Elliman Capital and Elliman International. In July 2025, we were pleased to announce the creation of Elliman Capital, an innovative mortgage platform developed with associated mortgage bankers, which we expect to provide a licensing revenue stream and represent a transformative advancement in our comprehensive service offering. The platform was initially launched in Florida, and we hope to expand it to all states where Douglas Elliman operates. Elliman Capital will provide our clients with access to an extensive and creative range of financing products. This new platform fosters convenience and oversight throughout the entire real estate transaction process, enabling our agents to provide seamless support from initial property search through closing. In June 2025, we were also incredibly proud to launch Elliman International, which extends our renowned bespoke service to key global markets. This initiative will enable us to directly serve the growing international real estate needs of our clients without any intermediaries. Initial focus will be on high end luxury demand in Latin America, the Middle East, Europe, Asia Pacific and other emerging wealth centers. Our international expansion will begin with immediate activation of certain core services for existing clients and will showcase our preeminent development marketing division. Given the scarcity of listing inventory of ultra luxury homes in many of our markets, our development marketing division continues to be a cornerstone of our long-term growth strategy. Bryant will discuss the successes of this division later in the call. Moving forward, we continue to evaluate complementary transactions and ancillary businesses such as title, escrow, insurance brokerage and property management. Now I would like to discuss our industry and will briefly address the practice of private listings. At Douglas Elliman, we have a long- standing commitment to offering clients greater choice and flexibility while continuing to promote equal access to listings and uphold a transparent, fair housing market. The decision to list property privately must originate from the seller. Our brokerage does not push, incentivize or default to private listings. With a larger percentage of luxury homes in our inventory, private listings may be the right fit because they are valid seller-driven reasons to withhold a property from public view, including personal privacy, timing or a desire to test the market. Our approach differs from brokerage-led exclusivity models in that we offer private listings as one option among many, empowering clients to make informed decisions based on their unique needs rather than applying a one-size-fits-all model. Additionally, we believe co-broking remains the most effective path for most sellers, as broad exposure in the most reliable way to maximize value drive competition and fulfill our fiduciary obligation to act in our clients' best interest. Any Douglas Elliman private listing platform will require sellers to review and sign acknowledging the potential risk of reduced exposure. The platform will also include strong guardrails to ensure compliance with other listing platforms such as broker oversight, audit logs and technical controls. We believe this transparent client-first approach sets us apart from our competitors and build long-term trust and value. In summary, our growth initiatives, coupled with a disciplined approach to capital allocation, cost management and investment are transforming Douglas Elliman into a more diversified, resilient and growth-oriented real estate services company to deliver sustainable long-term value for stockholders. With the launch of Elliman International, we're very excited to extend our renowned service beyond the U.S. and build a direct presence in key international luxury markets, further advancing our evolution into a truly global brand. 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.

