NYSE:DOUG Douglas Elliman Q2 2024 Earnings Report $1.60 -0.03 (-1.84%) Closing price 04/25/2025 03:59 PM EasternExtended Trading$1.64 +0.04 (+2.81%) As of 04/25/2025 07:32 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. Earnings History Douglas Elliman EPS ResultsActual EPS-$0.01Consensus EPS -$0.02Beat/MissBeat by +$0.01One Year Ago EPSN/ADouglas Elliman Revenue ResultsActual Revenue$285.75 millionExpected Revenue$282.43 millionBeat/MissBeat by +$3.32 millionYoY Revenue GrowthN/ADouglas Elliman Announcement DetailsQuarterQ2 2024Date8/7/2024TimeN/AConference Call DateThursday, August 8, 2024Conference Call Time8:00AM ETUpcoming EarningsDouglas Elliman's Q1 2025 earnings is scheduled for Thursday, May 8, 2025, with a conference call scheduled on Friday, May 9, 2025 at 8:00 AM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptPress Release (8-K)Quarterly Report (10-Q)Earnings HistoryCompany ProfilePowered by Douglas Elliman Q2 2024 Earnings Call TranscriptProvided by QuartrAugust 8, 2024 ShareLink copied to clipboard.There are 5 speakers on the call. Operator00:00:00Welcome to Douglas Elliman Second Quarter 2024 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 An archived version of the webcast will be available on the Investor Relations section of the company's website located at investors. Element.com for 1 year. During this call, the terms adjusted EBITDA and adjusted net loss will be used. Operator00:00:26These 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. Operator00:01:19Now I'd like to turn the call over to the Chairman, President and Chief Executive Officer of WSLIAM, Howard Lorber. Speaker 100:01:27Good morning, and thank you for joining us. With me today are Richard Lampen, our Chief Operating Officer Brian Kirkland, our Chief Financial Officer and Scott Durkin, President and CEO of Douglas Elliman Realty, our residential real estate brokerage business. On today's call, we will discuss the current operating environment and Douglas Elliman's financial results for the 3 6 months ended June 30, 2024. All numbers presented this morning will be as of June 30, 2024, unless otherwise stated. We will then provide closing comments and open the call for questions. Speaker 100:02:01Before I turn to our results, I want to begin with an update on certain matters. First, in July 2024, we were pleased to have received a $50,000,000 growth investment from Kennedy Lewis, a leading credit focused alternative asset management firm. We believe this positions us for strategic growth and expansion and we look forward to tapping into the network and knowledge base of Kennedy Lewis as we collaborate to drive long term stockholder value. 2nd, in June 2024, we were pleased to receive preliminary court approval of our settlement of the pending seller class action litigation relating to real estate brokerage fees, which will also resolve other similar pending litigation. Now we will discuss our outlook on our current operating environment as well as trends we are seeing in residential real estate. Speaker 100:02:53As discussed in previous quarters, generationally high interest rates have driven sustained listing inventory shortages across our luxury markets for more than 2 years. These shortages have resulted in significantly lower transaction volumes during this time. While we expect these industry wide challenges to impact our results, we remain encouraged by recent improvements. 1st, our 2nd quarter revenues and gross transaction values increased from the prior year period by approximately 4% 7%, respectively. Further, average daily cash receipts from existing home sales in July increased by approximately 12% compared to July 2023. Speaker 100:03:37This continues a trend that began in October 2023. We believe this is evidence of the market's gradual adjustment to higher interest rates. 2nd, we continue to see momentum in our development marketing business, a platform that differentiates Douglas Elliman from our competitors. Through its development marketing division, Douglas Elliman employs a hybrid broker model where our top resale residential real estate agents work in tandem with our development marketing professionals and leverage their extensive industry relationships for the benefit of our developer clients. Our agents can market and sell high profile developments that enhance their brands and provide additional commission potential for years as they are often hired to resell or rent those very same units. Speaker 100:04:23Consequently, Douglas Elliman Development and Marketing continues to be sought after by well known real estate developers. This division has an active pipeline of signed and new projects of approximately $26,500,000,000 gross transaction value, including approximately $16,000,000,000 gross transaction value in Florida alone. We believe this bodes well for the future as we will recognize commission income from these projects when they close. 3rd, listing volume increased 23% in the Q2 of 2024 from the prior year period as Douglas Elliman continues to be the leader in the luxury markets it serves. The advent of the $100,000,000 listing is upon us and we are well positioned to market and sell these prestigious homes. Speaker 100:05:08For example, during the quarter, we won significant 9 figure exclusives in Orange County, California, Snowmass Coffee and Coral Gables, Florida. The increases in total listing volume follows a 6.7% increase in the Q1 compared to the Q1 of 2023 and a 25% increase in the Q4 of 2023 compared to the Q4 of 2022. We believe we are already seeing the impact of increased listing volume and this trend will continue in the remainder of 2024 and into the Q1 of 2025. Consistent with the increase in listing volume, our average sales price per transaction remained an industry best $1,810,000 in the 2nd quarter and was $1,640,000 for the past 4 quarters. We believe the consistency in our average sales price per transaction reflects the strength of our luxury markets as well as Douglas Elliman's reputation for offering the finest properties and client experience in real estate. Speaker 