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What changed in Douglas Elliman Inc.'s 10-K — 2022 vs 2023

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Paragraph-level year-over-year comparison of Douglas Elliman Inc.'s 2022 and 2023 10-K annual filings, covering the Business, Risk Factors, Legal Proceedings, Cybersecurity, MD&A and Market Risk sections. Every new, removed and edited paragraph is highlighted side-by-side so you can see exactly what management changed in the 2023 report.

+285 added−258 removedSource: 10-K (2024-03-08) vs 10-K (2023-03-16)

Top changes in Douglas Elliman Inc.'s 2023 10-K

285 paragraphs added · 258 removed · 213 edited across 6 sections

Item 1. Business

Business — how the company describes what it does

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Biggest changeThis platform enhances Douglas Elliman’s suite of offerings for both the renters and landlords it represents. • Persefoni AI: a software-as-a-service (“SaaS”) platform built to enable enterprises of all sizes to measure their carbon footprint accurately, dynamically, and regularly across all operations. • Envoy: a shared mobility company that sets up fleets of electric vehicles that can be shared by residents of a condominium development, hotel, or shared space. • Audience: a subscription-based platform built around proprietary robotic arms that generate hand-written notes on behalf of sales-oriented professionals. • Tongo: a financial program that gives real estate agents instant access to future commissions up to 60 days before closing. 7 Table of Contents • Guest House: a tech-enabled company focused on the home staging market. • Alpaca: investment in Getaway House, Inc., a start-up company that provides cabin rental services in rural areas throughout the United States. • PropTech Venture Capital Funds: investments in the following venture capital funds providing New Valley Ventures with exposure to opportunities in the emerging PropTech industry. ◦ Camber Creek Venture Capital Funds: two funds that invest in a diversified pipeline of new PropTech ventures.
Biggest changeThis platform enhances Douglas Elliman’s suite of offerings for both the renters and landlords it represents. • Persefoni AI: a software-as-a-service, or “SaaS,” platform built to enable enterprises of all sizes to measure their carbon footprint accurately, dynamically, and regularly across all operations. • Tongo: a financial program that gives real estate agents instant access to future commissions up to 60 days before closing. • Guest House: a tech-enabled company focused on the home staging market. • Alpaca: investment in Getaway House, Inc., a start-up company that provides cabin rental services in rural areas throughout the United States. • Infinite Creator: investment in Infinite Creator, a do-it-yourself video creation app that allows any agent with a phone to walk through a guided process and film the key pieces for a high-end luxury presentation video. 7 Table of Contents • PropTech Venture Capital Funds: investments in the following venture capital funds providing New Valley Ventures with exposure to opportunities in the emerging PropTech industry. ◦ Camber Creek Venture Capital Funds: two funds that invest in a diversified pipeline of new PropTech ventures.
As the real estate brokerage industry evolves and addresses challenges related to constrained inventory of homes as well as higher mortgage rates, we continue to pursue profitable growth opportunities through the expansion of our footprint, investments in cutting-edge PropTech companies through New Valley Ventures, continued recruitment of best-in-class talent, acquisitions (acqui-hires), and operational efficiencies.
As the real estate brokerage industry evolves and addresses these challenges related to constrained inventory of homes as well as higher mortgage rates, we continue to pursue profitable growth opportunities through the expansion of our footprint, investments in cutting-edge PropTech companies through New Valley Ventures, continued recruitment of best-in-class talent, acquisitions (acqui-hires), and operational efficiencies.
We believe that investing strategically in disruptive, early-stage PropTech companies equips Douglas Elliman stakeholders with early and differentiated access to new technology built in entrepreneurial environments, while enabling PropTech investee companies to access our knowledge and experience through our commercial relationships in order to grow their own businesses.
We believe that investing strategically in disruptive, early-stage PropTech companies equips Douglas Elliman stakeholders with early and differentiated access to new technology built in entrepreneurial environments, while enabling PropTech investee companies to access our knowledge and experience through our commercial relationships to grow their own businesses.
It leverages our investee and growing PropTech startup, MoveEasy. 5 Table of Contents PropTech Investments 6 Table of Contents In addition to leveraging PropTech solutions to support our real estate brokerage and services operations, we believe that by investing in early-stage PropTech companies, Douglas Elliman can gain differentiated access to innovative PropTech services while benefiting from the expected growth and valuations of these firms without the need to build or fully acquire them.
It leverages our investee and growing PropTech startup, LiveEasy. 5 Table of Contents PropTech Investments In addition to leveraging PropTech solutions to support our real estate brokerage and services operations, we believe that by investing in early-stage PropTech companies, Douglas Elliman can gain differentiated access to innovative PropTech 6 Table of Contents services while benefiting from the expected growth and valuations of these firms without the need to build or fully acquire them.
As of December 31, 2022 our PropTech investments include: • Rechat: a lead-to-close fully-mobile technology dashboard for real estate agents including marketing, customer relationship management and transaction-management software. Douglas Elliman has a multi-year services agreement with Rechat for its agents, who are increasingly requesting and requiring superior access to technology and back-office support services.
As of December 31, 2023 our PropTech investments include: • Rechat: a lead-to-close fully mobile technology dashboard for real estate agents including marketing, customer relationship management and transaction-management software. Douglas Elliman has a multi-year services agreement with Rechat for its agents, who are increasingly requesting and requiring superior access to technology and back-office support services.
The investment will complement Douglas Elliman’s business in the Hamptons and align Humming Homes’ geographical growth with Douglas Elliman’s footprint in locations such as Aspen, Florida and Southern California. • MoveEasy: a client- and customer-facing digital concierge service designed to assist clients and customers moving into and “setting up” their new homes, while offering additional services to maintain their homes.
The investment will complement Douglas Elliman’s business in the Hamptons and align Humming Homes’ geographical growth with Douglas Elliman’s footprint in locations such as Aspen, Florida and Southern California. • LiveEasy: a client- and customer-facing digital concierge service designed to assist clients and customers moving into and “setting up” their new homes, while offering additional services to maintain their homes.
Drawing upon decades of experience and market-specific knowledge, DEDM offers a multidisciplinary approach that includes comprehensive in-house research, planning and design, marketing and sales. DEDM ranks among the most prominent sales and marketing firms in New York and Florida, as well as Douglas Elliman’s other luxury markets, and employs approximately 84 in-house development professionals.
Drawing upon decades of experience and market-specific knowledge, DEDM offers a multidisciplinary approach that includes comprehensive in-house research, planning and design, marketing and sales. DEDM ranks among the most prominent sales and marketing firms in New York and Florida, as well as Douglas Elliman’s other luxury markets, and employs approximately 83 in-house development professionals.
We aim to build on our leadership position in the New York metropolitan area, including New York City, Long Island, Westchester and the Hamptons, while entering and expanding in adjoining markets as well as key markets in Florida, California, Texas, Colorado, Nevada, Massachusetts, Maryland, Virginia and Washington, D.C. , where the Elliman brand has strong awareness and brand equity. 8 Table of Contents Continue executing the growth strategy of DEDM.
We strategically aim to build on our leadership position in the New York metropolitan area, including New York City, Long Island, Westchester and the Hamptons, while entering and expanding in complementary markets as well as key markets in Florida, California, Texas, Colorado, Nevada, Massachusetts, Maryland, Virginia and Washington, D.C. , where the Elliman brand has strong awareness and brand equity. 8 Table of Contents Continue executing the growth strategy of DEDM.
Our MyLearning platform enables Douglas Elliman agents and employees to access and participate in live and recorded on-demand training sessions directed at various experience levels and subjects, including professional development, entrepreneurialism, business writing, public speaking and marketing. Elliman Essentials provides agents and employees with enhanced vendor access .
MyLearning provides our agents and employees with additional development and growth opportunities. Our MyLearning platform enables Douglas Elliman agents and employees to access and participate in live and recorded on-demand training sessions directed at various experience levels and subjects, including professional development, entrepreneurialism, business writing, public speaking and marketing. Elliman Essentials provides agents and employees with enhanced vendor access .
Douglas Elliman is also engaged in the management of cooperative, condominium and rental apartment buildings though its subsidiary, Residential Management Group, LLC, which conducts business as Douglas Elliman Property Management.
Douglas Elliman is also engaged in the management of cooperative, condominium and rental apartment buildings through its subsidiary, Residential Management Group, LLC, which conducts business as Douglas Elliman Property Management.
The average transaction value of a home we sold in 2022 was approximately $1.62 million — significantly higher than our principal competitors. We are building on our record of innovation. Douglas Elliman is focused on digitizing, integrating and simplifying real estate activities for agents and elevating their clients’ experiences.
The average transaction value of a home we sold in 2023 was approximately $1.59 million — significantly higher than our principal competitors. We are building on our record of innovation. Douglas Elliman is focused on digitizing, integrating and simplifying real estate activities for agents and elevating their clients’ experiences.
Douglas Elliman has approximately 120 offices with approximately 6,900 real estate agents in the New York metropolitan area, as well as in Florida, California, Texas, Colorado, Nevada, Massachusetts, Maryland, Virginia and Washington, D.C. The Douglas Elliman name is synonymous with luxury. Prominent new development sales and marketing firm.
Douglas Elliman has approximately 125 offices with approximately 6,600 real estate agents in the New York metropolitan area, as well as in Florida, California, Texas, Colorado, Nevada, Massachusetts, Maryland, Virginia and Washington, D.C. The Douglas Elliman name is synonymous with luxury. Prominent new development sales and marketing firm.
We believe investing in these PropTech companies and investment funds enables us to establish relationships with these companies (and funds’ portfolio companies) to seek preferred terms, become an early adopter of emerging technologies and achieve greater product integration with our users and IT systems.
We believe investing in these PropTech companies and investment funds enables us to establish relationships with these companies (and funds’ portfolio companies) to seek preferred terms, become an early adopter of emerging technologies and achieve greater product integration with our users and technology applications.