Thank you, Michael. And we are confident that the positive momentum in our financial performance beginning in 2024 and continuing through the first half of 2025 has positioned Douglas Elliman for long-term success. Results from the first half of 2025 indicate that our core operations are starting to reflect the impact of the strategic actions we have taken over the past 2 years. In particular, the first half benefited from favorable sales mix, highlighted by strong contributions from development marketing as well as New York City and its suburbs, which are our most profitable markets. Specifically, revenues from existing home sales in our New York and Northeast markets increased by $16.8 million or 7.9% from the 2024 first half and development marketing's first half revenue increased by $17.7 million from the 2024 first half. In the second quarter of 2025, compared to the second quarter of 2024, we experienced a challenging period in May to early June when our results were negatively impacted by its exogenous economic pressures and industry-specific headwinds. During this period, heightened volatility in international financial markets driven by geopolitical uncertainties, including global economic policies, created a sense of caution among buyers and sellers. At the same time, the continuation of elevated mortgage rates further dampened market activity as higher borrowing costs continue to cause many clients to delay selling or purchasing decisions. In retrospect, we also saw the highest first quarter cash receipt since 2022, and we believe that an increase in written contracts after the 2024 U.S. elections accelerated some sales especially in New York City from the second quarter into the first quarter. It is important to note that we recognize revenue from home sale transactions at the time of closing which typically occurs 30 to 90 days after contract signing, depending on each market's custom. As a result, contracts written in March and April directly affected our reported results for the quarter. Before reviewing the financial performance, we will provide some updates on our trends. First, Douglas Elliman sets the standard in the luxury market and pricing for luxury home sales remains strong. Our industry best price per transaction for the year-to-date period rose to $1.92 million per home sale compared to $1.72 million for home sale in the comparable 2024 period. For the last 12 months, our average price per transaction has been $1.77 million per home sale compared to $1.64 million in the 2024 period. Our agents sold 340 homes were more than $5 million or 6% of total transactions in the second quarter of 2025 and 683 homes for more than $5 million in the first half of 2025. Year-to-date sales represent a 38% increase which when compared to the 6 months ended June 30, 2024. Equally impressive are 100 home sales of more than $10 million in the second quarter and 204 home sales of more than $10 million in the first half of 2025. This was a 32% increase from the first half of 2024. These results demonstrate Douglas Elliman continues to be the definitive name in luxury real estate. And as Michael discussed, our development marketing division remains the preeminent industry player with a pipeline of actively marketed projects of approximately $28.1 billion of gross transaction value, approximately $18.8 billion of gross transaction value is in Florida alone. Within this active pipeline, we have another $5.9 billion of gross transaction value coming to market through September 2026. We believe this foundation of business bodes well for the future as we will recognize commission income from these projects when they close, which is generally between the second half of 2025 and 2031. In addition, to a strong fourth quarter of 2024 in development marketing, we are continuing to see the early momentum of this pipeline in the first half of 2025 when development marketing's revenue increased to $35.4 million from $17.7 million in the first half of 2024. Transitioning to our expense structure. We continue to manage investments across our markets with a strict focus on return on investment metrics. And the 3 and 6 months ended June 30, 2025, our operating expenses excluding commissions, depreciation and amortization, unusual litigation is spent settlement and related expense. Restructuring expenses and noncash stock compensation expenses increased by $1 million and declined by $1.9 million, respectively, from the 2024 period. Related to the change in the second quarter, although targeted expense areas such as off-line advertising continue to decline, our overall expenses increased due to higher compensation and recurring professional fees, partly due to inflationary pressures. The rise in compensation expense was attributable to our continued investment in the development marketing business as well as increased bonus accruals associated with the increased revenues from business performance in 2025. Now turning to Douglas Elliman's financial results for the 3 months ended June 30, 2025. Douglas Elliman maintains ample liquidity with cash and cash equivalents at June 30, 2025 of approximately $136 million. The strength of our balance sheet provides a competitive advantage for Douglas Elliman as we implement expansion plans to scale our operations and strengthen our services platform. Moving to the operating performance of the business in the second quarter. Douglas Elliman reported $271.4 million in revenues compared to $285.8 million in the 2024 second quarter. The decline in revenues was primarily the result of reduced closing transactions in May 2025 as well as early June. Net loss for the second quarter was $22.7 million or $0.27 per diluted share compared to $1.7 million or $0.02 per diluted share in the second quarter of 2024. Net loss in the 2025 period included a noncash charge of $17 million associated with the increase in fair value of derivatives and embedded within our convertible debt, and this was primarily driven by an increase in our stock price from $1.72 per share at March 31, 2025, to $2.32 per share at June 30, 2025. Adjusted EBITDA for the second quarter was a loss of $849,000 compared to positive $2.9 million in the 2024 second quarter. Adjusted net loss for the second quarter was $4.7 million or $0.06 per share compared to $532,000 or $0.01 per share in the 2024 second quarter. Moving to the operating performance of the business for the 6 months ended June 30, 2025. Douglas Elliman reported $524.8 million in revenues, up from $486 million in the 2024 period. Net loss for the 6 months ended June 30, 2025, was $28.7 million or $0.34 per diluted share compared to $43.1 million or $0.52 per diluted share in 2024 period. Net loss in the 2025 period included a noncash charge of $17.7 million 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 $1.67 per share at December 31, 2024, to $2.32 per share at June 30, 2025. Net loss in the 2024 period included a $17.75 million litigation settlement charge. Adjusted EBITDA for the 6 months ended June 30, 2025, was $259,000 compared to a loss of $14.7 million in the 2024 period. Adjusted net loss for the 6 months ended June 30, 2025, was $7.1 million or $0.08 per share compared to $23.6 million or $0.28 per share in the 2024 period. Thank you for your attention. And now back to you, Michael.

Thank you, Bryant. Our results in the first half of 2025 are proof that our turnaround is working, and we are well positioned for success in the second half of the year and beyond. I remain deeply confident in the strength and brand power of the Douglas Elliman franchise and I'm energized by the incredible opportunities that lie ahead for us. With that, we will be happy to answer questions. Operator?

[Operator Instructions] Those are all the questions that we have for today. Thank you for joining us on Douglas Elliman's quarterly earnings conference call. We hope you have a good day, and this will conclude our call.

Thank you.

Thank you.