000187889712/312023Q1TRUE123,662163,85924,22722,16219,50712,8267,6477,5475,4044,98517,61313,680198,060225,05942,54441,717113,105117,7735,3456,21912,66912,93236,00438,91332,23032,23073,48973,6662,0551,6296,6336,483516,789550,40222,80822,3286,1745,45625,78322,1173,37118,2287,7118,22222,48013,60788,32789,9589,07714,467115,192120,50852,83754,706137306265,570279,9450.010.0110,000,00010,000,000——0.010.01250,000,000250,000,00084,416,02284,416,02280,881,02280,881,022844809271,678273,11122,6245,000249,898268,9201,3211,537251,219270,457516,789550,402202,036295,1098,7779,1993,1694,592213,982308,900156,102223,42221,23919,30618,89318,09132,29532,8306,0125,2932,0392,0791,210—23,8087,8791,105397353245475223,2309,2025,3902,91717,8406,28521622517,6246,5100.230.080.230.0880,881,022809273,1115,0001,537270,45717,62421617,8400.054,2214,2213,535,0003535—2,8232,82384,416,022844271,67822,6241,321251,21981,210,626812278,5006221,939281,8736,5102256,2850.054,0624,06225,0002,6522,65237537581,235,626812281,1523,0702,089287,12317,8406,2852,0392,0792,8232,652—105,390—454752735325,4004,8761,42855810,3613391001,16713,2571,2465,5685,86814,85718,0702,93377031,5756,780—100—602570127525552003,6278493,9821,815—3,1294,2214,062—375—184,2216,83439,77815,429171,382228,866131,604213,437SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a)Basis of Presentation:
Douglas Elliman Inc. (“Douglas Elliman” or the “Company”) is engaged in the real estate services and property technology investment business and is seeking to acquire or invest in additional real estate services and property technology, or PropTech, companies. The condensed consolidated financial statements of Douglas Elliman include the accounts of DER Holdings LLC and New Valley Ventures LLC (“New Valley Ventures”), directly and indirectly wholly owned subsidiaries of the Company. DER Holdings LLC owns Douglas Elliman Realty, LLC and Douglas Elliman of California, Inc., which are engaged in the residential real estate brokerage business with their subsidiaries. The operations of New Valley Ventures consist of minority investments in innovative and cutting-edge PropTech companies.
Certain references to “Douglas Elliman Realty” refer to the Company’s residential real estate brokerage business, including the operations of Douglas Elliman Realty, LLC and Douglas Elliman of California Inc., unless otherwise specified.
The unaudited, interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and, in management’s opinion, contain all adjustments, consisting only of normal recurring items, necessary for a fair statement of the results for the periods presented. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. References to U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) are to the FASB Accounting Standards Codification, also referred to as the “Codification” or “ASC.” These condensed consolidated financial statements should be read in conjunction with the combined consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”). The condensed consolidated results of operations for interim periods should not be regarded as necessarily indicative of the results that may be expected for the entire year.
In presenting the condensed consolidated financial statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates.
(b) Principles of Consolidation:
The condensed consolidated financial statements include the assets, liabilities, revenues, expenses and cash flows of DER Holdings LLC and New Valley Ventures as well as all other entities in which Douglas Elliman has a controlling financial interest. All intercompany balances and transactions have been eliminated in the condensed consolidated financial statements.
When evaluating an entity for consolidation, Douglas Elliman first determines whether an entity is within the scope of the guidance for consolidation of variable interest entities (“VIE”) and if it is deemed to be a VIE. If the entity is considered to be a VIE, Douglas Elliman determines whether it would be considered the entity’s primary beneficiary. Douglas Elliman consolidates those VIEs for which it has determined that it is the primary beneficiary. Douglas Elliman will consolidate an entity that is not deemed a VIE upon a determination that it has a controlling financial interest. For entities where Douglas Elliman does not have a controlling financial interest, the investments in such entities are classified as available-for-sale securities or accounted for using the equity or cost method, as appropriate.
(c) Estimates and Assumptions:
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant estimates subject to material changes in the near term include impairment charges and valuation of intangible assets. Actual results could differ from those estimates.
(d) (Loss) Earnings Per Share (“EPS”):
The Company has restricted stock awards which will provide cash dividends at the same rate as paid on the common stock with respect to the shares underlying the restricted stock awards. These outstanding restricted stock awards represent participating securities under authoritative guidance. The participating securities holders do not participate in the Company’s net losses. The Company first paid dividends during the three months ended March 31, 2022 and most recently paid a dividend during the three months ended March 31, 2023.
As a result, in its calculation of basic EPS and diluted EPS for the three months ended March 31, 2022, the Company adjusted its net income for the effect of these participating securities. There were no outstanding participating securities during the three months ended March 31, 2023.
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | |
| | | March 31, | | |
| | | | | 2023 | | 2022 | | |
| Net (loss) income attributed to Douglas Elliman Inc. | | | | | $ | (17,624) | | | $ | 6,510 | | | |
| Income attributable to participating securities | | | | | (307) | | | (275) | | | |
| Net (loss) income available to common stockholders attributed to Douglas Elliman Inc. | | | | | $ | (17,931) | | | $ | 6,235 | | | |
Basic EPS is computed by dividing net (loss) income available to common stockholders attributed to Douglas Elliman Inc. by the weighted-average number of shares outstanding, which will include vested restricted stock.
Basic and diluted EPS were calculated using the following shares of common stock for the periods presented below:
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | |
| | | March 31, | | |
| | | | | 2023 | | 2022 | | |
| Weighted-average shares for basic EPS | | | | | 78,279,772 | | | 77,666,210 | | | |
| Incremental shares related to non-vested restricted stock | | | | | — | | | 54,416 | | | |
| Weighted-average shares for diluted EPS | | | | | 78,279,772 | | | 77,720,626 | | | |
(e) Reconciliation of Cash, Cash Equivalents and Restricted Cash:
Restricted cash amounts included in current assets and other assets represent cash and cash equivalents required to be deposited into escrow for amounts required for letters of credit related to office leases, and certain deposit requirements for banking arrangements. The restrictions related to the letters of credit will remain in place for the duration of the respective lease. The restrictions related to the banking arrangements will remain in place for the duration of the arrangement. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables.
The components of “Cash, cash equivalents and restricted cash” in the condensed consolidated statements of cash flows were as follows:
| | | | | | | | | | | | | |
| March 31,
2023 | | December 31,
2022 | | |
| Cash and cash equivalents | $ | 123,662 | | | $ | 163,859 | | | |
| Restricted cash and cash equivalents included in current assets | 5,404 | | | 4,985 | | | |
| Restricted cash and cash equivalents included in other assets | 2,538 | | | 2,538 | | | |
| Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows | $ | 131,604 | | | $ | 171,382 | | | |
(f) Related Party Transactions:
Agreements with Vector Group Ltd. (“Vector Group”) The Company paid Vector Group $1,050 and $1,050 under the Transition Services Agreement and $562 and $491 under the Aircraft Lease Agreement during the three months ended March 31, 2023 and 2022, respectively.