Douglas Elliman is one of the largest residential brokerage companies in the New York metropolitan area, which includes New York City, Long Island, the Hamptons, Westchester, Connecticut and New Jersey, and the sixth-largest in the United States.
Douglas Elliman is one of the largest residential brokerage companies in the New York metropolitan area, which includes New York City, Long Island, the Hamptons, Westchester, Connecticut and New Jersey .
Despite various “agentless” models such as “iBuying,” approximately 86% of both buyers and sellers were assisted by a real estate agent or broker when purchasing or selling their home between July 2021 and June 2022, according to the National Association of Realtors (“NAR”), highlighting the central role agents continue to play in real estate transactions.
Despite various “agentless” models such as “iBuying,” approximately 89% of both buyers and sellers were assisted by a real estate agent or broker when purchasing or selling their home between July 2022 and June 2023, according to the National Association of Realtors, or NAR, highlighting the central role agents continue to play in real estate transactions.
Residential Management Group provides a full range of fee-based management services for approximately 353 properties representing approximately 46,000 units in New York City, Nassau County, Long Island City and Westchester County. Full-service title insurance business. Douglas Elliman is also engaged in the provision of title insurance services through its subsidiary DE Title Services.
Residential Management Group provides a full range of fee-based management services for approximately 465 properties representing approximately 54,700 units in New York City, Nassau County, Long Island City and Westchester County. Full-service title insurance business. Douglas Elliman is also engaged in the provision of title insurance services through its subsidiary DE Title Services.
Douglas Elliman owns Douglas Elliman Realty, LLC, one of the largest residential brokerage companies in the New York metropolitan area, which includes New York City, Long Island, the Hamptons, Westchester, Connecticut and New Jersey, and the sixth-largest in the United States with operations in Florida, California, Texas, Colorado, Nevada, Massachusetts, Maryland, Virginia and Washington D.C.
Douglas Elliman owns Douglas Elliman Realty, LLC, one of the largest residential brokerage companies in the New York metropolitan area, which includes New York City, Long Island, the Hamptons, Westchester, Connecticut and New Jersey, and also conducts operations in Florida, California, Texas, Colorado, Nevada, Massachusetts, Maryland, Virginia and Washington D.C.
Agents are able to generate significant repeat business from clients and referrals, with 63% of home sellers and 50% of home buyers between July 2021 and June 2022 choosing to work with an agent they had used in the past or from a referral, according to the NAR.
Agents are able to generate significant repeat business from clients and referrals, with 65% of home sellers and 56% of home buyers between July 2022 and June 2023 choosing to work with an agent they had used in the past or from a referral, according to the NAR.
Elliman Essentials provides a curated list of offerings from preferred vendors that Douglas Elliman’s approximately 6,900 agents and approximately 957 employees access to source products, services and experiences in order to enhance business practices and purchase closing gifts for customers. Elliman Essentials can be accessed on our intranet portal, MyDouglas.
Elliman Essentials provides a curated list of offerings from preferred vendors that Douglas Elliman’s approximately 6,600 agents and an additional 592 employees access to source products, services and experiences to enhance business practices and purchase closing gifts for customers. Elliman Essentials can be accessed on our intranet portal, MyDouglas.
Experienced team of talented agents and employees. The residential real estate business is built upon personal relationships, and we have long believed Douglas Elliman’s team of approximately 957 employees and approximately 6,900 agents (including 5,407 Principal Agents) as of December 31, 2022 distinguishes us from other residential real estate brokerage firms.
Experienced team of talented agents and employees. The residential real estate business is built upon personal relationships, and we have long believed Douglas Elliman’s team of approximately 809 employees and approximately 6,600 agents (including 5,150 Principal Agents) as of December 31, 2023 distinguishes us from other residential real estate brokerage firms.
In partnership with residential real estate brokerages, MoveEasy is delivered in a white-labeled format that features the name and contact information of the selling agent. • Fyxify: a tech-enabled platform that utilizes direct scheduling and operating technology to avoid the inefficiencies of home repairs (for example: calling around, mystery repair costs and wasting time). • EVPassport: an entity that offers complete electronic vehicle charging solutions including hardware and software. • Bilt: a leading loyalty program and co-branded credit card for renters to earn points on their rent payments.
In partnership with residential real estate brokerages, LiveEasy is delivered in a white-labeled format that features the name and contact information of the selling agent. • Fyxify: a tech-enabled platform that utilizes direct scheduling and operating technology to avoid the inefficiencies of home repairs (for example: calling around, mystery repair costs and wasting time). • Bilt: a leading loyalty program and co-branded credit card for renters to earn points on their rent payments.
As of December 31, 2022 , we employed approximately 957 employees, of which 693 were employed by Douglas Elliman Realty LLC, 256 were employed at Douglas Elliman Property Management and eight were employed at Douglas Elliman’s corporate headquarters. Real Estate Brokerage .
As of December 31, 2023 , we employed approximately 809 employees, of which 592 were employed by Douglas Elliman Realty LLC, 209 were employed at Douglas Elliman Property Management and eight were employed at Douglas Elliman’s corporate headquarters. Real Estate Brokerage .
PropTech Solutions Supporting Real Estate Services Our general approach to PropTech solutions is to leverage best-of-breed, proven legacy technologies while also selectively partnering with early-stage, disruptive PropTech companies to support our real estate brokerage and services operations. This strategy gives our stakeholders, including our agents, their clients and our management team, access to fast-changing and industry-leading technology.
PropTech Solutions Supporting Real Estate Services Our PropTech strategy combines leveraging best-of-breed, proven legacy technologies and selectively partnering with early-stage, disruptive PropTech companies to support our real estate brokerage and services operations. This strategy supports our stakeholders, including our agents, their clients and our management team, by providing them with access to fast-changing and industry-leading technology.
As of December 31, 2022, New Valley Ventures had investments (at a carrying value) of approximately $14.8 million in PropTech companies. This amounts to approximately 3% of the value of Douglas Elliman’s total assets, which totaled approximately $550 million, as of December 31, 2022.
As of December 31, 2023, New Valley Ventures had investments in PropTech companies and funds (at a carrying value) of approximately $13.4 million. This amounts to approximately 3% of the value of Douglas Elliman’s total assets, which totaled approximately $493 million, as of December 31, 2023.
We operate an open architecture technology infrastructure that allows for a “plug and play” environment where new features and functionality can be quickly added for the benefit of our agents and their clients. This 4 Table of Contents ensures our technology remains state-of-the-art, vendor optionality is maintained, and our costs are minimized.
By using PropTech solutions and offering a suite of cutting-edge applications, our open architecture technology 4 Table of Contents infrastructure provides users a “plug and play” environment where new features and functionality can be quickly added for the benefit of our agents and their clients. This ensures our technology remains state-of-the-art, vendor optionality is maintained, and our costs are minimized.
The series will be an ongoing process designed to foster a respectful and supportive workplace that enables Douglas Elliman to attract and retain a diverse workforce that represents its customers and its communities. 9 Table of Contents • Continued to support diversity efforts, including sponsoring Aspen Gay Ski Week, matching employees’ and agents’ contributions to NAACP Legal and Education Fund, the AAPI Community Fund and various other health and social charitable organizations. • Continued to support organizations benefiting victims of various Florida hurricanes, California wildfires, Texas and Puerto Rico flood disasters and the Ukraine Humanitarian Crisis Fund of the American Red Cross.
The series will be an ongoing process designed to foster a respectful and supportive workplace that enables Douglas Elliman to attract and retain a diverse workforce that represents its customers and its communities. 9 Table of Contents • We continued our Agents of Change initiative throughout 2023 and hosted events such as Stopping the Stigma Around Mental Health and Shattering the Glass Ceiling with successful and influential women in real estate. • Continued to support diversity efforts, including sponsoring Aspen Gay Ski Week, matching employees’ and agents’ contributions to the NAACP Legal and Education Fund, the AAPI Community Fund and various other health and social charitable organizations. • Launched our initial Diversity Equity & Inclusion survey for our employees and agents. • Continued to support organizations benefiting victims of various Florida hurricanes, California wildfires, Texas and Puerto Rico flood disasters and the Ukraine Humanitarian Crisis Fund of the American Red Cross.
Hiring technology talent to develop new products inside of a large company such as Douglas Elliman is costly, takes longer to bring new technology to market, rarely generates the most cutting-edge solutions, and limits the value of the emerging product to our own usage. Instead, we believe technology innovation is best fostered in smaller, purpose-built PropTech companies.
We believe technology innovation is best fostered in these smaller, purpose-built PropTech companies to develop new products rather than inside of a large company, such as Douglas Elliman, because in-house technology is generally more costly, takes longer to bring new technology to market and rarely generates the most cutting-edge solutions.
Camber Creek’s portfolio includes Notarize, a digitized notary service, and Curbio, a renovation firm designed to increase a property’s selling price. ◦ Sum Ventures: a fund that invests in growth companies in PropTech, FinTech, and CleanTech industries. ◦ MetaProp Venture Capital Fund: a fund advised or managed by a New York-based venture capital firm. ◦ The Lab PropTech Fund: a fund advised or managed by a Miami-based firm that aims to invest in emerging technologies with a focus on residential real estate and construction services.
Camber Creek has also invested in Bilt. ◦ Sum Ventures: a fund that invests in growth companies in PropTech, FinTech, and CleanTech industries. ◦ MetaProp Venture Capital Fund: a fund advised or managed by a New York-based venture capital firm. ◦ The Lab PropTech Fund: a fund advised or managed by a Miami-based firm that aims to invest in emerging technologies with a focus on residential real estate and construction services.
Other than the five private funds listed above in which New Valley Ventures invests as a limited partner, all of these companies currently provide technology or services to Douglas Elliman. To date, we have not recognized revenue from these investments and do not anticipate recognizing revenue from these non-controlling PropTech investments.
Other than the five private funds listed above in which New Valley Ventures invests as a limited partner, all of these companies currently provide technology or services to Douglas Elliman.