100:06:12Finally, our cost reduction efforts have been judicious and the results of our strategy are beginning to flow to the bottom line. Over the past year, we have continued to adjust our cost structure to benefit our business, including additional headcount reductions, cutting costly sponsorships, streamlining advertising and commencing a program to consolidate office spaces. Our Real Estate Brokerage segment reduced its operating expenses excluding commission expenses, litigation settlement expenses, restructuring and other non cash expenses by $11,300,000 in the first half of twenty twenty four, representing a decline of approximately 7.9% compared to the prior year period. Over the last 12 months ended June 30, 2024, our Real Estate Brokerage segment has reduced its operating expenses, excluding commission expenses, litigation settlement expenses, restructuring and other non cash expenses by $21,000,000 or approximately 7.3% compared to the 12 months ended June 30, 2023. We believe these efforts are enabling Douglas Elliman to meet industry challenges head on without significantly impacting the agent experience. Speaker 100:07:25We are proud to share that our agent retention rate stands at 88%, and we continue to attract the industry's best talent. Now turning to Douglas Elliman's financial results for the 3 months ended June 30, 2024. Douglas Elliman reported $285,800,000 in revenues compared to $275,900,000 in the 2023 period. Net loss attributed to Douglas Selman for the Q2 was 1,700,000 dollars or $0.02 per diluted share compared to $5,200,000 or $0.06 per diluted share in the 2023 period. Adjusted EBITDA attributed to Douglas Simon in the 2nd quarter were income of $2,400,000 compared to a loss of $2,600,000 in the 2023 period. Speaker 100:08:12For comparison purposes, our Real Estate Brokerage segment reported operating income of $2,900,000 this quarter compared to an operating loss of $1,000,000 in the 2023 period. Adjusted EBITDA attributed to the segment were income of 6,600,000 dollars compared to $2,500,000 in the 2023 period. Adjusted net loss attributed to Douglas Elliman in the 2nd quarter was $1,100,000 or $0.01 per share compared to $4,900,000 or $0.06 per share in the 2023 period. Douglas Elliman has maintained ample liquidity with cash and cash equivalents at June 30, 2024 of approximately $92,900,000 Now turning to Douglas Elliman's financial results for the 6 months ended June 30, 2024. Douglas Elliman reported $486,000,000 in revenues compared to $489,900,000 in the prior year period. Speaker 100:09:10Net loss attributed to Douglas Elliman for the 2nd quarter was $43,100,000 or $0.52 per diluted share compared to $22,800,000 or $0.28 per diluted share in the 2023 period. Net loss attributed to Douglas Simon in the 2024 period included a $17,750,000 litigation settlement charge of which we have paid 7.7 $5,000,000 in June 2024. Adjusted EBITDA attributed to Douglas Elliman in the 6 months ended June 30, 2024 were a loss of 15.9 $1,000,000 compared to $20,200,000 in the 2023 period. For comparison purposes, our Real Estate Brokerage segment reported an operating loss of $32,300,000 for the 1st 6 months of 2024 compared to $18,400,000 in the 2023 period. Operating loss in the 2024 period includes the $17,750,000 litigation settlement charge. Speaker 100:10:07Adjusted EBITDA attributed to the segment were a loss of $7,600,000 compared to $10,500,000 in the 2023 period. Adjusted net loss attributed to Douglas Elliman in the 6 months ended June 30, 2024 was $24,800,000 or $0.30 per share compared to $21,600,000 or $0.27 per share in the 2023 period. In summary, we are confident that Douglas Elliman positioned for long term success with its differentiated platform, continued cost reduction efforts and strong luxury brand. Our proven management team has a successful history of navigating many economic cycles and applying financial discipline that balances the importance of maintaining revenues and managing operating expenses to create long term stockholder value. Looking ahead, in addition to driving operational efficiencies, we are focused on strategic market expansion, continued recruitment of outstanding talent and further adoption of innovative solutions to empower our agents. Speaker 100:11:08With that, we will be happy to answer questions. Operator? Operator00:11:13Thank We'll take our first question from Sohank Bonsley with BTIG. Please go ahead. Your line is open. Speaker 200:11:36Hey, good morning, everyone. So first one, I guess, Howard, more recently, we've seen an increase in inventory in some of your core markets like Florida and Texas, and I think you sort of noted that in your comments as well. So I guess wondering what you're hearing from agents as to why that's maybe not translated into more transaction unit growth this quarter? Because when I sort of break down your GTV performance into units and price, it looks like units were still down 3%. So yes, any thoughts there would be helpful. Speaker 200:12:03Thank you. Speaker 100:12:04Yes. I mean, look, I think people are still waiting. The inventory is building a little bit because they're still waiting for rate cuts, okay. It's hard, you have inventory build and then there's really less buyers at most levels or especially at the lower end levels in the market because of rates. So hoping that we will have some rate cuts before the end of the year, who knows, I mean, we'd be really happy with 2 quarter point cuts, but there's also been talk of a half a point cut and then a quarter of a point cut before year end. Speaker 100:12:44And we sure will see the inventory really going down as people decide to make new purchases from the current inventory. Speaker 200:12:56Okay. And then Brian, I guess you did in the prepared comments say, I think, up 12% on cash receipts. Can you just remind us how that actually translates into revenue going forward? Speaker 300:13:09Sure. I mean, so, Amit, you can obviously, we've had really good performance in 2024 compared to 2023, up 12%. Our margins are running anywhere between 20% 25%. So that really depends on regions going forward. But