Real estate commissions. Real estate commissions include commissions of approximately $842 and $900 for the three months ended March 31, 2023 and 2022, respectively, from projects where the Company has been engaged by certain developers as the sole broker or the co-broker for several of the real estate development projects that Vector Group owns an interest in through its real estate venture investments.
(g) Investment and Other (Losses) Income:
Investment and other (losses) income consists of the following:
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2023 | | 2022 |
| Net (losses) gains recognized on PropTech convertible trading debt securities | | | | | $ | (352) | | | $ | 154 | |
| Net (losses) gains recognized on long-term investments at fair value | | | | | (102) | | | 598 | |
| | | | | | | |
| Investment and other (losses) income | | | | | $ | (454) | | | $ | 752 | |
(h) Restructuring:
Employee severance and benefits expensed for the three months ended March 31, 2023 relate entirely to the reduction in staff and are cash charges. All of the amounts expensed for the three months ended March 31, 2023 are included in Restructuring expense in the Company’s condensed consolidated statements of operations. The following table present the changes in the employee severance and benefits liability under the Real Estate Brokerage segment restructuring plan for the three months ended March 31, 2023:
| | | | | |
| Employee Severance and Benefits |
| Severance liability balance at January 1, 2023 | $ | — | |
| Severance expense | 1,210 | |
| Severance payments | (223) | |
| Severance liability at March 31, 2023 | $ | 987 | |
(i) Other Comprehensive Income:
The Company does not have any activity that results in Other Comprehensive Income; therefore, no statement of Comprehensive Income is included in the condensed consolidated financial statements.
(j) Subsequent Events:
The Company has evaluated subsequent events through November 9, 2023, the date the financial statements were issued.
(k) New Accounting Pronouncements:
Accounting Standards Updates (“ASUs”) to be adopted in 2023:
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires that an acquirer recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of this update did not have a material impact on the Company’s condensed consolidated financial statements.
Accounting Standards Updates (“ASUs”) adopted in 2023:
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The ASU clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. The standard also requires certain disclosures for equity securities that are subject to contractual restrictions. The ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Adoption of this update did not have a material impact on the Company’s condensed consolidated financial statements.
SEC Proposed Rule Changes
On March 21, 2022, the SEC proposed rule changes that would require registrants to provide certain climate-related information in their registration statements and annual reports. The proposed rules would require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks would also include disclosure of a registrant's greenhouse gas emissions, which have become a commonly used metric to assess a registrant's exposure to such risks. In addition, under the proposed rules, certain climate-related financial metrics would be required in a registrant's audited financial statements. The Company is currently evaluating the impact of the proposed rule changes.
Basis of Presentation:Douglas Elliman Inc. (“Douglas Elliman” or the “Company”) is engaged in the real estate services and property technology investment business and is seeking to acquire or invest in additional real estate services and property technology, or PropTech, companies. The condensed consolidated financial statements of Douglas Elliman include the accounts of DER Holdings LLC and New Valley Ventures LLC (“New Valley Ventures”), directly and indirectly wholly owned subsidiaries of the Company. DER Holdings LLC owns Douglas Elliman Realty, LLC and Douglas Elliman of California, Inc., which are engaged in the residential real estate brokerage business with their subsidiaries. The operations of New Valley Ventures consist of minority investments in innovative and cutting-edge PropTech companies.
Certain references to “Douglas Elliman Realty” refer to the Company’s residential real estate brokerage business, including the operations of Douglas Elliman Realty, LLC and Douglas Elliman of California Inc., unless otherwise specified.
The unaudited, interim condensed consolidated financial statements have been prepared in accordance with U.S. generally accepted accounting principles (“U.S. GAAP”) for interim financial information and, in management’s opinion, contain all adjustments, consisting only of normal recurring items, necessary for a fair statement of the results for the periods presented. Accordingly, they do not include all the information and footnotes required by U.S. GAAP for complete financial statements. References to U.S. GAAP issued by the Financial Accounting Standards Board (“FASB”) are to the FASB Accounting Standards Codification, also referred to as the “Codification” or “ASC.” These condensed consolidated financial statements should be read in conjunction with the combined consolidated financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2022 filed with the Securities and Exchange Commission (“SEC”). The condensed consolidated results of operations for interim periods should not be regarded as necessarily indicative of the results that may be expected for the entire year.
In presenting the condensed consolidated financial statements, management makes estimates and assumptions that affect the amounts reported and related disclosures. Estimates, by their nature, are based on judgment and available information. Accordingly, actual results could differ from those estimates.
(b) Principles of Consolidation:
The condensed consolidated financial statements include the assets, liabilities, revenues, expenses and cash flows of DER Holdings LLC and New Valley Ventures as well as all other entities in which Douglas Elliman has a controlling financial interest. All intercompany balances and transactions have been eliminated in the condensed consolidated financial statements.
When evaluating an entity for consolidation, Douglas Elliman first determines whether an entity is within the scope of the guidance for consolidation of variable interest entities (“VIE”) and if it is deemed to be a VIE. If the entity is considered to be a VIE, Douglas Elliman determines whether it would be considered the entity’s primary beneficiary. Douglas Elliman consolidates those VIEs for which it has determined that it is the primary beneficiary. Douglas Elliman will consolidate an entity that is not deemed a VIE upon a determination that it has a controlling financial interest. For entities where Douglas Elliman does not have a controlling financial interest, the investments in such entities are classified as available-for-sale securities or accounted for using the equity or cost method, as appropriate.
Estimates and Assumptions:The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities and the reported amounts of revenues and expenses. Significant estimates subject to material changes in the near term include impairment charges and valuation of intangible assets. Actual results could differ from those estimates.(
Loss) Earnings Per Share (“EPS”):The Company has restricted stock awards which will provide cash dividends at the same rate as paid on the common stock with respect to the shares underlying the restricted stock awards. These outstanding restricted stock awards represent participating securities under authoritative guidance. The participating securities holders do not participate in the Company’s net losses.
As a result, in its calculation of basic EPS and diluted EPS for the three months ended March 31, 2022, the Company adjusted its net income for the effect of these participating securities. There were no outstanding participating securities during the three months ended March 31, 2023.