The residential real estate business is built upon personal relationships and we have long believed Douglas Elliman’s team of approximately 693 employees and approximately 6,900 agents distinguish us from other residential real estate brokerage firms.
The residential real estate business is built upon personal relationships and we have long believed Douglas Elliman’s team of employees as well as approximately 6,600 agents distinguish us from other residential real estate brokerage firms. Forbes recognized Douglas Elliman in its 2021 list of America’s best large employers and 2023 list of America’s best employers.
Forbes recognized Douglas Elliman in its 2021 list of America’s best large employers and we believe this recognition is a testament to the hard work and resiliency of the Douglas Elliman family.
We believe this recognition is a testament to the hard work and resiliency of the Douglas Elliman family.
We anticipate that the results for the first quarter of 2023 will reflect these same trends of significant year over year declines and the NAR and other real estate industry consortiums are forecasting continued challenges for the U.S. residential real estate market in 2023. 3 Table of Contents Despite these recent changes, we believe our competitive advantages in the luxury markets distinguish us from our competitors and our comprehensive suite of real estate solutions, our industry-leading brand name, and our talented team of employees and agents set us apart in the industry.
Based on cash receipts in January and February 2024, we expect these modest increases to continue in the first quarter of 2024 and the NAR and other real estate industry consortiums are forecasting similar increases in the U.S. residential real estate market in 2024. 3 Table of Contents Despite these macroeconomic challenges, we believe our competitive advantages in the luxury markets distinguish us from our competitors and our comprehensive suite of real estate solutions, our industry-leading brand name, and our talented team of employees and agents set us apart in the industry.
In the fourth quarter of 2022, our Gross Transaction Value and transactions of homes sold declined by approximately 40% and 43%, respectively, compared to the 2021 fourth quarter.
By comparison, our transactions declined by 19% to 21,606 in 2023 from 26,573 in 2022. In the fourth quarter of 2023, our Gross Transaction Value and transactions of homes sold increased by approximately 5% and 5%, respectively, compared to the 2022 fourth quarter.
We have a presence in most major luxury real estate markets in the United States, including New York, Florida, California, Texas, Colorado, Nevada, Massachusetts, Maryland, Virginia and Washington D.C. and others. Further, we have established a reputation for luxury and trust, which we believe has differentiated our brand from those of our peers.
We have a presence in most major luxury real estate markets in the United States, including New York, Florida, California, Texas, Colorado, Nevada, Massachusetts as well as the Washington, D.C. Metro area, which includes Maryland, Virginia and Washington D.C .
In addition to entering into business relationships with PropTech companies, as described further below, we are committed to creating over time a portfolio of PropTech companies that, through our business and investment relationship, have access to our agents and their clients, as well as our knowledge and experience, to grow their own businesses, while benefiting our operations.
In addition to entering into business relationships with these PropTech companies, we are committed to creating over time a dynamic portfolio of PropTech companies by leveraging our relationships to provide them access to our agents and their clients, as well as our knowledge and experience.
While most of Douglas Elliman’s employees are located in the New York and Miami metropolitan areas, our agents are located in New York, Florida, California, Texas, Colorado, Nevada, Massachusetts, Maryland, Virginia and Washington, D.C.
We are proud that women are well represented in our leadership as they comprise of 50% of our “Executive/Senior Level officers and managers” and 63% of our “First/Mid-Level officials and managers.” While most of Douglas Elliman’s employees are located in the New York and Miami metropolitan areas, our agents are located in New York, Florida, California, Texas, Colorado, Nevada, Massachusetts, Maryland, Virginia and Washington, D.C.
These town halls are intended to promote a spirit of camaraderie and educate our employees and agents. • In response to the COVID-19 pandemic, we converted all of its training and educational courses to its online platform in 2020. • In 2023, we launched the inaugural “Agents of Change” initiative.
These town halls are intended to promote a spirit of camaraderie and educate our employees and agents. • In addition, in 2023 we launched a Learning Management System to support employee continued professional development. • In 2023, we launched the inaugural “Agents of Change” initiative.
Our Elliman Everywhere effort seeks to provide agents with the robust virtual and mobile resources they desire and will need to transact business from anywhere in the world, including markets where we do not have offices.
Our Elliman Everywhere initiative provides agents with the robust virtual and mobile resources they desire and will need to transact business from anywhere in the world, including markets where we do not have offices. This cloud-based agent portal includes workflow processing, a commission system, customer acquisition tools, an Innovation Lab and more, enhancing the agent experience and agents’ efficiency.
Repeat business, as well the ability to provide ancillary services, allows agents to extend their client relationships and generate significant lifetime value. After a strong 2021, when existing home sales reported by the NAR reached their highest level since 2006, the residential real estate brokerage industry encountered significant challenges in 2022.
After a strong 2021, when existing home sales reported by the NAR reached their highest level since 2006, the residential real estate brokerage industry began experiencing significant challenges in the second quarter of 2022, which have continued to date.
Douglas Elliman also supports health driven organizations including God’s Love We Deliver, Project Angel Food, and the American Cancer Society. Douglas Elliman offers comprehensive benefit programs to its employees which provide them with, among other things, medical, dental, and vision healthcare; 401(k) matching contributions; paid parental leave; and paid vacation time.
Douglas Elliman offers comprehensive benefit programs to its employees which provide them with, among other things, medical, dental, and vision healthcare; 401(k) matching contributions; paid parental leave; and paid vacation time. We will continue to listen, while engaging and connecting with our employees and Douglas Elliman’s agents, to further our human capital management objectives.
These challenges began during the second quarter of 2022 and included, among other things, a reduced inventory of homes available for sale as well as higher mortgage rates. According to the NAR, sales of existing homes declined by 34.0% in December 2022 from December 2021 and total homes sold in 2022 (5.03 million) was the lowest since 2014 (4.94 million).
These challenges have been marked by a reduced inventory of homes available for sale, which we believe has been caused by elevated mortgage rates since early 2022. According to the NAR, sales of existing homes of 4.09 million in 2023, which was the lowest amount since 1995, declined from 5.03 million in 2022 and 6.12 million in 2021.
Douglas Elliman is well positioned to capitalize on opportunities in the U.S. residential real estate market with a leading luxury brand and a comprehensive suite of technology-enabled real estate services and investments.
Furthermore, we maintain upside potential in the success of our PropTech partners in which we invest through minority stakes in their capital structures. Douglas Elliman boasts a prestigious luxury brand that is complemented by a comprehensive suite of technology-enabled real estate services and investments. These distinguishing qualities position us to capitalize on opportunities in the U.S. residential real estate market.
This keeps Douglas Elliman and our agents on the cutting edge of the industry with innovative solutions and services that can be integrated into our technology, while also remaining asset-light. Furthermore, we maintain upside potential in the success of our PropTech partners in which we invest through minority stakes in their capital structures.
We believe these collaborative relationships are mutually beneficial because they keep Douglas Elliman both asset light and on the cutting edge of the industry by offering our agents innovative solutions and services that can be integrated into our technology.
However, we target earning an attractive rate of return from the capital appreciation of our PropTech investments. Our Competitive Strengths Leading luxury brand with a strong presence in markets where we have brand recognition and brand equity.
Because these PropTech companies and funds are accounted for as investments, we have not recognized revenue from these PropTech investments to date and do not anticipate recognizing revenue from these PropTech investments in the future. However, we target earning an attractive rate of return from the capital appreciation of our PropTech investments.
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By comparison, our Gross Transaction Value declined only 16.2% in 2022 compared to 2021, reflecting the relative strength of the luxury markets in which we operate. In addition, our transactions of homes sold declined by 18% to 26,573 in 2022 from 32,400 in 2021.
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Repeat business, as well the ability to provide ancillary services, allows agents to extend their client relationships and generate significant lifetime value.
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This cloud-based agent portal includes workflow processing, a commission system, customer acquisition tools, an Innovation Lab and more, enhancing the agent experience and agents’ efficiency. MyLearning provides our agents and employees with additional development and growth opportunities.
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We believe the increases in the fourth quarter of 2023 reflected the gradual stabilization of home purchasing activity during 2023. This trend resulted in our first year-over-year increases in quarterly revenue, Gross Transaction Value and transactions since the first quarter of 2022.
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We will continue to listen, while engaging and connecting with our employees and Douglas Elliman’s agents, to further our human capital management objectives by continuing the initiatives we first began during the COVID-19 pandemic. Available Information Our website address is www.elliman.com.
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Douglas Elliman was recently named the most trusted real estate brokerage firm in the United States as part of the America’s Most Trusted Series by Lifestory Research.
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Camber Creek’s portfolio includes Notarize, a digitized notary service, and Curbio, a renovation firm designed to increase a property’s selling price.
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In 2023, New Valley Ventures monetized two PropTech investments, EVPassport and Envoy, and recorded gains of $715,000 and $160,000 respectively, for the year ended December 31, 2023.
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In 2023, New Valley Ventures also determined that the fair value of its investment in Audience was zero and reported realized losses on convertible debt securities of $236,000 for the year ended December 31, 2023. Our Competitive Strengths Leading luxury brand with a strong presence in markets where we have brand recognition and brand equity.
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Further, we have established a reputation for luxury and trust, which we believe has differentiated our brand from those of our peers.
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Douglas Elliman also supports health driven organizations including God’s Love We Deliver, Project Angel Food, and the American Cancer Society. • Supported the Israeli American Council following the attacks on October 7, 2023.