what we're seeing is a very strong market. Speaker 200:13:31Okay. And then I Speaker 300:13:33guess And so to answer your just to add a little to the previous question, we are starting to see the impact of that listing as we've seen strong July in particular. So it does take because we recognize revenue when the earnings process is complete, that's only when the sale occurs. So we think that looks positive going forward. Speaker 200:13:56Okay, great. And then I guess on the capital raise, it sounds like you're looking to deploy that for growth. So can you maybe just talk about whether you envision that spend going towards tuck in acquisitions? Or is it building out teams more organically? And then maybe just a market that you'd be looking to target? Speaker 200:14:12Thanks. Speaker 100:14:13Look, we're basically our expansion is basically limited to the states that really are no income tax states because that's where people are going. So it's a number of markets we're not in that we could be in. We've held back a little bit, but we've had really, I think, most of the no tax states covered now. We're in Texas. We're doing well in Texas. Speaker 100:14:45We're in, obviously, Florida. Florida is still booming. It's somewhat shocking almost because people just are coming to Florida in droves. And they're coming from all over. Most people think like most of Florida or a lot of it is coming from New York. Speaker 100:15:05But having said that, we see the California people also coming to Florida and that's surprising. Most the general thinking was that anyone from California that wants to get out of the tax position there is going to go to Texas. Well, I think sometimes California is more aligned with Florida. And we've heard that a few times that people are I have a neighbor in Florida on each side of me that came from California. So we know what's going on and we're sort of happy with it and we're going to continue to be very careful with our money and work well. Speaker 100:15:52We will be working well with Kennedy Lewis and we will be hopefully getting involved. They are a big lender to developers, single family home developers and we're hoping to pick up some of that business if possible. Speaker 200:16:09Okay. And then, Brian, on expenses, so it looks like you've been able to bring down the G and A line nicely. But my question is more around the go forward. So if volumes were to begin to inflect next year or in the back half of the year, how are you sort of thinking about managing that line or just expenses, your fixed expenses in general, right? Should we expect that to continue to trend down as some of your prior actions sort of flow through? Speaker 200:16:35Or do you expect to add more folks to support the Speaker 400:16:38growth as you go forward? Speaker 300:16:40So obviously, you're asking a question about scale. And to answer your question, we do think we can scale expenses going forward. And we think that when revenues return that that will impact the business favorably. But let's just talk about where we were and then where we're going. So the contributions to our profits from the expense reductions really do reflect the work over the last 2 years. Speaker 300:17:07And this has been a gradual impact and it's been building as management has been very deliberate on these expense cuts and has been focused on continuing expenses in a judicious matter. And otherwise, we're not penny wise and pound foolish. We're focused on continuing to enhance the agent experience, which that's the number one driver of long term stockholder value. And while initially the expense reductions came from lower advertising, which is somewhat variable to revenues and personnel expenses, we're now seeing the impact of the eliminations of leases and long term sponsorships. So we'll continue to think smartly. Speaker 300:17:48We'll continue to where there's a need to spend more on things like advertising, we will, but we're going to continue to try to scale our expenses to the maximum amount possible. Speaker 100:17:58Right. And let me add something to what I was talking about before on expansion. Our way of expansion now is not to go buy a company or not to start from scratch. But what we do is we go into markets and most of these developers are do business in multiple states. So like for instance, we have projects in Tennessee coming up. Speaker 100:18:23We don't have an office in Tennessee. We have a broker. And so that may be just for a while just doing new development projects, which is a great part of our business. And that's pretty much how we save money in opening other markets. Speaker 200:18:38Okay, understood. And just last one on split, Brian. It was up 150 basis points. And look, we've seen pressure across the industry. Can you just maybe talk about some of the dynamics at play there? Speaker 200:18:48Thank you. Speaker 300:18:50Yes, of course. And this is a similar answer to the Q1, but I'll give you the walk forward. So nothing has changed on the grid that we pay to agents in recent years. And we're looking region if you look at the region to region commission splits, they're completely consistent. But what's happening is our margin analysis is really sensitive in mix given the number of markets we're in. Speaker 300:19:17So specifically Florida, which is a higher commission state, increased from 27% of our existing home sales in the 23% Q2 to 30% of existing home sales in the Q2 of 2024. That accounted for if you look at the difference between that and New York City, that accounted for about half about 0.5% of the 1.5% change in the margin. The remainder was due to the Dougherty Settlement Development Marketing, which you know that business is sensitive to revenue recognition accounting because we only recognize revenue and related profit on that business when the earnings process is complete or the sale closes. And as Howard said, we have a tremendous pipeline in that and that looks good for future profits. The final impact was higher commission payouts on a percentage basis and that was due to we're an ultra luxury realtor. Speaker 300:20:13I