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | |
| | | March 31, | | |
| | | | | 2023 | | 2022 | | |
| Net (loss) income attributed to Douglas Elliman Inc. | | | | | $ | (17,624) | | | $ | 6,510 | | | |
| Income attributable to participating securities | | | | | (307) | | | (275) | | | |
| Net (loss) income available to common stockholders attributed to Douglas Elliman Inc. | | | | | $ | (17,931) | | | $ | 6,235 | | | |
17,6246,51030730727527517,93117,9316,2356,235
Basic and diluted EPS were calculated using the following shares of common stock for the periods presented below:
| | | | | | | | | | | | | | | | | |
| | | Three Months Ended | | |
| | | March 31, | | |
| | | | | 2023 | | 2022 | | |
| Weighted-average shares for basic EPS | | | | | 78,279,772 | | | 77,666,210 | | | |
| Incremental shares related to non-vested restricted stock | | | | | — | | | 54,416 | | | |
| Weighted-average shares for diluted EPS | | | | | 78,279,772 | | | 77,720,626 | | | |
78,279,77277,666,210—54,41678,279,77277,720,626
Reconciliation of Cash, Cash Equivalents and Restricted Cash:Restricted cash amounts included in current assets and other assets represent cash and cash equivalents required to be deposited into escrow for amounts required for letters of credit related to office leases, and certain deposit requirements for banking arrangements. The restrictions related to the letters of credit will remain in place for the duration of the respective lease. The restrictions related to the banking arrangements will remain in place for the duration of the arrangement. Financial instruments which potentially subject the Company to concentrations of credit risk consist principally of cash and cash equivalents and trade receivables.
The components of “Cash, cash equivalents and restricted cash” in the condensed consolidated statements of cash flows were as follows:
| | | | | | | | | | | | | |
| March 31,
2023 | | December 31,
2022 | | |
| Cash and cash equivalents | $ | 123,662 | | | $ | 163,859 | | | |
| Restricted cash and cash equivalents included in current assets | 5,404 | | | 4,985 | | | |
| Restricted cash and cash equivalents included in other assets | 2,538 | | | 2,538 | | | |
| Total cash, cash equivalents, and restricted cash shown in the condensed consolidated statements of cash flows | $ | 131,604 | | | $ | 171,382 | | | |
123,662163,8595,4044,9852,5382,538131,604171,3821,0501,050562491842900
Investment and other (losses) income consists of the following:
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2023 | | 2022 |
| Net (losses) gains recognized on PropTech convertible trading debt securities | | | | | $ | (352) | | | $ | 154 | |
| Net (losses) gains recognized on long-term investments at fair value | | | | | (102) | | | 598 | |
| | | | | | | |
| Investment and other (losses) income | | | | | $ | (454) | | | $ | 752 | |
352154102598454752
Restructuring:Employee severance and benefits expensed for the three months ended March 31, 2023 relate entirely to the reduction in staff and are cash charges. All of the amounts expensed for the three months ended March 31, 2023 are included in Restructuring expense in the Company’s condensed consolidated statements of operations.The following table present the changes in the employee severance and benefits liability under the Real Estate Brokerage segment restructuring plan for the three months ended March 31, 2023:
| | | | | |
| Employee Severance and Benefits |
| Severance liability balance at January 1, 2023 | $ | — | |
| Severance expense | 1,210 | |
| Severance payments | (223) | |
| Severance liability at March 31, 2023 | $ | 987 | |
—1,210223987
Other Comprehensive Income:The Company does not have any activity that results in Other Comprehensive Income; therefore, no statement of Comprehensive Income is included in the condensed consolidated financial statements.Subsequent Events:The Company has evaluated subsequent events through November 9, 2023, the date the financial statements were issued.New Accounting Pronouncements:Accounting Standards Updates (“ASUs”) to be adopted in 2023:
In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers. The ASU requires that an acquirer recognize and measure contract assets and contract liabilities in a business combination in accordance with Topic 606. The ASU is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Adoption of this update did not have a material impact on the Company’s condensed consolidated financial statements.
Accounting Standards Updates (“ASUs”) adopted in 2023:
In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820), Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions. The ASU clarifies the guidance in Topic 820, Fair Value Measurement, when measuring the fair value of an equity security subject to contractual restrictions that prohibit the sale of an equity security. The standard also requires certain disclosures for equity securities that are subject to contractual restrictions. The ASU is effective for fiscal years beginning after December 15, 2023, including interim periods within those fiscal years. Adoption of this update did not have a material impact on the Company’s condensed consolidated financial statements.
SEC Proposed Rule Changes
On March 21, 2022, the SEC proposed rule changes that would require registrants to provide certain climate-related information in their registration statements and annual reports. The proposed rules would require information about a registrant's climate-related risks that are reasonably likely to have a material impact on its business, results of operations, or financial condition. The required information about climate-related risks would also include disclosure of a registrant's greenhouse gas emissions, which have become a commonly used metric to assess a registrant's exposure to such risks. In addition, under the proposed rules, certain climate-related financial metrics would be required in a registrant's audited financial statements. The Company is currently evaluating the impact of the proposed rule changes.
REVENUE RECOGNITION
Disaggregation of Revenue
In the following tables, revenue is disaggregated by major services line and primary geographical market:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2023 | | |
| New York City | | Northeast | | Southeast | | West | | Total | | |
Revenues: | | | | | | | | | | | |
| Commission and other brokerage income - existing home sales | $ | 57,798 | | | $ | 33,105 | | | $ | 54,454 | | | $ | 37,899 | | | $ | 183,256 | | | |
| Commission and other brokerage income - development marketing | 7,763 | | | 619 | | | 10,060 | | | 338 | | | 18,780 | | | |
| Property management revenue | 8,580 | | | 197 | | | — | | | — | | | 8,777 | | | |
| Escrow and title fees | 399 | | | 210 | | | — | | | 2,560 | | | 3,169 | | | |
| Total revenue | $ | 74,540 | | | $ | 34,131 | | | $ | 64,514 | | | $ | 40,797 | | | $ | 213,982 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2022 |
| New York City | | Northeast | | Southeast | | West | | Total |
Revenues: | | | | | | | | | |
| Commission and other brokerage income - existing home sales | $ | 92,388 | | | $ | 50,079 | | | $ | 80,824 | | | $ | 51,884 | | | $ | 275,175 | |
| Commission and other brokerage income - development marketing | 11,369 | | | — | | | 8,216 | | | 349 | | | 19,934 | |
| Property management revenue | 9,041 | | | 158 | | | — | | | — | | | 9,199 | |
| Escrow and title fees | 717 | | | 271 | | | — | | | 3,604 | | | 4,592 | |
| Total revenue | $ | 113,515 | | | $ | 50,508 | | | $ | 89,040 | | | $ | 55,837 | | | $ | 308,900 | |
Contract Balances
The following table provides information about contract assets and contract liabilities from development marketing and commercial leasing contracts with customers:
| | | | | | | | | | | |
| March 31,
2023 | | December 31, 2022 |
| | | |
| Receivables, which are included in receivables | $ | 2,721 | | | $ | 3,063 | |
| Contract assets, net, which are included in other current assets | 4,184 | | | 4,453 | |
| Contract assets, net, which are in other assets | 36,004 | | | 38,913 | |
| Payables, which are included in other current liabilities | 2,044 | | | 2,291 | |
| Contract liabilities, which are in current liabilities | 7,711 | | | 8,222 | |
| Contract liabilities, which are in other liabilities | 52,837 | | | 54,706 | |
The Company recognized revenue of $1,614 for the three months ended March 31, 2023, that were included in the contract liabilities balances at December 31, 2022. The Company recognized revenue of $8,069 for the three months ended March 31, 2022, that were included in the contract liabilities balances at December 31, 2021.