Item 1A. Risk Factors

Risk Factors — what could go wrong, per management

78 edited+24 added−15 removed128 unchanged
Biggest changeDuring the first quarter of 2020, we determined that a triggering event occurred related to Douglas Elliman due to a decline in sales and profitability projections for the reporting unit driven by the COVID-19 pandemic and related economic disruption. We utilized third-party valuation specialists to prepare a quantitative assessment of goodwill and trademark intangible assets related to Douglas Elliman.
Biggest changeIn the quarterly period ended December 31, 2023, we utilized third-party valuation specialists to prepare a quantitative assessment of goodwill and trademark intangible assets related to Douglas Elliman, based on the current market conditions in the residential real estate brokerage industry.
The agreement provides for sharing of commissions and certain other payments in respect of jointly marketed properties.
The agreement provides for the sharing of commissions and certain other payments in respect of jointly marketed properties.
Some of our potential losses may not be covered by insurance. We may not be able to obtain or maintain adequate insurance coverage. We maintain insurance to cover costs and losses from certain risk exposures in the ordinary course of our operations, but our insurance does not cover all of the costs and losses from all events.
Some of our potential losses may not be covered by insurance. We may not be able to obtain or maintain adequate insurance coverage. We maintain insurance to cover costs and losses from certain risk exposures in the ordinary course of our operations, but our insurance does not cover all costs and losses from all events.
These options may include direct-buyer companies (also called iBuyers) that purchase directly from the seller at below-market rates in exchange for speed and convenience and then resell them shortly thereafter at market prices, and discounters who reduce the role of the agent in order to offer sellers a low commission or a flat fee while giving rebates to buyers.
These options may include direct-buyer companies (also called iBuyers) that purchase directly from the seller at below-market rates in exchange for speed and convenience and then resell them shortly thereafter at market prices, and discounters who reduce the role of the agent to offer sellers a low commission or a flat fee while giving rebates to buyers.
The opinion will not be binding on the Internal Revenue Service or the courts and there can be no assurance that the IRS will not challenge the validity of the Distribution and such related transactions as a reorganization for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code eligible for tax-free treatment, or that any such challenge ultimately will not prevail.
The opinion is not binding on the Internal Revenue Service or the courts and there can be no assurance that the IRS will not challenge the validity of the Distribution and such related transactions as a reorganization for U.S. federal income tax purposes under Sections 368(a)(1)(D) and 355 of the Code eligible for tax-free treatment, or that any such challenge ultimately will not prevail.
You should carefully consider and evaluate all of the information included in this report and any subsequent reports that we may file with the SEC or make available to the public before investing in our securities. Risks Associated with Our Real Estate Business We are subject to risks relating to the real estate industry.
You should carefully consider and evaluate all information included in this report and any subsequent reports that we may file with the SEC or make available to the public before investing in our securities. Risks Associated with Our Real Estate Business We are subject to risks relating to the real estate industry.
In many instances, these third parties are in direct contact with our agents and customers in order to deliver services on our behalf or to fulfill their role in the applicable collaboration. In some instances, these third parties may be in possession of personal information of our customers, agents or employees.
In many instances, these third parties are in direct contact with our agents and customers to deliver services on our behalf or to fulfill their role in the applicable collaboration. In some instances, these third parties may be in possession of personal information of our customers, agents or employees.
In some instances, search engine companies may change these rankings in order to promote their own competing services or the services of one or more of our competitors. Our websites have experienced fluctuations in search result rankings in the past, and we anticipate fluctuations in the future.
In some instances, search engine companies may change these rankings to promote their own competing services or the services of one or more of our competitors. Our websites have experienced fluctuations in search result rankings in the past, and we anticipate fluctuations in the future.
Bryant Kirkland III serves as our Chief Financial Officer and Treasurer and of Vector Group, Marc N. Bell serves as our General Counsel and Secretary and of Vector Group, and J. David Ballard serves as our Senior Vice President, Enterprise Efficiency and Chief Technology Officer and of Vector Group.
Bryant Kirkland III serves as our Chief Financial Officer and of Vector Group, Marc N. Bell serves as our General Counsel and Secretary and of Vector Group, and J. David Ballard serves as our Senior Vice President, Enterprise Efficiency and Chief Technology Officer and of Vector Group.
As a result, not all of our executive officers devote their full time and attention to our affairs. In addition, three members of our Board, Messrs. Lorber, Lampen and White, are also directors of Vector Group. These overlap persons may have actual or apparent conflicts of interest with respect to matters involving or affecting each company.
As a result, not all of our executive officers devote their full time and attention to our affairs. In addition, three members of our Board, Messrs. Lorber, Lampen and White, are also directors of Vector Group. These overlap people may have actual or apparent conflicts of interest with respect to matters involving or affecting each company.
The number of users we attract to our websites, including our flagship website elliman.com, from search engines is due in large part to how and where our websites rank in unpaid search results. These rankings can be affected by a number of factors, many of which are not under our direct control, and they may change frequently.
The number of users we attract to our websites, including our flagship website elliman.com, from search engines is due in large part to how and where our websites rank in unpaid search results. These rankings can be affected by several factors, many of which are not under our direct control, and they may change frequently.
We believe these higher interest rates also reduced home inventory because many sellers considering a move faced higher monthly payment costs as a result of moving. Consequently, both of these trends resulted in a decline of transaction volume from 2021 to 2022 and, if these trends continue, could eventually result in lower home prices.
We believe these higher interest rates also reduced home inventory because many sellers considering a move faced higher monthly payment costs because of moving. Consequently, both of these trends resulted in a decline of transaction volume from 2021 to 2022 to 2023 and, if these trends continue, could eventually result in lower home prices.
In general, financial and operating risks confronting portfolio companies can be significant. While targeted returns should reflect the perceived level of risk in any investment, there can be no assurance that New Valley Ventures will be adequately compensated for risks taken, and the loss of its entire investment is possible.
In general, financial and operating risks confronting private companies can be significant. While targeted returns should reflect the perceived level of risk in any investment, there can be no assurance that New Valley Ventures will be adequately compensated for risks taken, and the loss of its entire investment is possible.
In the Tax Disaffiliation 22 Table of Contents Agreement, we agreed that, among other things, we may not take, or fail to take, any action following the Distribution if such action or failure to act would be inconsistent with or prohibit the Distribution and certain related transactions from qualifying as a tax-free reorganization under Sections 368(a)(1)(D) and 355 and related provisions of the Code to Vector Group and Vector Group stockholders (except with respect to the receipt of cash in lieu of fractional shares of Vector Group stock).
In the Tax Disaffiliation Agreement, we agreed that, among other things, we may not take, or fail to take, any action following the Distribution if such action or failure to act would be inconsistent with or prohibit the Distribution and certain related transactions from qualifying as a tax-free reorganization under Sections 368(a)(1)(D) and 355 and related provisions of the Code to Vector Group and Vector Group stockholders (except with respect to the receipt of cash in lieu of fractional shares of Vector Group stock).
Numerous factors can influence our results of operations, including: ◦ our ability to attract and retain agents; ◦ our ability to develop innovative solutions and offer new services on our platform; ◦ changes in interest rates or mortgage underwriting standards; ◦ the actions of our competitors; ◦ costs and expenses related to the strategic acquisitions, investments and joint ventures; ◦ increases in and timing of operating expenses that we may incur to grow and expand our operations and to remain competitive; ◦ changes in the legislative or regulatory environment, including with respect to real estate commission rates and disclosures; ◦ system failures or outages, or actual or perceived breaches of security or privacy, and the costs associated with preventing, responding to, or remediating any such outages or breaches; ◦ adverse judgments, settlements, or other litigation-related costs and the fees associated with investigating and defending claims; ◦ the overall tax rate for our business and the impact of any changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; ◦ the application of new or changing financial accounting standards or practices; and ◦ changes in real estate market conditions; ◦ changes in regional or national business or macroeconomic conditions, including as a result of a pandemic, which may impact the other factors described above.
Numerous factors can influence our results of operations, including: 19 Table of Contents ◦ our ability to attract and retain agents; ◦ our ability to develop innovative solutions and offer new services on our platform; ◦ changes in interest rates or mortgage underwriting standards; ◦ the actions of our competitors; ◦ costs and expenses related to the strategic acquisitions, investments and joint ventures; ◦ increases in and timing of operating expenses that we may incur to grow and expand our operations and to remain competitive; ◦ changes in the legislative or regulatory environment, including with respect to real estate commission rates and disclosures; ◦ system failures or outages, or actual or perceived breaches of security or privacy, and the costs associated with preventing, responding to, or remediating any such outages or breaches; ◦ adverse judgments, settlements, or other litigation-related costs and the fees associated with investigating and defending claims; ◦ the overall tax rate for our business and the impact of any changes in tax laws or judicial or regulatory interpretations of tax laws, which are recorded in the period such laws are enacted or interpretations are issued and may significantly affect the effective tax rate of that period; ◦ the application of new or changing financial accounting standards or practices; and ◦ changes in real estate market conditions; ◦ changes in regional or national business or macroeconomic conditions, including because of a pandemic, which may impact the other factors described above.
Other incidents may arise from events that are or may be beyond our ability to control and may damage our brand, such as actions taken (or not taken) by one 12 Table of Contents or more agents relating to health, safety, welfare or other matters; cybersecurity incidents; litigation and claims; failure to maintain high ethical and social standards for all of our operations and activities; failure to comply with local laws and regulations; and illegal activity targeted at Douglas Elliman or others.
Other incidents may arise from events that are or may be beyond our ability to control and may damage our brand, such as actions taken (or not taken) by one or more agents relating to health, safety, welfare or other matters; cybersecurity incidents; litigation and claims; failure to maintain high ethical and social standards for all of our operations and activities; failure to comply with local laws and regulations; and illegal activity targeted at Douglas Elliman or others.
Developments in the laws and regulations governing the handling and transmission of personal identifying information in the United States may require us to devote more resources to protecting such information. Some of our products and services contain open source software, which may pose particular risks to our proprietary software, products, and services.
Developments in the laws and regulations governing the handling and transmission of personal identifying information in the United States may require us to devote more resources to protecting such information. Some of our application systems and services contain open-source software, which may pose particular risks to our proprietary software, products, and services.
The attractiveness of New York City may also be negatively affected by other factors, including high residential property sales prices or rents (or a risk or perceived risk of a fall in sales prices in the future), high costs of living, the impact of the Tax Act, the impact of changes in state tax law, such as the real estate transfer tax on luxury property, and negative perceptions surrounding quality of life, safety and security (including the risk or perceived risk of acts of terrorism or protests).