mean that's the bottom line. That's our market, ultra luxury. And we had some really significant record breaking transactions, some 9 figure transactions during the quarter. And that's going to result in lower margins, but at the same time, it's going to result in higher absolute gross profit. Speaker 200:20:33Understood. All right. Thanks a lot for the thoughts. Operator00:20:39Our next question comes from Peter Abramowitz with Jefferies. Please go ahead. Speaker 400:20:46Yes. Thank you for taking the question. So if we just look at overall transaction value in your business versus the overall market, it would seem that you gained market share this quarter. So just wondering if you could provide any context or comments around that, maybe what drove that and if you think that's something that's sustainable going forward? Speaker 300:21:09Obviously, record breaking sales growth. We have the best agents. We're an ultra luxury residential real estate broker. And when you have a Speaker 100:21:22BK, just to add, we have, I think, in the whole industry, in the whole country, we have the highest level of sales. Our average sale is, was this year was $1,800,000 I think, right? Speaker 300:21:40Yes. This quarter. Speaker 100:21:43The rest of the companies, even companies, no matter what size they are, I don't think there's anyone that's even close to that. I think they're all $1,000,000 or less. Speaker 300:21:55I believe you're correct, Howard. And we also are in markets that in addition to record breaking sales, in addition to being the name and ultra luxury real estate, we also are in markets that are less mortgage rate sensitive. Mortgage rates were very high in the 2nd quarter. So we are going to outperform in a quarter like that from that rate from the interest rate perspective. Speaker 400:22:20Okay, that's helpful. And then a question just overall on the macro backdrop, obviously, some volatile and wild moves in the market and there seems to be maybe a little bit more concern around a recession today than there was a couple of weeks ago. Just if you could help us think through impact your business, I know that your core buyer is maybe less impacted by the macro backdrop and not as sensitive, but have you had conversations internally about how that affects the business? And could you help us think through, if we do go into a recession, how we should think about sort of the go forward sort of medium term? Speaker 100:23:03Yes. That's a tough question because we don't know how deep the recession would be if there even is 1. We keep hearing how many times have we heard about recession is coming, recession is coming. It's I don't think there's going to be any serious recession. There may be others that think the opposite. Speaker 100:23:23But I still say that we are in the best position in the industry to weather a recession. And that's what's important because when you come out of that recession, if there is 1, we'll be the number 1 we'll continue to be the number 1 broker in the country. Speaker 400:23:43Got it. And then one more if I could. I think Howard you mentioned in your comments toward the end there just on strategic market expansion. Could you touch on maybe some of the markets where you're thinking that may be a possibility whether acquiring new teams or potentially just kind of beefing up for recovery, just market overall where you think the business could be expanding over the next year or 2? Speaker 100:24:09Yes. As I said, one of the ways we're doing it without spending a lot of money is through new development, because there's in some of these markets, there's really pretty much no one that does new development sales. So that's what we're doing, as I said, in Tennessee. And that's how we're building our pretty much all our markets, all our newer markets, including Texas and including Las Vegas. We have some great projects. Speaker 100:24:40And you don't have to spend much money to do that because we have the back office part of it in New York and Florida and that can service the whole country pretty much. So we're not building like we're not going in and opening and taking 5,000 feet and opening a big beautiful new office. That we're not doing. We want to get business first before we open the office. And that has worked pretty well for us because we're very well known in the new development business. Speaker 100:25:10I mean, we have huge market share. And if you look at Florida, huge market share in Florida, and we haven't been there that long. I guess how long have we been in Florida, BK, maybe Speaker 300:25:2111 years. Speaker 100:25:22I was going to say 10 years, 10, 11 years. And we built up where we're the number one broker in Miami Beach, we're the number one broker in Palm Beach County. And we're all the way up pretty much we go halfway up on the east side. And we're now on the West Coast of Florida. And they really don't have anyone that really knows the new development business like we do. Speaker 100:25:49And that's really been a huge help. And so we're going to be going to places where there's business. It doesn't matter really where they are. If we can do it and do it economically and make money, we're doing it. Speaker 400:26:04All right. That's all for me. Thanks for the time. Operator00:26:10Ladies and gentlemen, those are all the questions that we have for today. Thank you for joining us on Douglas Elliman's quarterly earnings conference call. Hope you have a good day and this will conclude our call. Speaker 100:26:22Thank you. Thank you.Read morePowered by Conference Call Audio Live Call not available Earnings Conference CallDouglas Elliman Q2 202400:00 / 00:00Speed:1x1.25x1.5x2x Earnings DocumentsPress Release(8-K)Quarterly report(10-Q) Douglas Elliman Earnings HeadlinesSouthpole fashion founder lists Miami penthouse for $27.5M — $16.5M more than what he paid in 2021April 25 at 2:04 AM | msn.comDouglas Elliman Inc. 