In the following tables, revenue is disaggregated by major services line and primary geographical market:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2023 | | |
| New York City | | Northeast | | Southeast | | West | | Total | | |
Revenues: | | | | | | | | | | | |
| Commission and other brokerage income - existing home sales | $ | 57,798 | | | $ | 33,105 | | | $ | 54,454 | | | $ | 37,899 | | | $ | 183,256 | | | |
| Commission and other brokerage income - development marketing | 7,763 | | | 619 | | | 10,060 | | | 338 | | | 18,780 | | | |
| Property management revenue | 8,580 | | | 197 | | | — | | | — | | | 8,777 | | | |
| Escrow and title fees | 399 | | | 210 | | | — | | | 2,560 | | | 3,169 | | | |
| Total revenue | $ | 74,540 | | | $ | 34,131 | | | $ | 64,514 | | | $ | 40,797 | | | $ | 213,982 | | | |
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| Three Months Ended March 31, 2022 |
| New York City | | Northeast | | Southeast | | West | | Total |
Revenues: | | | | | | | | | |
| Commission and other brokerage income - existing home sales | $ | 92,388 | | | $ | 50,079 | | | $ | 80,824 | | | $ | 51,884 | | | $ | 275,175 | |
| Commission and other brokerage income - development marketing | 11,369 | | | — | | | 8,216 | | | 349 | | | 19,934 | |
| Property management revenue | 9,041 | | | 158 | | | — | | | — | | | 9,199 | |
| Escrow and title fees | 717 | | | 271 | | | — | | | 3,604 | | | 4,592 | |
| Total revenue | $ | 113,515 | | | $ | 50,508 | | | $ | 89,040 | | | $ | 55,837 | | | $ | 308,900 | |
57,79833,10554,45437,899183,2567,76361910,06033818,7808,580197——8,777399210—2,5603,16974,54034,13164,51440,797213,98292,38850,07980,82451,884275,17511,369—8,21634919,9349,041158——9,199717271—3,6044,592113,51550,50889,04055,837308,900
The following table provides information about contract assets and contract liabilities from development marketing and commercial leasing contracts with customers:
| | | | | | | | | | | |
| March 31,
2023 | | December 31, 2022 |
| | | |
| Receivables, which are included in receivables | $ | 2,721 | | | $ | 3,063 | |
| Contract assets, net, which are included in other current assets | 4,184 | | | 4,453 | |
| Contract assets, net, which are in other assets | 36,004 | | | 38,913 | |
| Payables, which are included in other current liabilities | 2,044 | | | 2,291 | |
| Contract liabilities, which are in current liabilities | 7,711 | | | 8,222 | |
| Contract liabilities, which are in other liabilities | 52,837 | | | 54,706 | |
2,7213,0634,1844,45336,00438,9132,0442,2917,7118,22252,83754,7061,6148,069CURRENT EXPECTED CREDIT LOSSES
Real estate broker agent receivables: Douglas Elliman Realty is exposed to credit losses for various amounts due from real estate agents, which are included in Other current assets on the condensed consolidated balance sheets, net of an allowance for credit losses. The Company estimates its allowance for credit losses on receivables from agents based on an evaluation of aging, agent sales in pipeline, any security, specific exposures, historical experience of collections from the individual agents, and current and expected future market trends. The Company estimated that the credit losses for these receivables were $11,850 and $10,916 at March 31, 2023 and December 31, 2022, respectively.
The following table summarizes changes in the allowance for credit losses for the three months ended March 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| January 1,
2023 | | Current Period Provision | | Write-offs | | Recoveries | | March 31,
2023 |
| Allowance for credit losses: | | | | | | | | | |
| | | | | | | | | |
| Real estate broker agent receivables | $ | 10,916 | | | $ | 1,428 | | (1) | $ | 494 | | | $ | — | | | $ | 11,850 | |
_____________________________
(1) The current period provision for the real estate broker agent receivables is included in “General and administrative expenses” in the Company’s condensed consolidated statements of operations.
The following table summarizes changes in the allowance for credit losses for the three months ended March 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| January 1,
2022 | | Current Period Provision | | Write-offs | | Recoveries | | March 31,
2022 |
| Allowance for credit losses: | | | | | | | | | |
| | | | | | | | | |
| Real estate broker agent receivables | $ | 8,607 | | | $ | 558 | | (1) | $ | 332 | | | $ | — | | | $ | 8,833 | |
_____________________________
(1) The current period provision for the real estate broker agent receivables is included in “General and administrative expenses” in the Company’s condensed consolidated statements of operations.
11,85010,916
The following table summarizes changes in the allowance for credit losses for the three months ended March 31, 2023:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| January 1,
2023 | | Current Period Provision | | Write-offs | | Recoveries | | March 31,
2023 |
| Allowance for credit losses: | | | | | | | | | |
| | | | | | | | | |
| Real estate broker agent receivables | $ | 10,916 | | | $ | 1,428 | | (1) | $ | 494 | | | $ | — | | | $ | 11,850 | |
_____________________________
(1) The current period provision for the real estate broker agent receivables is included in “General and administrative expenses” in the Company’s condensed consolidated statements of operations.
The following table summarizes changes in the allowance for credit losses for the three months ended March 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| January 1,
2022 | | Current Period Provision | | Write-offs | | Recoveries | | March 31,
2022 |
| Allowance for credit losses: | | | | | | | | | |
| | | | | | | | | |
| Real estate broker agent receivables | $ | 8,607 | | | $ | 558 | | (1) | $ | 332 | | | $ | — | | | $ | 8,833 | |
_____________________________
(1) The current period provision for the real estate broker agent receivables is included in “General and administrative expenses” in the Company’s condensed consolidated statements of operations.