The attractiveness of New York City may also be negatively affected by other factors, including high residential property sales prices or rents (or a risk or perceived risk of a fall in sales prices in the future), high costs of living, the impact of the Tax Act, the impact of changes in state tax law, such as the real estate transfer tax on luxury property, and 11 Table of Contents negative perceptions surrounding quality of life, safety and security (including the risk or perceived risk of acts of terrorism or protests).
Our operations are dependent on the efforts, abilities and experience of our employees, and we compete for their services. We have contracts with certain employees that include provisions preventing these persons from competing with us both during and after the term of our employment contracts with them.
Our operations are dependent on the efforts, abilities and experience of our employees, and we compete for their services. We have contracts with certain employees that include provisions preventing them from competing with us both during and after the term of our employment contracts with them.
Enforceability of the non-compete agreements that we have in place is not guaranteed, and contractual restrictions could be breached without discovery or adequate remedies. On July 9, 2021, President Biden signed an executive order encouraging the Federal Trade Commission (“FTC”) to curtail unfair use of non-compete agreements and other agreements that may unfairly limit worker mobility.
Enforceability of the non-compete agreements that we have in place is not guaranteed, and contractual restrictions could be breached without discovery or adequate remedies. 13 Table of Contents On July 9, 2021, President Biden signed an executive order encouraging the Federal Trade Commission (“FTC”) to curtail unfair use of non-compete agreements and other agreements that may unfairly limit worker mobility.
This decline has caused more homeowners to remain in their homes, reducing the volume of home sale transactions closed by our brokers and agents. The continuing decline in home inventory levels could have a material adverse effect on our business, financial condition and results of operations . Consumers may adopt alternatives to full service agents.
This decline has caused more homeowners to remain in their homes, reducing the volume of home sale transactions closed by our brokers and agents. Historically low home inventory levels could have a material adverse effect on our business, financial condition and results of operations . Consumers may adopt alternatives to full-service agents.
The potential consequences of a material cybersecurity incident include reputational damage, litigation with third parties, diminution 16 Table of Contents in the value of the services we provide to our customers, increased cybersecurity protection and remediation costs, business disruption and the loss of funds or revenue which in turn could adversely affect our competitiveness and results of operations.
The potential consequences of a material cybersecurity incident include reputational damage, litigation with third parties, diminution in the value of the services we provide to our customers, increased cybersecurity protection and remediation costs, business disruption and the loss of funds or revenue which in turn could adversely affect our competitiveness and results of operations.
Vector Group obtained an opinion from Sullivan & Cromwell LLP substantially to the effect that, among other things, and subject to the assumptions and limitations described therein, the distribution by Vector Group of our common stock to the 21 Table of Contents holders of Vector Group common stock will qualify as a tax-free distribution under the Internal Revenue Code of 1986, as amended.
Vector Group obtained an opinion from Sullivan & Cromwell LLP substantially to the effect that, among other things, and subject to the assumptions and limitations described therein, the distribution by Vector Group of our common stock to the holders of Vector Group common stock will qualify as a tax-free distribution under the Internal Revenue Code of 1986, as amended.
To date, we have experienced no material realized losses on or lack of access to our cash held in operating accounts or our invested cash or cash equivalents, however, we can provide no assurances that access to our cash held in operating accounts or our invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets or the negative performance of financial institutions.
To date, we have experienced 20 Table of Contents no material realized losses on or lack of access to our cash held in operating accounts or our invested cash or cash equivalents, however, we can provide no assurances that access to our cash held in operating accounts or our invested cash and cash equivalents will not be impacted by adverse conditions in the financial markets or the negative performance of financial institutions.
This strategic alliance subjects Douglas Elliman to a number of risks, including risks associated with the sharing of proprietary information between parties, non-performance by Douglas Elliman or Knight Frank Residential of obligations under the strategic alliance agreement, disputes over strategic or operational decisions or other matters and reputational risks, as well as litigation risks associated therewith.
This strategic alliance subjects Douglas Elliman to some risks, including risks associated with the sharing of proprietary information between parties, non-performance by Douglas Elliman or Knight Frank Residential of obligations under the strategic alliance agreement, disputes over strategic or operational decisions or other matters and reputational risks, as well as litigation risks associated therewith.
For example, in April 2021, we determined that an unauthorized party gained access to Douglas Elliman Property Management’s IT network, temporarily disrupted business operations and obtained certain files that contained personal information pertaining to owners and others in buildings managed by and employees of Douglas Elliman Property Management.
For example, in April 2021, we determined that an unauthorized party gained access 17 Table of Contents to Douglas Elliman Property Management’s IT network, temporarily disrupted business operations and obtained certain files that contained personal information pertaining to owners and others in buildings managed by employees of Douglas Elliman Property Management.
We entered into various agreements with Vector Group related to the Distribution, including a Distribution Agreement, a Tax Disaffiliation Agreement, a Transition Services Agreement, an Employee Matters Agreement and Aviation Agreements. These agreements included the allocation of employee benefits, taxes and certain other liabilities and obligations attributable to periods prior to, at and after the Distribution.
We entered into various agreements with Vector Group related to the Distribution, including a Distribution Agreement, a Tax Disaffiliation Agreement, a Transition Services Agreement, an Employee Matters Agreement and Aviation Agreements. 22 Table of Contents These agreements included the allocation of employee benefits, taxes and certain other liabilities and obligations attributable to periods prior to, at and after the Distribution.
These services include the collection and storage of certain personal information regarding employees and/or customers as well as information regarding Douglas Elliman, Vector Group and our counter-parties. We pay Vector Group $350,000 per month for these services as well as office space and secretarial and administrative services provided to members of our management team.
These services include the collection and storage of certain personal information regarding employees and/or customers as well as information regarding Douglas Elliman, Vector Group and our counterparties. We pay Vector Group $350,000 per month for these services as well as office space and secretarial and administrative services provided to members of our management team.
Examples may include claims associated with Real Estate Settlement Procedures Act (“RESPA”) compliance (including, but not limited to, those related to the broker-to-broker exception, marketing agreements or consumer rebates), broker fiduciary duties, multiple listing service practices, sales agent classification, federal and state fair housing laws, and state laws limiting or prohibiting inducements, cash rebates and gifts to consumers.
Examples may include claims associated with Real Estate Settlement Procedures Act (“RESPA”) compliance (including, but not limited to, those related to the broker-to-broker exception, marketing agreements or consumer rebates), broker fiduciary duties, multiple listing service practices, sales agent classification, federal 21 Table of Contents and state fair housing laws, and state laws limiting or prohibiting inducements, cash rebates and gifts to consumers.
Any of the following could be associated with cyclicality in the real estate market by halting or limiting a recovery in the residential real estate market, and have an adverse effect on our business by causing periods of lower growth or a decline in the number of home sales and/or property prices which in turn could adversely affect our revenue and profitability: • periods of economic slowdown or recession; 10 Table of Contents • rising interest rates and inflation; • the general availability of and cost of mortgage financing; • a negative perception of the market for residential real estate; • commission pressure from brokers who discount their commissions; • an increase in the cost of homeowners’ insurance for owners of single-family homes and condominium associations; • weak credit markets; • a low level of consumer confidence in the economy and/or the real estate market; • instability of financial institutions; • legislative, tax or regulatory changes that would adversely impact the real estate market, including, but not limited to, potential reform relating to Fannie Mae, Freddie Mac and other government sponsored entities that provide liquidity to the U.S. housing and mortgage markets, and potential limits on, or elimination of, the deductibility of certain mortgage interest expense and property taxes; • adverse changes in economic and general business conditions in the New York metropolitan area or the other markets in which we operate; • a decline in the affordability of homes; • declining demand for real estate; • declining home ownership rates, declining demand for real estate and changing social attitudes toward home ownership; • acts of God, such as hurricanes, earthquakes and other natural disasters, or acts or threats of war or terrorism; and/or • adverse changes in global, national, regional and local economic and market conditions, particularly in the New York metropolitan area and the other markets where we operate, including those relating to pandemics and health crises, such as the COVID-19 pandemic.
Lack of available credit or lack of confidence in the financial sector could adversely impact the real estate market. 10 Table of Contents Any of the following could be associated with cyclicality in the real estate market by halting or limiting a recovery in the residential real estate market, and have an adverse effect on our business by causing periods of lower growth or a decline in the number of home sales and/or property prices which in turn could adversely affect our revenue and profitability: • periods of economic slowdown or recession; • rising interest rates and inflation; • the general availability of and cost of mortgage financing; • a negative perception of the market for residential real estate; • commission pressure from brokers who discount their commissions; • an increase in the cost of homeowners’ insurance for owners of single-family homes and condominium associations; • weak credit markets; • a low level of consumer confidence in the economy and/or the real estate market; • instability of financial institutions, which may result in, among other things, depository banks not honoring escrow and trust deposits held by certain of our subsidiaries; • legislative, tax or regulatory changes that would adversely impact the real estate market, including, but not limited to, potential reform relating to Fannie Mae, Freddie Mac and other government sponsored entities that provide liquidity to the U.S. housing and mortgage markets, and potential limits on, or elimination of, the deductibility of certain mortgage interest expense and property taxes; • adverse changes in economic and general business conditions in the New York metropolitan area or the other markets in which we operate; • a decline in the affordability of homes; • declining demand for real estate; • declining home ownership rates, declining demand for real estate and changing social attitudes toward home ownership; • acts of God, such as hurricanes, earthquakes and other natural disasters, or acts or threats of war or terrorism; and/or • adverse changes in global, national, regional and local economic and market conditions, particularly in the New York metropolitan area and the other markets where we operate, including those relating to pandemics and health crises, such as the COVID-19 pandemic.
Any 14 Table of Contents loss or changes to our rights to use listing data or add listings, or any similar loss of rights in the markets we serve, could negatively impact agent and client confidence in the listing data we provide and reduce our ability to attract and retain agents.
Any loss or changes to our rights to use listing data or add listings, or any similar loss of rights in the markets we serve, could negatively impact agent and client confidence in the listing data we provide and reduce our ability to attract and retain agents.
If the Distribution does not qualify for tax-free treatment for U.S. federal income tax purposes for any reason, including as a result of a breach of a representation or covenant, then, generally, Vector Group would recognize a substantial gain for U.S. federal income tax purposes.
If the Distribution does not qualify for tax-free treatment for U.S. federal income tax purposes for any reason, including because of a breach of a representation or covenant, then, generally, Vector Group would recognize a substantial gain for U.S. federal income tax purposes.
Our business significantly depends on sales transactions for residential property in the New York metropolitan area, and we derived approximately 55% of our revenues in 2022, 52% of our revenues in 2021 and 55% of our revenues in 2020 from the New York metropolitan area.