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Email Address About Douglas EllimanDouglas Elliman (NYSE:DOUG) owns Douglas Elliman Realty, LLC, operating as a residential brokerage company in the United States with operations in New York, Florida, California, Texas, Colorado, Nevada, Massachusetts, Connecticut, Maryland, Virginia and Washington, D.C. In addition, Douglas Elliman sources, uses and invests in early-stage, disruptive property technology (“PropTech”) solutions and companies and provides other real estate services, including development marketing, property management and settlement and escrow services in select markets.View Douglas Elliman ProfileRead more More Earnings Resources from MarketBeat Earnings Tools Today's Earnings Tomorrow's Earnings Next Week's Earnings Upcoming Earnings Calls Earnings Newsletter Earnings Call Transcripts Earnings Beats & Misses Corporate Guidance Earnings Screener Earnings By Country U.S. Earnings Reports Canadian Earnings Reports U.K. Earnings Reports Latest Articles Market Anticipation Builds: Joby Stock Climbs Ahead of EarningsIs Intuitive Surgical a Buy After Volatile Reaction to Earnings?Seismic Shift at Intel: Massive Layoffs Precede Crucial EarningsRocket Lab Lands New Contract, Builds Momentum Ahead of EarningsAmazon's Earnings Could Fuel a Rapid Breakout Tesla Earnings Miss, But Musk Refocuses and Bulls ReactQualcomm’s Range Narrows Ahead of Earnings as Bulls Step In Upcoming Earnings Cadence Design Systems (4/28/2025)Welltower (4/28/2025)Waste Management (4/28/2025)AstraZeneca (4/29/2025)Mondelez International (4/29/2025)PayPal (4/29/2025)Starbucks (4/29/2025)DoorDash (4/29/2025)Honeywell International (4/29/2025)Regeneron Pharmaceuticals (4/29/2025) Get 30 Days of MarketBeat All Access for Free Sign up for MarketBeat All Access to gain access to MarketBeat's full suite of research tools. 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There are 5 speakers on the call. Operator00:00:00Welcome to Douglas Elliman Second Quarter 2024 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. Element.com for 1 year. During this call, the terms adjusted EBITDA and adjusted net loss will be used. Operator00:00:26These 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. Operator00:01:19Now I'd like to turn the call over to the Chairman, President and Chief Executive Officer of WSLIAM, Howard Lorber. Speaker 100:01:27Good morning, and thank you for joining us. With me today are Richard Lampen, our Chief Operating Officer Brian Kirkland, our Chief Financial Officer and Scott Durkin, President and CEO of Douglas Elliman Realty, our residential real estate brokerage business. On today's call, we will discuss the current operating environment and Douglas Elliman's financial results for the 3 6 months ended June 30, 2024. All numbers presented this morning will be as of June 30, 2024, unless otherwise stated. We will then provide closing comments and open the call for questions. Speaker 100:02:01Before I turn to our results, I want to begin with an update on certain matters. First, in July 2024, we were pleased to have received a $50,000,000 growth investment from Kennedy Lewis, a leading credit focused alternative asset management firm. We believe this positions us for strategic growth and expansion and we look forward to tapping into the network and knowledge base of Kennedy Lewis as we collaborate to drive long term stockholder value. 2nd, in June 2024, we were pleased to receive preliminary court approval of our settlement of the pending seller class action litigation relating to real estate brokerage fees, which will also resolve other similar pending litigation. Now we will discuss our outlook on our current operating environment as well as trends we are seeing in residential real estate. Speaker 100:02:53As discussed in previous quarters, generationally high interest rates have driven sustained listing inventory shortages across our luxury markets for more than 2 years. These shortages have resulted in significantly lower transaction volumes during this time. While we expect these industry wide challenges to impact our results, we remain encouraged by recent improvements. 1st, our 2nd quarter revenues and gross transaction values increased from the prior year period by approximately 4% 7%, respectively. Further, average daily cash receipts from existing home sales in July increased by approximately 12% compared to July 2023. Speaker 100:03:37This continues a trend that began in October 2023. We believe this is evidence of the market's gradual adjustment to higher interest rates. 2nd, we continue to see momentum in our development marketing business, a platform that differentiates Douglas Elliman from our competitors. Through its development marketing division, Douglas Elliman employs a hybrid broker model where our top resale residential real estate agents work in tandem with our development marketing professionals and leverage their extensive industry relationships for the benefit of our developer clients. Our agents can market and sell high profile developments that enhance their brands and provide additional commission potential for years as they are often hired to resell or rent those very same units. Speaker 100:04:23Consequently, Douglas Elliman Development and Marketing continues to be sought after by well known real estate developers. This division has an active pipeline of signed and new projects of approximately $26,500,000,000 gross transaction value, including approximately $16,000,000,000 gross transaction value in Florida alone. We believe this bodes well for the future as we will recognize commission income from these projects when they close. 