10,9161,428494—11,8508,607558332—8,833LEASES
Leases
The Company has operating leases for corporate and sales offices and equipment. The components of lease expense were as follows:
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2023 | | 2022 |
| Operating lease cost | | | | | $ | 8,325 | | | $ | 8,169 | |
| Short-term lease cost | | | | | 278 | | | 257 | |
| Variable lease cost | | | | | 1,078 | | | 985 | |
| Less: Sublease income | | | | | (153) | | | (121) | |
| Total lease cost | | | | | $ | 9,528 | | | $ | 9,290 | |
| | | | | | | |
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| 2023 | | 2022 |
| Cash paid for amounts included in measurement of lease liabilities: | | | |
| Operating cash flows from operating leases | $ | 8,524 | | | $ | 9,196 | |
| | | |
| Right-of-use assets obtained in exchange for lease obligations: | | | |
| Operating leases | 732 | | | 6,984 | |
| | | |
| | | |
Supplemental balance sheet information related to leases was as follows:
| | | | | | | | | | | |
| | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| Weighted average remaining lease term: | | | |
| Operating leases | 6.90 | | 7.03 |
| | | |
| Weighted average discount rate: | | | |
| Operating leases | 8.75 | % | | 8.73 | % |
| | | |
| | | |
As of March 31, 2023, maturities of lease liabilities were as follows:
| | | | | | |
| Operating Leases | |
| Period Ending December 31: | | |
| Remainder of 2023 | $ | 25,989 | | |
| 2024 | 29,863 | | |
| 2025 | 25,096 | | |
| 2026 | 22,733 | | |
| 2027 | 19,912 | | |
| 2028 | 18,129 | | |
| Thereafter | 46,053 | | |
| Total lease payments | 187,775 | | |
| Less imputed interest | (49,775) | | |
| Total | $ | 138,000 | | |
As of March 31, 2023, the Company had $217 in undiscounted lease payments relating to an operating lease for office space that has not yet commenced. The operating lease has a lease term of five years and is expected to commence during the third quarter of 2023.
The components of lease expense were as follows:
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2023 | | 2022 |
| Operating lease cost | | | | | $ | 8,325 | | | $ | 8,169 | |
| Short-term lease cost | | | | | 278 | | | 257 | |
| Variable lease cost | | | | | 1,078 | | | 985 | |
| Less: Sublease income | | | | | (153) | | | (121) | |
| Total lease cost | | | | | $ | 9,528 | | | $ | 9,290 | |
| | | | | | | |
Supplemental cash flow information related to leases was as follows:
| | | | | | | | | | | |
| Three Months Ended |
| March 31, |
| 2023 | | 2022 |
| Cash paid for amounts included in measurement of lease liabilities: | | | |
| Operating cash flows from operating leases | $ | 8,524 | | | $ | 9,196 | |
| | | |
| Right-of-use assets obtained in exchange for lease obligations: | | | |
| Operating leases | 732 | | | 6,984 | |
| | | |
| | | |
8,3258,1692782571,0789851531219,5289,2908,5249,1967326,984
Supplemental balance sheet information related to leases was as follows:
| | | | | | | | | | | |
| | | |
| March 31, | | December 31, |
| 2023 | | 2022 |
| Weighted average remaining lease term: | | | |
| Operating leases | 6.90 | | 7.03 |
| | | |
| Weighted average discount rate: | | | |
| Operating leases | 8.75 | % | | 8.73 | % |
| | | |
| | | |
6.907.038.758.73As of March 31, 2023, maturities of lease liabilities were as follows:
| | | | | | |
| Operating Leases | |
| Period Ending December 31: | | |
| Remainder of 2023 | $ | 25,989 | | |
| 2024 | 29,863 | | |
| 2025 | 25,096 | | |
| 2026 | 22,733 | | |
| 2027 | 19,912 | | |
| 2028 | 18,129 | | |
| Thereafter | 46,053 | | |
| Total lease payments | 187,775 | | |
| Less imputed interest | (49,775) | | |
| Total | $ | 138,000 | | |
25,98929,86325,09622,73319,91218,12946,053187,77549,775138,000217five years
LONG-TERM INVESTMENTSLong-term investments consisted of the following:
| | | | | | | | | | | |
| March 31,
2023 | | December 31, 2022 |
| PropTech convertible trading debt securities | $ | 2,630 | | | $ | 2,957 | |
Long-term investment securities at fair value (1) | 2,715 | | | 3,262 | |
| PropTech investments at cost | 8,863 | | | 8,588 | |
| PropTech investments at equity method | 497 | | | — | |
| Total investments | 14,705 | | | 14,807 | |
Less PropTech current convertible trading debt securities (2) | 1,539 | | | 1,875 | |
| Less PropTech investments accounted for under the equity method | 497 | | | — | |
| Total long-term investments | $ | 12,669 | | | $ | 12,932 | |
_____________________________
(1) These assets are measured at net asset value (“NAV”) as a practical expedient under ASC 820.
(2) These amounts are included in Other current assets on the condensed consolidated balance sheets.
Net realized and unrealized losses and gains recognized on long-term investment securities were as follows:
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2023 | | 2022 |
| | | | | | | |
| Net realized (losses) gains recognized on PropTech convertible trading debt securities | | | | | $ | (352) | | | $ | 154 | |
| Net unrealized (losses) gains recognized on long-term investments at fair value | | | | | (102) | | | 598 | |
| Net realized and unrealized (losses) gains recognized on long-term investment securities | | | | | $ | (454) | | | $ | 752 | |
(a) PropTech Convertible Trading Debt Securities:
These securities are classified as trading debt securities and are accounted for at fair value. The maturities of all convertible notes range from June 2023 to February 2025.
(b) Long-Term Investment Securities at Fair Value:
The following is a summary of unrealized (losses) gains recognized in net income on long-term investment securities at fair value during the three months ended March 31, 2023 and 2022, respectively:
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2023 | | 2022 |
| Net unrealized (losses) gains recognized on long-term investment securities | | | | | $ | (102) | | | $ | 598 | |
| | | | | | | |
| | | | | | | |
The Company has unfunded commitments of $1,030 related to long-term investment securities at fair value as of March 31, 2023.
(c) Equity Securities Without Readily Determinable Fair Values That Do Not Qualify for the NAV Practical Expedient
Equity securities without readily determinable fair values that do not qualify for the NAV practical expedient consisted of investments in various limited liability companies at March 31, 2023. During the three months ended March 31, 2023, New Valley Ventures invested $250 into one additional PropTech venture. The investment is classified as an equity security without a readily determinable fair value. The total carrying value of these investments was $8,863 as of March 31, 2023. No impairment or other adjustments related to observable price changes in orderly transactions for identical or similar investments were identified for the three months ended March 31, 2023.
Long-term investments consisted of the following:
| | | | | | | | | | | |
| March 31,
2023 | | December 31, 2022 |
| PropTech convertible trading debt securities | $ | 2,630 | | | $ | 2,957 | |
Long-term investment securities at fair value (1) | 2,715 | | | 3,262 | |
| PropTech investments at cost | 8,863 | | | 8,588 | |
| PropTech investments at equity method | 497 | | | — | |
| Total investments | 14,705 | | | 14,807 | |
Less PropTech current convertible trading debt securities (2) | 1,539 | | | 1,875 | |
| Less PropTech investments accounted for under the equity method | 497 | | | — | |
| Total long-term investments | $ | 12,669 | | | $ | 12,932 | |
_____________________________
(1) These assets are measured at net asset value (“NAV”) as a practical expedient under ASC 820.