Our business significantly depends on sales transactions for residential property in the New York metropolitan area, and we derived approximately 50% of our revenues in 2023, 52% of our revenues in 2022 and 55% of our revenues in 2021 from the New York metropolitan area.
In addition, in the event that we communicate certain initiatives and goals regarding environmental, social and governance matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could be criticized for the scope of such initiatives or goals.
In addition, if we communicate certain initiatives and goals regarding environmental, social and governance matters, we could fail, or be perceived to fail, in our achievement of such initiatives or goals, or we could be criticized for the scope of such initiatives or goals.
There is no assurance that those activities will maintain or enhance Douglas Elliman’s brand awareness. Brand value can be severely damaged even by isolated incidents, particularly if the incidents receive considerable negative publicity or result in litigation.
There is no assurance that those activities will maintain or enhance Douglas Elliman’s brand awareness. 12 Table of Contents Brand value can be severely damaged even by isolated incidents, particularly if the incidents receive considerable negative publicity or result in litigation.
Federal Income Tax Consequences of the Distribution.” We may have a significant indemnity obligation to Vector Group if the Distribution is treated as a taxable transaction.
Federal Income Tax Consequences of the Distribution.” 23 Table of Contents We may have a significant indemnity obligation to Vector Group if the Distribution is treated as a taxable transaction.
In 2022, approximately 70.0% of our closed sales occurred in New York, California, Connecticut, New Jersey and Massachusetts, and a migration of residents from these markets or a reduction in the attractiveness of these markets as a place to live could adversely impact demand for our products and services.
In 2023, approximately 65% of our closed sales occurred in New York, California, Connecticut, New Jersey and Massachusetts, and a migration of residents from these markets or a reduction in the attractiveness of these markets as a place to live could adversely impact demand for our products and services.
The settlement previously required NAR to adopt certain rule changes, such as increased disclosure of commission offers from sellers’ agents to buyers’ agents. In January 2023, a federal court ruled that the DOJ must uphold the settlement agreement, although the ruling may be appealed.
The settlement previously required the NAR to adopt certain rule changes, such as increased disclosure of commission offers from sellers’ agents to buyers’ agents. In January 2023, a federal court ruled that the DOJ must uphold the settlement agreement. The DOJ appealed the district court’s January 2023 ruling.
If Vector Group were to breach or be unable to satisfy its material obligations under these agreements, including a failure to satisfy its indemnification or other financial obligations, or these agreements otherwise terminate or expire and we do not enter into replacement agreements, we could suffer operational difficulties and/or significant losses. The Distribution could result in significant tax liability.
If Vector Group were to breach or be unable to satisfy its material obligations under these agreements, including a failure to satisfy its indemnification or other financial obligations, or these agreements otherwise terminate or expire and we do not enter into replacement agreements, we could suffer operational difficulties and/or significant losses.
The investments may be difficult to value, and the timing of any profit realization is highly uncertain. Losses are likely to occur. Early-stage and development-stage companies often experience unexpected problems in the areas of product development, manufacturing, marketing, financing and general management, which, in some cases, cannot be adequately solved.
The investments may be difficult to value, and the timing of any profit realization is highly uncertain. Losses have occurred and may occur in the future. Private companies often experience unexpected problems in the areas of product development, manufacturing, marketing, financing and general management, which, in some cases, cannot be adequately solved.
As a result of such variability, our historical performance, including from recent quarters or years, may not be a meaningful indicator of future performance and period-to-period comparisons also may not be meaningful. 18 Table of Contents We are a holding company and depend on cash payments from our subsidiaries in order to pay dividends on our common stock.
Because of such variability, our historical performance, including from recent quarters or years, may not be a meaningful indicator of future performance and period-to-period comparisons also may not be meaningful. We are a holding company and depend on cash payments from our subsidiaries to pay dividends on our common stock.
We believe the trademark portfolio of Douglas Elliman has significant value and is an important factor in the marketing of our brand. We believe that this and other intellectual property are valuable assets that are critical to our success.
Infringement, misappropriation or dilution of the intellectual property of Douglas Elliman could harm our business. We believe the trademark portfolio of Douglas Elliman has significant value and is an important factor in the marketing of our brand. We believe that this and other intellectual property are valuable assets that are critical to our success.
We maintain controls and procedures designed to 17 Table of Contents ensure that we will not be subject to regulation under the Investment Company Act. In the event we engage in business activities that result in us holding minority interests in a number of nonconsolidated entities with significant value, we might become subject to regulation under the Investment Company Act.
We maintain controls and procedures designed to ensure that we will not be subject to regulation under the Investment Company Act. If we engage in business activities that result in us holding minority interests in nonconsolidated entities with significant value, we might become subject to regulation under the Investment Company Act.
We use open source software in our products and services and anticipate using open source software in the future.
We use open-source software in our applications systems and services and anticipate using open-source software in the future.
This litigation or subsequent regulatory action, if successful, could result in significant changes or disruptions to industry practices of the residential real estate market, including changes or disruptions to buyer's agent's commissions, and could negatively affect our financial condition and results of operations.
Any of the foregoing litigation (including any related settlement agreement) or subsequent regulatory action, if successful, could result in significant changes or disruptions to industry practices of the residential real estate market, including changes or disruptions to buyers’ agent’s commissions, and could negatively affect our financial condition and results of operations.
We may be subject to claims, lawsuits, arbitration proceedings, government investigations and other legal and regulatory proceedings in the ordinary course of business, including those involving labor and employment, anti- discrimination, commercial disputes, competition, professional liability and consumer complaints, intellectual property disputes, compliance with regulatory requirements, antitrust and anti-competition claims (including claims related to NAR or MLS rules regarding buyer-broker commissions), securities laws and other matters, and we may become subject to additional types of claims, lawsuits, government investigations and legal or regulatory proceedings if the regulatory landscape changes or as our business grows and as we deploy new offerings, including proceedings related to our acquisitions, securities issuances or business practices.
We are periodically subject to claims, lawsuits, arbitration proceedings, government investigations and other legal and regulatory proceedings in the ordinary course of business, including those involving labor and employment, anti- discrimination, commercial disputes, competition, professional liability and consumer complaints, intellectual property disputes, compliance with regulatory requirements, antitrust and anti-competition claims (including claims related to NAR or MLS rules regarding buyer-broker commissions as further described in Note 13 to our combined consolidated financial statements included elsewhere in this Form 10-K), securities laws and other matters, and we may become subject to additional types of claims, lawsuits, government investigations and legal or regulatory proceedings if the regulatory landscape changes or as our business grows and as we deploy new offerings, including proceedings related to our acquisitions, securities issuances or business practices.
Consequently, mortgage interest rates have significantly and rapidly increased, and may continue to increase. Changes in the Federal Reserve Board’s policies, the interest rate environment and mortgage market are beyond our control and difficult to predict. In 2022, the cost of financing for homebuyers increased significantly, which resulted in higher monthly payment costs that make homes less affordable to purchasers.
Changes in the Federal Reserve Board’s policies, the interest rate environment and mortgage market are beyond our control and difficult to predict. In 2022, the cost of financing for homebuyers increased significantly, which resulted in higher monthly payment costs that make homes less affordable to purchasers and these conditions continued in 2023.
Moreover , unauthorized third parties may use Douglas Elliman’s intellectual property to trade on the goodwill of our brand, resulting in consumer confusion or dilution.
Moreover , unauthorized third parties may use Douglas Elliman’s intellectual property to trade on the goodwill of our brand, resulting in consumer confusion or dilution. Any reduction of our brand’s goodwill, consumer confusion, or dilution is likely to impact sales.
In addition, private litigants have filed multiple antitrust suits against NAR, some of which the DOJ has intervened in, that allege certain NAR and MLS rules are anti-competitive and result in increased costs to consumers.
In addition, private litigants have filed several antitrust suits against the NAR and certain real estate brokerage firms, some of which the DOJ has intervened in, that allege certain NAR and MLS rules are anti-competitive under federal and state antitrust laws and result in increased costs to consumers.
Any reduction in the attractiveness of New York City as a place to live or a place to invest in residential real estate and any matters which adversely affect New York City’s status as an international center for business and commerce could result in a reduction, by volume and/or by value, in residential property sales transactions in the New York metropolitan area. 11 Table of Contents There could be a lack of financing for homebuyers in the U.S. residential real estate market at favorable rates and on favorable terms.
Any reduction in the attractiveness of New York City as a place to live or a place to invest in residential real estate and any matters which adversely affect New York City’s status as an international center for business and commerce could result in a reduction, by volume and/or by value, in residential property sales transactions in the New York metropolitan area.
Additionally, the Investment Company Act requires that a number of structural safeguards, such as an independent board of directors and a separate investment adviser whose contract must be approved by a majority of our stockholders, be put in place within such companies.
In such event, we would be required to register as an investment company and incur significant registration and compliance costs. Additionally, the Investment Company Act requires that several structural safeguards, such as an independent board of directors and a separate investment adviser whose contract must be approved by a majority of our stockholders, be put in place within such companies.
Goodwill, trademarks and other identifiable intangible assets must be tested for impairment at least annually. The fair value of the goodwill assigned to a reporting unit could decline if projected revenues or cash flows were to be lower in the future due to the effects of the global economy or other causes.
The fair value of the goodwill assigned to a reporting unit could decline if projected revenues or cash flows were to be lower in the future due to the effects of the global economy or other causes.
If the carrying value of intangible assets or of goodwill were to exceed its fair value, the asset would be written down to its fair value, with the impairment loss recognized as a non-cash charge in our c ombined consolidated statement of operations.
If the carrying value of intangible assets or of goodwill were to exceed its fair value, the asset would be written down to its fair value, with the impairment loss recognized as a non-cash charge in our consolidated statement of operations. Changes in our future outlook of the Douglas Elliman Realty, LLC reporting unit could result in an impairment loss.
Although we did not experience a material erosion of our commission percentage rates from 2017 and 2021, the withdrawal of the DOJ from this settlement and the executive order signed by President Biden on July 9, 2021, which, among other things, directs the Federal Trade Commission to consider additional rule making pertaining to the real estate industry indicates increased regulatory scrutiny of the real estate industry.
The withdrawal of the DOJ from this settlement and the executive order signed by President Biden on July 9, 2021, which, among other things, directs the FTC to consider additional rule making pertaining to the real estate industry, indicates increased regulatory scrutiny of the real estate industry.
Even where we have effectively secured statutory protection for our trademarks and other intellectual property, our competitors may misappropriate our intellectual property. Defending or enforcing our trademark rights, branding practices and other intellectual property, and seeking an injunction and/or compensation for misappropriation of confidential information, could result in the expenditure of significant resources and divert the attention of management.