3rd, listing volume increased 23% in the Q2 of 2024 from the prior year period as Douglas Elliman continues to be the leader in the luxury markets it serves. The advent of the $100,000,000 listing is upon us and we are well positioned to market and sell these prestigious homes. Speaker 100:05:08For example, during the quarter, we won significant 9 figure exclusives in Orange County, California, Snowmass Coffee and Coral Gables, Florida. The increases in total listing volume follows a 6.7% increase in the Q1 compared to the Q1 of 2023 and a 25% increase in the Q4 of 2023 compared to the Q4 of 2022. We believe we are already seeing the impact of increased listing volume and this trend will continue in the remainder of 2024 and into the Q1 of 2025. Consistent with the increase in listing volume, our average sales price per transaction remained an industry best $1,810,000 in the 2nd quarter and was $1,640,000 for the past 4 quarters. We believe the consistency in our average sales price per transaction reflects the strength of our luxury markets as well as Douglas Elliman's reputation for offering the finest properties and client experience in real estate. Speaker 100:06:12Finally, our cost reduction efforts have been judicious and the results of our strategy are beginning to flow to the bottom line. Over the past year, we have continued to adjust our cost structure to benefit our business, including additional headcount reductions, cutting costly sponsorships, streamlining advertising and commencing a program to consolidate office spaces. Our Real Estate Brokerage segment reduced its operating expenses excluding commission expenses, litigation settlement expenses, restructuring and other non cash expenses by $11,300,000 in the first half of twenty twenty four, representing a decline of approximately 7.9% compared to the prior year period. Over the last 12 months ended June 30, 2024, our Real Estate Brokerage segment has reduced its operating expenses, excluding commission expenses, litigation settlement expenses, restructuring and other non cash expenses by $21,000,000 or approximately 7.3% compared to the 12 months ended June 30, 2023. We believe these efforts are enabling Douglas Elliman to meet industry challenges head on without significantly impacting the agent experience. Speaker 100:07:25We are proud to share that our agent retention rate stands at 88%, and we continue to attract the industry's best talent. Now turning to Douglas Elliman's financial results for the 3 months ended June 30, 2024. Douglas Elliman reported $285,800,000 in revenues compared to $275,900,000 in the 2023 period. Net loss attributed to Douglas Selman for the Q2 was 1,700,000 dollars or $0.02 per diluted share compared to $5,200,000 or $0.06 per diluted share in the 2023 period. Adjusted EBITDA attributed to Douglas Simon in the 2nd quarter were income of $2,400,000 compared to a loss of $2,600,000 in the 2023 period. Speaker 100:08:12For comparison purposes, our Real Estate Brokerage segment reported operating income of $2,900,000 this quarter compared to an operating loss of $1,000,000 in the 2023 period. Adjusted EBITDA attributed to the segment were income of 6,600,000 dollars compared to $2,500,000 in the 2023 period. Adjusted net loss attributed to Douglas Elliman in the 2nd quarter was $1,100,000 or $0.01 per share compared to $4,900,000 or $0.06 per share in the 2023 period. Douglas Elliman has maintained ample liquidity with cash and cash equivalents at June 30, 2024 of approximately $92,900,000 Now turning to Douglas Elliman's financial results for the 6 months ended June 30, 2024. Douglas Elliman reported $486,000,000 in revenues compared to $489,900,000 in the prior year period. Speaker 100:09:10Net loss attributed to Douglas Elliman for the 2nd quarter was $43,100,000 or $0.52 per diluted share compared to $22,800,000 or $0.28 per diluted share in the 2023 period. Net loss attributed to Douglas Simon in the 2024 period included a $17,750,000 litigation settlement charge of which we have paid 7.7 $5,000,000 in June 2024. Adjusted EBITDA attributed to Douglas Elliman in the 6 months ended June 30, 2024 were a loss of 15.9 $1,000,000 compared to $20,200,000 in the 2023 period. For comparison purposes, our Real Estate Brokerage segment reported an operating loss of $32,300,000 for the 1st 6 months of 2024 compared to $18,400,000 in the 2023 period. Operating loss in the 2024 period includes the $17,750,000 litigation settlement charge. Speaker 100:10:07Adjusted EBITDA attributed to the segment were a loss of $7,600,000 compared to $10,500,000 in the 2023 period. Adjusted net loss attributed to Douglas Elliman in the 6 months ended June 30, 2024 was $24,800,000 or $0.30 per share compared to $21,600,000 or $0.27 per share in the 2023 period. In summary, we are confident that Douglas Elliman positioned for long term success with its differentiated platform, continued cost reduction efforts and strong luxury brand. Our proven management team has a successful history of navigating many economic cycles and applying financial discipline that balances the importance of maintaining revenues and managing operating expenses to create long term stockholder value. Looking ahead, in addition to driving operational efficiencies, we are focused on strategic market expansion, continued recruitment of outstanding talent and further adoption of innovative solutions to empower our agents. Speaker 100:11:08With that, we will be happy to answer questions. Operator? Operator00:11:13Thank We'll take our first question from Sohank Bonsley with BTIG. Please go ahead. Your line is open. Speaker 200:11:36Hey, good morning, everyone. So first one, I guess, Howard, more recently, we've seen an increase in inventory in some of your core markets like Florida and Texas, and I think you sort of noted that in your comments as well. So I guess wondering what you're hearing from agents as to why that's maybe not translated into more transaction unit growth this quarter? Because when I sort of break down your GTV performance into units and price, it looks like units were still down 3%. So yes, any thoughts there would be helpful. Speaker 200:12:03Thank you. Speaker 100:12:04Yes. I mean, look, I think people are still waiting. The inventory is building a little bit because they're still waiting for rate cuts, okay. It's hard, you have inventory build and then there's really less buyers at most levels or especially at the lower end levels in the market because of rates. So hoping that we will have some rate cuts before the end of the year, who knows, I mean, we'd be really happy with 2 quarter point cuts, but there's also been talk of a half a point cut and then a quarter of a point cut before year end. Speaker 