(2) These amounts are included in Other current assets on the condensed consolidated balance sheets.
Net realized and unrealized losses and gains recognized on long-term investment securities were as follows:
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2023 | | 2022 |
| | | | | | | |
| Net realized (losses) gains recognized on PropTech convertible trading debt securities | | | | | $ | (352) | | | $ | 154 | |
| Net unrealized (losses) gains recognized on long-term investments at fair value | | | | | (102) | | | 598 | |
| Net realized and unrealized (losses) gains recognized on long-term investment securities | | | | | $ | (454) | | | $ | 752 | |
2,6302,9572,7153,2628,8638,588497—14,70514,8071,5391,875497—12,66912,932352154102598454752
The following is a summary of unrealized (losses) gains recognized in net income on long-term investment securities at fair value during the three months ended March 31, 2023 and 2022, respectively:
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2023 | | 2022 |
| Net unrealized (losses) gains recognized on long-term investment securities | | | | | $ | (102) | | | $ | 598 | |
| | | | | | | |
| | | | | | | |
1025981,030250one8,863EQUITY METHOD INVESTMENTS
Equity method investments consisted of the following:
| | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
| Ancillary services ventures | $ | 2,055 | | | $ | 1,629 | |
At March 31, 2023, the Company’s ownership percentages in these investments ranged from 17.0% to 50.0%; therefore, the Company accounts for these investments under the equity method of accounting.
VIE Consideration:
The Company has determined that the Company is not the primary beneficiary of any of its equity method investments because it does not control the activities that most significantly impact the economic performance of each investment. The Company determined that the entities were VIEs but the Company was not the primary beneficiary. Therefore, the Company’s equity method investments have been accounted for under the equity method of accounting.
Maximum Exposure to Loss:
The Company’s maximum exposure to loss from its equity method investments consists of the net carrying value of the investments adjusted for any future capital commitments and/or guarantee arrangements. The maximum exposure to loss was $2,055 as of March 31, 2023.
Equity method investments consisted of the following:
| | | | | | | | | | | |
| March 31, 2023 | | December 31, 2022 |
| Ancillary services ventures | $ | 2,055 | | | $ | 1,629 | |
2,0551,62917.050.02,055
CONTINGENCIES The Company is involved in litigation through the normal course of business. The majority of claims are covered by the Company’s insurance policies in excess of any applicable retention. Some claims may not be covered by the Company’s insurance policies. The Company believes that the resolution of these matters will not have a material adverse effect on the financial position, results of operations or cash flows of the Company.
INCOME TAXESThe Company’s income tax (benefit) expense consisted of the following:
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2023 | | 2022 |
| (Loss) income before provision for income taxes | | | | | $ | (23,230) | | | $ | 9,202 | |
| Income tax (benefit) expense using estimated annual effective income tax rate | | | | | (5,390) | | | 2,917 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Income tax (benefit) expense | | | | | $ | (5,390) | | | $ | 2,917 | |
The Company’s income tax (benefit) expense consisted of the following:
| | | | | | | | | | | | | | | |
| | | Three Months Ended |
| | | March 31, |
| | | | | 2023 | | 2022 |
| (Loss) income before provision for income taxes | | | | | $ | (23,230) | | | $ | 9,202 | |
| Income tax (benefit) expense using estimated annual effective income tax rate | | | | | (5,390) | | | 2,917 | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| | | | | | | |
| Income tax (benefit) expense | | | | | $ | (5,390) | | | $ | 2,917 | |
23,2309,2025,3902,9175,3902,917
INVESTMENTS AND FAIR VALUE MEASUREMENTSThe Company’s financial assets and liabilities subject to fair value measurements were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value Measurements as of March 31, 2023 | | |
| Description | | Total | | Quoted Prices in Active Markets for Identical Assets
(Level 1) | |
Significant Other Observable Inputs
(Level 2) | |
Significant Unobservable Inputs
(Level 3) | | |
| Assets: | | | | | | | | | | |
Money market funds (1) | | $ | 105,647 | | | $ | 105,647 | | | $ | — | | | $ | — | | | |
Certificates of deposit (2) | | 507 | | | — | | | 507 | | | — | | | |
| PropTech convertible trading debt securities | | 1,539 | | | — | | | — | | | 1,539 | | | |
| Long-term investments | | | | | | | | | | |
| PropTech convertible trading debt securities | | 1,091 | | | — | | | — | | | 1,091 | | | |
Long-term investment securities at fair value (3) | | 2,715 | | | — | | | — | | | — | | | |
| | | | | | | | | | |
| Total long-term investments | | 3,806 | | | — | | | — | | | 1,091 | | | |
| Total assets | | $ | 111,499 | | | $ | 105,647 | | | $ | 507 | | | $ | 2,630 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
_____________________________
(1)Amounts included in Cash and cash equivalents on the condensed consolidated balance sheets, except for $5,404 that is included in current restricted cash and cash equivalents and $2,538 that is included in non-current restricted assets.
(2)Amounts included in current restricted assets and non-current restricted assets on the condensed consolidated balance sheets.
(3)In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value Measurements as of December 31, 2022 | | |
| Description | | Total | | Quoted Prices in Active Markets for Identical Assets
(Level 1) | |
Significant Other Observable Inputs
(Level 2) | |
Significant Unobservable Inputs
(Level 3) | | |
| Assets: | | | | | | | | | | |
Money market funds (1) | | $ | 153,941 | | | $ | 153,941 | | | $ | — | | | $ | — | | | |
Certificates of deposit (2) | | 569 | | | — | | | 569 | | | — | | | |
| PropTech convertible trading debt securities | | 1,875 | | | — | | | — | | | 1,875 | | | |
| Long-term investments | | | | | | | | | | |
| PropTech convertible trading debt securities | | 1,082 | | | — | | | — | | | 1,082 | | | |
Long-term investment securities at fair value (3) | | 3,262 | | | — | | | — | | | — | | | |
| Total long-term investments | | 4,344 | | | — | | | — | | | 1,082 | | | |
| Total assets | | $ | 160,729 | | | $ | 153,941 | | | $ | 569 | | | $ | 2,957 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
_____________________________
(1)Amounts included in Cash and cash equivalents on the condensed consolidated balance sheets, except for $4,985 that is included in current restricted assets and $2,538 that is included in non-current restricted assets.
(2)Amounts included in current restricted assets and non-current restricted assets on the condensed consolidated balance sheets.
(3)In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.
The fair value of the Level 2 certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is the rate offered by the financial institution.
The fair values of the Level 3 PropTech convertible trading debt securities were derived using a discounted cash flow model utilizing a probability-weighted expected return method based on the probabilities of different potential outcomes for the convertible trading debt securities.