Defending or enforcing our trademark rights, branding practices and other intellectual property, and seeking an 16 Table of Contents injunction and/or compensation for misappropriation of confidential information, could result in the expenditure of significant resources and divert the attention of management.
Our overlapping directors and officers with Vector Group may result in the diversion of corporate opportunities to Vector Group, and other conflicts and provisions in our amended and restated certificate of incorporation may provide us no remedy in that circumstance. 23 Table of Contents Our amended and restated certificate of incorporation acknowledges that directors and officers of ours may also be serving as directors, officers, employees or agents of Vector Group or any subsidiary thereof, and that we may engage in material business transactions with Vector Group.
Our amended and restated certificate of incorporation acknowledges that directors and officers of ours may also be serving as directors, officers, employees or agents of Vector Group or any subsidiary thereof, and that we may engage in 24 Table of Contents material business transactions with Vector Group.
Furthermore , if our competitors’ corporate responsibility performance is perceived to be greater than ours, potential or current investors may elect to invest with our competitors instead.
We may face reputational damage if our corporate responsibility procedures or standards do not meet the standards set by various constituencies. Furthermore , if our competitors’ corporate responsibility performance is perceived to be greater than ours, potential or current investors may elect to invest with our competitors instead.
Any reduction of our brand’s goodwill, consumer confusion, or dilution is likely to impact sales. 15 Table of Contents We rely on licenses to use the intellectual property rights of third parties which are incorporated into our products and services. Failure to renew or expand existing licenses may require us to modify, limit or discontinue certain offerings.
We rely on licenses to use the intellectual property rights of third parties which are incorporated into our products and services. Failure to renew or expand existing licenses may require us to modify, limit or discontinue certain offerings. We rely on products, technologies and intellectual property that we license from third parties for use in our services.
The criteria by which companies’ corporate responsibility practices are assessed may change, which could result in greater expectations of us and 19 Table of Contents cause us to undertake costly initiatives to satisfy such new criteria.
The criteria by which companies’ corporate responsibility practices are assessed may change, which could result in greater expectations of us and cause us to undertake costly initiatives to satisfy such new criteria. If we elect not to or are unable to satisfy such new criteria, investors may conclude that our policies with respect to corporate responsibility are inadequate.
We rely on products, technologies and intellectual property that we license from third parties for use in our services. We cannot assure that these third-party licenses, or support for such licensed products and technologies, will continue to be available to us on commercially reasonable terms, if at all.
There is no assurance that these third-party licenses, or support for such licensed products and technologies, will continue to be available to us on commercially reasonable terms, if at all.
Although we have sophisticated fraud detection processes and have taken 20 Table of Contents other measures to continuously improve controls to identify fraudulent activity, we have not been and may not be able to detect and prevent all such activity.
Although we have sophisticated fraud detection processes and have taken other measures to continuously improve controls to identify fraudulent activity, we have not been and may not be able to detect and prevent all such activity. Persistent or pervasive fraudulent activity may cause agents or clients to lose trust in us and decrease or terminate their usage of our platform.
We may engage in business activities that could result in us holding investment interests in a number of entities which could subject us to regulation under the Investment Company Act of 1940.
These activities involve a significant amount of change in a company and could give rise to significant problems in sales, manufacturing, and general management of these activities. 18 Table of Contents We may engage in business activities that could result in us holding investment interests in entities which could subject us to regulation under the Investment Company Act of 1940.
Significant agent reclassification determinations in the absence of available exemptions from minimum wage or overtime laws, including damages and penalties for prior periods (if assessed), could be disruptive to our business or constrain our operations in certain jurisdictions.
Significant agent reclassification determinations in the absence of available exemptions from minimum wage or overtime laws, including damages and penalties for prior periods (if assessed), could be disruptive to our business or constrain our operations in certain jurisdictions. 14 Table of Contents We may not be able to maintain or establish relationships with multiple listing services (“MLSs”) and third-party listing services, which could limit the information we are able to provide to our agents and clients.
Such companies typically have obtained capital in the form of debt and/or equity to expand rapidly, reorganize operations, acquire other businesses, or develop new products and markets. These activities by definition involve a significant amount of change in a company and could give rise to significant problems in sales, manufacturing, and general management of these activities.
Such companies typically have obtained capital in the form of debt and/or equity to expand rapidly, reorganize operations, acquire other businesses, or develop new products and markets.
Industry structure changes that disrupt the functioning of the residential real estate market could materially adversely affect our operations and financial results. Through our brokerages, we participate in MLS and are a member of the NAR and state real estate associations and, accordingly, are subject to each group’s rules, policies, data licenses, and terms of service.
Through our brokerages, we participate in MLS and are a member of the NAR and state real estate associations and, accordingly, are subject to each group’s rules, policies, data licenses, and terms of service. The rules of each MLS to which we belong can vary widely and are complex.
We could experience meaningful changes in industry operations or structure, as a result of governmental pressures, the result of litigation, changes to NAR or MLS rules, the actions of certain competitors or the introduction or growth of certain competitive models. Infringement, misappropriation or dilution of the intellectual property of Douglas Elliman could harm our business.
Such consequences may reduce our revenues, require additional expenditure, or distract our management’s attention from pursuing our growth strategy. We could experience meaningful changes in industry operations or structure, as a result of governmental pressures, the result of litigation, changes to NAR or MLS rules, the actions of certain competitors or the introduction or growth of certain competitive models.
Customary commission rates could change due to market forces locally or industry-wide, as well as due to regulatory or legal changes in such markets, including as a result of litigation or enforcement actions.
Customary commission rates could change due to market forces locally or industry-wide, as well as due to regulatory or legal changes in such markets, including because of litigation or enforcement actions. In addition, there can be no assurance that we will be able to maintain the percentage of commission income that we collect from our agents.
Further, our stockholders may consider these covenants and indemnity obligations unfavorable as they might discourage, delay or prevent a change of control. For more information, see our Registration Statement on Form S-1 initially filed on December 7, 2021 and the sections entitled “The Distribution — Material U.S.
For more information, see our Registration Statement on Form S-1 initially filed on December 7, 2021 and the sections entitled “The Distribution — Material U.S.
On July 1, 2021, the DOJ announced its withdrawal from a settlement agreement reached during the prior administration with the NAR in relation to claims of anticompetitive behavior with respect to commissions received by buyers’ agents from sellers’ agents.
Any such determination could result in industry investigations, legislative or regulatory action, private litigation or other actions, any of which could have the potential to disrupt our business. 15 Table of Contents On July 1, 2021, the DOJ announced its withdrawal from a settlement agreement reached during the prior adminis tration with the NAR in relation to claims of anticompetitive behavior with respect to commissions received by buyers’ agents from sellers’ agents.
In January 2023, the FTC proposed a rule that, if enacted, would prohibit employers from entering into non-compete clauses with workers and require employers to rescind existing non-complete clauses. 13 Table of Contents Douglas Elliman is subject to risks and operational limitations associated with its strategic alliance with Knight Frank Residential.
In January 2023, the FTC proposed a rule that, if enacted, would prohibit employers from entering into non-compete clauses with workers and require employers to rescind existing non-compete clauses. The FTC is expected to vote on a final rule in April 2024.
We may not be able to maintain or establish relationships with multiple listing services (“MLSs”) and third-party listing services, which could limit the information we are able to provide to our agents and clients. Our ability to attract agents and to appeal to clients depends upon providing a robust number of listings.
Our ability to attract agents and to appeal to clients depends upon providing a robust number of listings. To provide these listings, we maintain relationships with multiple listing services and other third-party listing providers and aggregators, as well as our agents themselves to include listing data in our services.
If our agents were to provide lower quality services to our customers or engage in negligent or intentional misconduct, our image and reputation could be materially adversely affected. In addition, we could also be subject to litigation and regulatory claims arising out of their performance of brokerage services, which if adversely determined, could result in substantial financial or legal penalties.
In addition, we could also be subject to litigation and regulatory claims arising out of their performance of brokerage services, which if adversely determined, could result in substantial financial or legal penalties. There may be adverse financial and operational consequences to us if independent real estate agents are reclassified as employees.
Any of these events would negatively impact our liquidity, results of operations and our reputation. Goodwill and indefinite-lived intangible asset impairment charges may adversely affect our operating results and financial condition. We have a substantial amount of goodwill and other intangible assets on our balance sheet, primarily comprised of goodwill and trademarks.
Goodwill and indefinite-lived intangible asset impairment charges may adversely affect our operating results and financial condition. We have a substantial amount of goodwill and other intangible assets on our balance sheet. As of December 31, 2023, we had approximately $32.2 million of goodwill and $73.0 million of trademarks and other intangible assets related to Douglas Elliman.
The rules of each MLS to which we belong can vary widely and are complex. From time to time, certain industry practices, including NAR and MLS rules, have come under regulatory scrutiny.
From time to time, certain industry practices, including NAR and MLS rules, have come under regulatory scrutiny and, more recently, have been subject to private litigation.
We believe that low mortgage rates were a significant factor in the trend in increased homeowner equity and growth in home prices and sales in 2021, in particular.
We believe that low mortgage rates were a significant factor in the trend in increased homeowner equity and growth in home prices and sales in 2021. In March 2022, the Federal Reserve Board began increasing its primary policy interest rate as well as reducing the size of its balance sheet. Consequently, mortgage interest rates have significantly and rapidly increased.
If industry conditions change, we may be forced to reduce the percentage of commissions that we collect from our agents. Negligence or intentional actions of real estate agents engaged by us could materially and adversely affect our reputation and subject us to liability. Our operations rely on the performance of real estate agents.
If industry conditions change, we may be forced to reduce the percentage of commissions that we collect from our agents.
To provide these listings, we maintain relationships with multiple listing services and other third-party listing providers and aggregators, as well as our agents themselves to include listing data in our services. Certain of our agreements with real estate listing providers are short-term agreements that may be terminated with limited notice.
Certain of our agreements with real estate listing providers are short-term agreements that may be terminated with limited notice.
See "Industry structure changes that disrupt the functioning of the residential real estate market could materially adversely affect our operations and financial results." In addition, there can be no assurance that we will be able to maintain the percentage of commission income that we collect from our agents.
Industry structure changes that disrupt the functioning of the residential real estate market, including as a result of litigation or regulatory scrutiny, could materially adversely affect our operations and financial results.
Removed
Lack of available credit or lack of confidence in the financial sector could adversely impact the real estate market.
Added
There could be a lack of financing for homebuyers in the U.S. residential real estate market at favorable rates and on favorable terms.