100:12:44And we sure will see the inventory really going down as people decide to make new purchases from the current inventory. Speaker 200:12:56Okay. And then Brian, I guess you did in the prepared comments say, I think, up 12% on cash receipts. Can you just remind us how that actually translates into revenue going forward? Speaker 300:13:09Sure. I mean, so, Amit, you can obviously, we've had really good performance in 2024 compared to 2023, up 12%. Our margins are running anywhere between 20% 25%. So that really depends on regions going forward. But what we're seeing is a very strong market. Speaker 200:13:31Okay. And then I Speaker 300:13:33guess And so to answer your just to add a little to the previous question, we are starting to see the impact of that listing as we've seen strong July in particular. So it does take because we recognize revenue when the earnings process is complete, that's only when the sale occurs. So we think that looks positive going forward. Speaker 200:13:56Okay, great. And then I guess on the capital raise, it sounds like you're looking to deploy that for growth. So can you maybe just talk about whether you envision that spend going towards tuck in acquisitions? Or is it building out teams more organically? And then maybe just a market that you'd be looking to target? Speaker 200:14:12Thanks. Speaker 100:14:13Look, we're basically our expansion is basically limited to the states that really are no income tax states because that's where people are going. So it's a number of markets we're not in that we could be in. We've held back a little bit, but we've had really, I think, most of the no tax states covered now. We're in Texas. We're doing well in Texas. Speaker 100:14:45We're in, obviously, Florida. Florida is still booming. It's somewhat shocking almost because people just are coming to Florida in droves. And they're coming from all over. Most people think like most of Florida or a lot of it is coming from New York. Speaker 100:15:05But having said that, we see the California people also coming to Florida and that's surprising. Most the general thinking was that anyone from California that wants to get out of the tax position there is going to go to Texas. Well, I think sometimes California is more aligned with Florida. And we've heard that a few times that people are I have a neighbor in Florida on each side of me that came from California. So we know what's going on and we're sort of happy with it and we're going to continue to be very careful with our money and work well. Speaker 100:15:52We will be working well with Kennedy Lewis and we will be hopefully getting involved. They are a big lender to developers, single family home developers and we're hoping to pick up some of that business if possible. Speaker 200:16:09Okay. And then, Brian, on expenses, so it looks like you've been able to bring down the G and A line nicely. But my question is more around the go forward. So if volumes were to begin to inflect next year or in the back half of the year, how are you sort of thinking about managing that line or just expenses, your fixed expenses in general, right? Should we expect that to continue to trend down as some of your prior actions sort of flow through? Speaker 200:16:35Or do you expect to add more folks to support the Speaker 400:16:38growth as you go forward? Speaker 300:16:40So obviously, you're asking a question about scale. And to answer your question, we do think we can scale expenses going forward. And we think that when revenues return that that will impact the business favorably. But let's just talk about where we were and then where we're going. So the contributions to our profits from the expense reductions really do reflect the work over the last 2 years. Speaker 300:17:07And this has been a gradual impact and it's been building as management has been very deliberate on these expense cuts and has been focused on continuing expenses in a judicious matter. And otherwise, we're not penny wise and pound foolish. We're focused on continuing to enhance the agent experience, which that's the number one driver of long term stockholder value. And while initially the expense reductions came from lower advertising, which is somewhat variable to revenues and personnel expenses, we're now seeing the impact of the eliminations of leases and long term sponsorships. So we'll continue to think smartly. Speaker 300:17:48We'll continue to where there's a need to spend more on things like advertising, we will, but we're going to continue to try to scale our expenses to the maximum amount possible. Speaker 100:17:58Right. And let me add something to what I was talking about before on expansion. Our way of expansion now is not to go buy a company or not to start from scratch. But what we do is we go into markets and most of these developers are do business in multiple states. So like for instance, we have projects in Tennessee coming up. Speaker 100:18:23We don't have an office in Tennessee. We have a broker. And so that may be just for a while just doing new development projects, which is a great part of our business. And that's pretty much how we save money in opening other markets. Speaker 200:18:38Okay, understood. And just last one on split, Brian. It was up 150 basis points. And look, we've seen pressure across the industry. Can you just maybe talk about some of the dynamics at play there? Speaker 200:18:48Thank you. Speaker 300:18:50Yes, of course. And this is a similar answer to the Q1, but I'll give you the walk forward. So nothing has changed on the grid that we pay to agents in recent years. And we're looking region if you look at the region to region commission splits, they're completely consistent. But what's happening is our margin analysis is really sensitive in mix given the number of markets we're in. Speaker 300:19:17So specifically Florida, which is a higher commission state, increased from 27% of our existing home sales in the 23% Q2 to 30% of existing home sales in the Q2 of 2024. That accounted for if you look at the difference between that and New York City, that accounted for about