The long-term investments are based on NAV per share provided by the partnerships based on the indicated market value of the underlying assets or investment portfolio. In accordance with Subtopic 820-10, these investments are not classified under the fair value hierarchy disclosed above because they are measured at fair value using the NAV practical expedient.
The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at March 31, 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quantitative Information about Level 3 Fair Value Measurements |
| | Fair Value at | | | | | | |
| | March 31,
2023 | | Valuation Technique | | Unobservable Input | | Range (Actual) |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| PropTech convertible trading debt securities | | $ | 2,630 | | | Discounted cash flow | | Interest rate | | 4% and 8% |
| | | | | | Maturity | | June 2023 - Feb 2025 |
| | | | | | Volatility | | 56.9% - 101.9% |
| | | | | | Discount rate | | 33.62% - 190.38% |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quantitative Information about Level 3 Fair Value Measurements |
| | Fair Value at | | | | | | |
| | December 31,
2022 | | Valuation Technique | | Unobservable Input | | Range (Actual) |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| PropTech convertible trading debt securities | | $ | 2,957 | | | Discounted cash flow | | Interest rate | | 4% and 8% |
| | | | | | Maturity | | Mar 2023 -Feb 2025 |
| | | | | | Volatility | | 60.7% - 103.3% |
| | | | | | Discount rate | | 29.39% - 186.15% |
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record assets and liabilities at fair value on a nonrecurring basis. Generally, assets and liabilities are recorded at fair value on a nonrecurring basis as a result of impairment charges. The Company had no nonrecurring nonfinancial assets subject to fair value measurements as of March 31, 2023 and December 31, 2022, respectively.
The Company’s financial assets and liabilities subject to fair value measurements were as follows:
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value Measurements as of March 31, 2023 | | |
| Description | | Total | | Quoted Prices in Active Markets for Identical Assets
(Level 1) | |
Significant Other Observable Inputs
(Level 2) | |
Significant Unobservable Inputs
(Level 3) | | |
| Assets: | | | | | | | | | | |
Money market funds (1) | | $ | 105,647 | | | $ | 105,647 | | | $ | — | | | $ | — | | | |
Certificates of deposit (2) | | 507 | | | — | | | 507 | | | — | | | |
| PropTech convertible trading debt securities | | 1,539 | | | — | | | — | | | 1,539 | | | |
| Long-term investments | | | | | | | | | | |
| PropTech convertible trading debt securities | | 1,091 | | | — | | | — | | | 1,091 | | | |
Long-term investment securities at fair value (3) | | 2,715 | | | — | | | — | | | — | | | |
| | | | | | | | | | |
| Total long-term investments | | 3,806 | | | — | | | — | | | 1,091 | | | |
| Total assets | | $ | 111,499 | | | $ | 105,647 | | | $ | 507 | | | $ | 2,630 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
_____________________________
(1)Amounts included in Cash and cash equivalents on the condensed consolidated balance sheets, except for $5,404 that is included in current restricted cash and cash equivalents and $2,538 that is included in non-current restricted assets.
(2)Amounts included in current restricted assets and non-current restricted assets on the condensed consolidated balance sheets.
(3)In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.
| | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Fair Value Measurements as of December 31, 2022 | | |
| Description | | Total | | Quoted Prices in Active Markets for Identical Assets
(Level 1) | |
Significant Other Observable Inputs
(Level 2) | |
Significant Unobservable Inputs
(Level 3) | | |
| Assets: | | | | | | | | | | |
Money market funds (1) | | $ | 153,941 | | | $ | 153,941 | | | $ | — | | | $ | — | | | |
Certificates of deposit (2) | | 569 | | | — | | | 569 | | | — | | | |
| PropTech convertible trading debt securities | | 1,875 | | | — | | | — | | | 1,875 | | | |
| Long-term investments | | | | | | | | | | |
| PropTech convertible trading debt securities | | 1,082 | | | — | | | — | | | 1,082 | | | |
Long-term investment securities at fair value (3) | | 3,262 | | | — | | | — | | | — | | | |
| Total long-term investments | | 4,344 | | | — | | | — | | | 1,082 | | | |
| Total assets | | $ | 160,729 | | | $ | 153,941 | | | $ | 569 | | | $ | 2,957 | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | | | | | | | |
_____________________________
(1)Amounts included in Cash and cash equivalents on the condensed consolidated balance sheets, except for $4,985 that is included in current restricted assets and $2,538 that is included in non-current restricted assets.
(2)Amounts included in current restricted assets and non-current restricted assets on the condensed consolidated balance sheets.
(3)In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.
105,647105,647——507—507—1,539——1,5391,091——1,0912,715———3,806——1,091111,499105,6475072,6305,4042,538153,941153,941——569—569—1,875——1,8751,082——1,0823,262———4,344——1,082160,729153,9415692,9574,9852,538
The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at March 31, 2023: | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quantitative Information about Level 3 Fair Value Measurements |
| | Fair Value at | | | | | | |
| | March 31,
2023 | | Valuation Technique | | Unobservable Input | | Range (Actual) |
| | | | | | | | |
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| | | | | | | | |
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| | | | | | | | |
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| | | | | | | | |
| PropTech convertible trading debt securities | | $ | 2,630 | | | Discounted cash flow | | Interest rate | | 4% and 8% |
| | | | | | Maturity | | June 2023 - Feb 2025 |
| | | | | | Volatility | | 56.9% - 101.9% |
| | | | | | Discount rate | | 33.62% - 190.38% |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at December 31, 2022:
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | Quantitative Information about Level 3 Fair Value Measurements |
| | Fair Value at | | | | | | |
| | December 31,
2022 | | Valuation Technique | | Unobservable Input | | Range (Actual) |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| PropTech convertible trading debt securities | | $ | 2,957 | | | Discounted cash flow | | Interest rate | | 4% and 8% |
| | | | | | Maturity | | Mar 2023 -Feb 2025 |
| | | | | | Volatility | | 60.7% - 103.3% |
| | | | | | Discount rate | | 29.39% - 186.15% |
2,6304856.9101.933.62190.382,9574860.7103.329.39186.15
SEGMENT INFORMATIONThe Company’s business segments were Real Estate Brokerage and Corporate and Other. The accounting policies of the segments are the same as those described in the summary of significant accounting policies.
Financial information for the Company’s operations before taxes and non-controlling interests for the three months ended March 31, 2023 and 2022 were as follows:
| | | | | | | | | | | | | | | | | |
| Real Estate Brokerage | | Corporate and Other | | Total |
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| | | | | |
| Three months ended March 31, 2023 | | | | | |
| Revenues | $ | 213,982 | | | $ | — | | | $ | 213,982 | |
| Operating loss | (17,343) | | (1) | (6,465) | | | (23,808) | |
Adjusted EBITDA attributed to Douglas Elliman (2) | (12,984) | | | (4,661) | | | (17,645) | |
| Depreciation and amortization | 2,039 | | | — | | | 2,039 | |
| Capital expenditures | 3,627 | | | — | | | 3,627 | |
| | | | | |
| Three months ended March 31, 2022 | | | | | |
| Revenues | $ | 308,900 | | | $ | — | | | $ | 308,900 | |
| Operating income (loss) | 14,541 | | | (6,662) | | | 7,879 | |
Adjusted EBITDA attributed to Douglas Elliman (2) | 17,662 | | | (4,935) | | | 12,727 | |
| Depreciation and amortization | 2,079 | | | — | | | 2,079 | |
| Capital expenditures | 849 | | | — | | | 849 | |
_____________________________
(1)Operating loss includes $1,210 of restructuring expense.
(2)The following table reconciles operating income to Adjusted EBITDA attributed to Douglas Elliman for the three months ended March 31, 2023 and 2022.
| | | | | | | | | | | | | | | | | |
| | | | | Three Months Ended March 31, |
| | | | | | | 2023 | | 2022 |
| Real estate brokerage segment | | | | | | | | | |
| Operating (loss) income | | | | | | | $ | (17,343) | | | $ | 14,541 | |
| Depreciation and amortization | | | | | | | 2,039 | | | 2,079 | |
| Stock-based compensation | | | | | | | 1,019 | | | 925 | |
| Restructuring | | | | | | | 1,210 | | | — | |
| Adjusted EBITDA | | | | | | | (13,075) | | | 17,545 | |
| Adjusted EBITDA attributed to non-controlling interest | | | | | | | 91 | | | 117 | |
| Adjusted EBITDA attributed to Douglas Elliman | | | | | | | $ | (12,984) | | | $ | 17,662 | |
| | | | | | | | | |
| Corporate and other segment | | | | | | | | | |
| Operating loss | | | | | | | $ | (6,465) | | | $ | (6,662) | |
| Stock-based compensation | | | | | | | 1,804 | | | 1,727 | |
| Adjusted EBITDA attributed to Douglas Elliman | | | | | | | $ | (4,661) | | | $ | (4,935) | |
Financial information for the Company’s operations before taxes and non-controlling interests for the three months ended March 31, 2023 and 2022 were as follows:
| | | | | | | | | | | | | | | | | |
| Real Estate Brokerage | | Corporate and Other | | Total |
| | | | | |
| | | | | |
| | | | | |
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| | | | | |
| Three months ended March 31, 2023 | | | | | |
| Revenues | $ | 213,982 | | | $ | — | | | $ | 213,982 | |
| Operating loss | (17,343) | | (1) | (6,465) | | | (23,808) | |
Adjusted EBITDA attributed to Douglas Elliman (2) | (12,984) | | | (4,661) | | | (17,645) | |
| Depreciation and amortization | 2,039 | | | — | | | 2,039 | |
| Capital expenditures | 3,627 | | | — | | | 3,627 | |
| | | | | |
| Three months ended March 31, 2022 | | | | | |
| Revenues | $ | 308,900 | | | $ | — | | | $ | 308,900 | |
| Operating income (loss) | 14,541 | | | (6,662) | | | 7,879 | |
Adjusted EBITDA attributed to Douglas Elliman (2) | 17,662 | | | (4,935) | | | 12,727 | |
| Depreciation and amortization | 2,079 | | | — | | | 2,079 | |
| Capital expenditures | 849 | | | — | | | 849 | |
_____________________________
(1)Operating loss includes $1,210 of restructuring expense.
(2)The following table reconciles operating income to Adjusted EBITDA attributed to Douglas Elliman for the three months ended March 31, 2023 and 2022.
| | | | | | | | | | | | | | | | | |
| | | | | Three Months Ended March 31, |
| | | | | | | 2023 | | 2022 |
| Real estate brokerage segment | | | | | | | | | |
| Operating (loss) income | | | | | | | $ | (17,343) | | | $ | 14,541 | |
| Depreciation and amortization | | | | | | | 2,039 | | | 2,079 | |
| Stock-based compensation | | | | | | | 1,019 | | | 925 | |
| Restructuring | | | | | | | 1,210 | | | — | |
| Adjusted EBITDA | | | | | | | (13,075) | | | 17,545 | |
| Adjusted EBITDA attributed to non-controlling interest | | | | | | | 91 | | | 117 | |
| Adjusted EBITDA attributed to Douglas Elliman | | | | | | | $ | (12,984) | | | $ | 17,662 | |
| | | | | | | | | |
| Corporate and other segment | | | | | | | | | |
| Operating loss | | | | | | | $ | (6,465) | | | $ | (6,662) | |
| Stock-based compensation | | | | | | | 1,804 | | | 1,727 | |
| Adjusted EBITDA attributed to Douglas Elliman | | | | | | | $ | (4,661) | | | $ | (4,935) | |
213,982—213,98217,3436,46523,80812,9844,66117,6452,039—2,0393,627—3,627308,900—308,90014,5416,6627,87917,6624,93512,7272,079—2,079849—8491,21017,34314,5412,0392,0791,0199251,210—13,07517,5459111712,98417,6626,4656,6621,8041,7274,6614,935ESCROW FUNDS IN HOLDINGAs a service to its customers, Portfolio Escrow Inc., a subsidiary of the Company, administers escrow and trust deposits which represent undisbursed amounts received for the settlement of real estate transactions. Deposits at FDIC-insured institutions are insured up to $250. Portfolio Escrow Inc. had escrow funds on deposit in the amount of $27,505 and $33,533 as of March 31, 2023 and December 31, 2022, respectively, and corresponding escrow funds in holding of the same amount. While these deposits are not assets of the Company (and, therefore, are excluded from the accompanying Condensed Consolidated Balance Sheets), the subsidiary of the Company remains contingently liable for the disposition of these deposits.27,50533,533
Washington, D.C. 20549
Amendment No. 1
This Amendment No. 1 on Form 10-Q/A (the “Amendment”) amends the Quarterly Report on Form 10-Q of Douglas Elliman Inc. (the “Company”) for the period ended March 31, 2023, originally filed with the Securities and Exchange Commission (“SEC”) on May 15, 2023 (the “Original Filing”). This Amendment is being filed solely to amend the certifications pursuant to Section 302 of the Sarbanes-Oxley Act of 2022 appended as Exhibits 31.1 and 31.2. Specifically, the Company is refiling these certifications solely to include the introductory language of paragraph 4 and the language of paragraph 4(b) referring to internal control over financial reporting, which language was inadvertently omitted from the Company’s certifications in the Original Filing.
This Amendment should be read in conjunction with the Original Filing and the Company’s other filings made with the SEC subsequent to the filing of the Original Filing on May 15, 2023. This Amendment is not intended to, nor does it, reflect events occurring after the filing of the Original Filing, and does not modify or update the disclosures therein in any way other than as required to reflect the changes described above.
Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned thereunto duly authorized.