half about 0.5% of the 1.5% change in the margin. The remainder was due to the Dougherty Settlement Development Marketing, which you know that business is sensitive to revenue recognition accounting because we only recognize revenue and related profit on that business when the earnings process is complete or the sale closes. And as Howard said, we have a tremendous pipeline in that and that looks good for future profits. The final impact was higher commission payouts on a percentage basis and that was due to we're an ultra luxury realtor. Speaker 300:20:13I mean that's the bottom line. That's our market, ultra luxury. And we had some really significant record breaking transactions, some 9 figure transactions during the quarter. And that's going to result in lower margins, but at the same time, it's going to result in higher absolute gross profit. Speaker 200:20:33Understood. All right. Thanks a lot for the thoughts. Operator00:20:39Our next question comes from Peter Abramowitz with Jefferies. Please go ahead. Speaker 400:20:46Yes. Thank you for taking the question. So if we just look at overall transaction value in your business versus the overall market, it would seem that you gained market share this quarter. So just wondering if you could provide any context or comments around that, maybe what drove that and if you think that's something that's sustainable going forward? Speaker 300:21:09Obviously, record breaking sales growth. We have the best agents. We're an ultra luxury residential real estate broker. And when you have a Speaker 100:21:22BK, just to add, we have, I think, in the whole industry, in the whole country, we have the highest level of sales. Our average sale is, was this year was $1,800,000 I think, right? Speaker 300:21:40Yes. This quarter. Speaker 100:21:43The rest of the companies, even companies, no matter what size they are, I don't think there's anyone that's even close to that. I think they're all $1,000,000 or less. Speaker 300:21:55I believe you're correct, Howard. And we also are in markets that in addition to record breaking sales, in addition to being the name and ultra luxury real estate, we also are in markets that are less mortgage rate sensitive. Mortgage rates were very high in the 2nd quarter. So we are going to outperform in a quarter like that from that rate from the interest rate perspective. Speaker 400:22:20Okay, that's helpful. And then a question just overall on the macro backdrop, obviously, some volatile and wild moves in the market and there seems to be maybe a little bit more concern around a recession today than there was a couple of weeks ago. Just if you could help us think through impact your business, I know that your core buyer is maybe less impacted by the macro backdrop and not as sensitive, but have you had conversations internally about how that affects the business? And could you help us think through, if we do go into a recession, how we should think about sort of the go forward sort of medium term? Speaker 100:23:03Yes. That's a tough question because we don't know how deep the recession would be if there even is 1. We keep hearing how many times have we heard about recession is coming, recession is coming. It's I don't think there's going to be any serious recession. There may be others that think the opposite. Speaker 100:23:23But I still say that we are in the best position in the industry to weather a recession. And that's what's important because when you come out of that recession, if there is 1, we'll be the number 1 we'll continue to be the number 1 broker in the country. Speaker 400:23:43Got it. And then one more if I could. I think Howard you mentioned in your comments toward the end there just on strategic market expansion. Could you touch on maybe some of the markets where you're thinking that may be a possibility whether acquiring new teams or potentially just kind of beefing up for recovery, just market overall where you think the business could be expanding over the next year or 2? Speaker 100:24:09Yes. As I said, one of the ways we're doing it without spending a lot of money is through new development, because there's in some of these markets, there's really pretty much no one that does new development sales. So that's what we're doing, as I said, in Tennessee. And that's how we're building our pretty much all our markets, all our newer markets, including Texas and including Las Vegas. We have some great projects. Speaker 100:24:40And you don't have to spend much money to do that because we have the back office part of it in New York and Florida and that can service the whole country pretty much. So we're not building like we're not going in and opening and taking 5,000 feet and opening a big beautiful new office. That we're not doing. We want to get business first before we open the office. And that has worked pretty well for us because we're very well known in the new development business. Speaker 100:25:10I mean, we have huge market share. And if you look at Florida, huge market share in Florida, and we haven't been there that long. I guess how long have we been in Florida, BK, maybe Speaker 300:25:2111 years. Speaker 100:25:22I was going to say 10 years, 10, 11 years. And we built up where we're the number one broker in Miami Beach, we're the number one broker in Palm Beach County. And we're all the way up pretty much we go halfway up on the east side. And we're now on the West Coast of Florida. And they really don't have anyone that really knows the new development business like we do. Speaker 100:25:49And that's really been a huge help. And so we're going to be going to places where there's business. It doesn't matter really where they are. If we can do it and do it economically and make money, we're doing it. Speaker 400:26:04All right. That's all for me. Thanks for the time. Operator00:26:10Ladies and gentlemen, those are all the questions that we have for today. Thank you for joining us on Douglas Elliman's quarterly earnings conference call. Hope you have a good day and this will conclude our call. Speaker 100:26:22Thank you. Thank you.Read morePowered by