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Item 2. Properties

Properties — owned and leased real estate

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Biggest changeAs of December 31, 2022, the properties leased by Douglas Elliman are as follows: Type Number of Offices Location Owned or Leased Approximate Total Square Footage Offices 27 New York City, NY Leased 255,000 Offices 38 Long Island, NY Leased 123,000 Offices 20 Florida Leased 52,000 Offices 4 Westchester County, NY Leased 7,000 Offices 16 California Leased 85,000 Offices 23 Other Leased 47,500
Biggest changeAs of December 31, 2023, the properties leased by Douglas Elliman are as follows: Type Number of Offices Location Owned or Leased Approximate Total Square Footage Offices 26 New York City, NY Leased 308,000 Offices 37 Long Island, NY Leased 121,000 Offices 23 Florida Leased 60,000 Offices 4 Westchester County, NY Leased 7,000 Offices 14 California Leased 82,000 Offices 27 Other Leased 57,300
ITEM 2. PROPERTIES Our principal executive offices are located in Miami, Florida. Douglas Elliman leases 128 offices and its leases expire at various times between 2023 and 2033.
ITEM 2. PROPERTIES Our principal executive offices are located in Miami, Florida. Douglas Elliman leases 131 offices and its leases expire at various times between 2024 and 2033.

Item 3. Legal Proceedings

Legal Proceedings — active lawsuits and investigations

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Biggest changeITEM 3. LEGAL PROCEEDINGS Reference is made to Note 14 to our combined consolidated financial statements included elsewhere in this report which is incorporated by reference and contains a general description of certain legal proceedings to which we, or our subsidiaries, are a party and certain related matters. ITEM 4.
Biggest changeITEM 3. LEGAL PROCEEDINGS Reference is made to Note 13 to our combined consolidated financial statements included elsewhere in this report which is incorporated by reference and contains a general description of certain legal proceedings to which we, or our subsidiaries, are a party. ITEM 4. MINE SAFETY DISCLOSURES Not applicable. 26 Table of Contents PART II
Removed
MINE SAFETY DISCLOSURES Not applicable. 24 Table of Contents PART II

Item 5. Market for Registrant's Common Equity

Market for Common Equity — stock, dividends, buybacks

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Biggest changeHe has served as Chief Financial Officer and Treasurer of Vector Group since April 2006 and as Vector Group’s Senior Vice President since May 2016. Mr. Kirkland served as a Vice President of Vector Group from January 2001 to April 2016 and served as New Valley’s Vice President and Chief Financial Officer from January 1998 to December 2005.
Biggest changeKirkland served as a Vice President of Vector Group from January 2001 to April 2016 and served as New Valley’s Vice President and Chief Financial Officer from January 1998 to December 2005. He has served since July 1992 in various financial capacities with us, Vector Group, Liggett and New Valley. Mr.
(NASDAQ: NATH), a chain of fast food restaurants, since 1987 and Chief Executive Officer from November 1993 to December 2006; and a director of Clipper Realty, Inc. (NYSE: CLPR), a real estate investment trust, since July 2015. Mr.
(NASDAQ: NATH), a chain of fast-food restaurants, since 1987 and Chief Executive Officer from November 1993 to December 2006; and, since July 2015, a director of Clipper Realty, Inc. (NYSE: CLPR), a real estate investment trust. Mr.
Sachar led Ladenburg’s innovation platform, created a new division called the “Innovation Lab” and launched an industry-leading initiative to modernize and grow the nationwide network of independent financial advisors, until February 2020. Prior to joining Ladenburg, he spent seven years in management consulting at a New York-based firm focused on innovation and growth, helping publicly-traded companies launch new businesses. Mr.
Sachar led Ladenburg’s innovation platform, created a new division called the “Innovation Lab” and launched an industry-leading initiative to modernize and grow the nationwide network of independent financial advisors, until February 2020. Prior to joining Ladenburg, he spent seven years in management consulting at a New York-based firm focused on innovation and growth, helping publicly traded companies launch new businesses.
Sachar received a Bachelor of Arts degree from Swarthmore College and an MBA from Columbia Business School. Lisa M. Seligman serves as Vice President of Human Resources. Ms. Seligman’s experience includes more than 20 years in Human Resources leadership roles at a diverse group of companies with luxury brand names, which include Dow Jones, Chanel, Shiseido and Tiffany.
Mr. Sachar received a Bachelor of Arts degree from Swarthmore College and an MBA from Columbia Business School. Lisa M. Seligman serves as Vice President of Human Resources. Ms. Seligman’s experience includes more than 20 years in Human Resources leadership roles at a diverse group of companies with luxury brand names, which include Dow Jones, Chanel, Shiseido and Tiffany.
We selected our Peer Group Index based on the peer group used by our compensation and human committee, as recommended by its outside consultant, which consists of 17 publicly traded, national and regional companies conducting business in the real estate and financial services industry.
We selected our Peer Group Index based on the peer group used by our compensation and human capital committee, as recommended by its outside consultant, which consists of 17 publicly traded, national and regional companies conducting business in the real estate and financial services industry.
Each of the executive officers serves until the election and qualification of such individual’s successor or until such individual’s death, resignation or removal by the Board of Directors. Name Age Position Year Individual Became an Executive Officer Howard M. Lorber 74 Chairman, President and Chief Executive Officer 2021 Richard J.
Each of the executive officers serves until the election and qualification of such individual’s successor or until such individual’s death, resignation or removal by the Board of Directors. Name Age Position Year Individual Became an Executive Officer Howard M. Lorber 75 Chairman, President and Chief Executive Officer 2021 Richard J.
Most recently, she has served as Vice President and Global Head of HR at Arcade Beauty, a private equity-owned company engaged in the manufacture of sampling materials for the beauty industry. 29 Table of Contents ITEM 6. RESERVED Reserved.
Most recently, she has served as Vice President and Global Head of HR at Arcade Beauty, a private equity-owned company engaged in the manufacture of sampling materials for the beauty industry. 31 Table of Contents ITEM 6. RESERVED Reserved.
Ballard served as Senior Vice President, Enterprise Services of Ladenburg Thalmann Financial Services Inc. from April 2019 to February 2020. Prior to joining Ladenburg, he served as President and Chief Operating Officer for Docupace Technologies, a leading digital operations technology provider in the wealth management space from March 2018 to April 2019. Mr.
Ballard served as Senior Vice 30 Table of Contents President, Enterprise Services of Ladenburg Thalmann Financial Services Inc. from April 2019 to February 2020. Prior to joining Ladenburg, he served as President and Chief Operating Officer for Docupace Technologies, a leading digital operations technology provider in the wealth management space from March 2018 to April 2019. Mr.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed and traded on the New York Stock Exchange under the symbol “DOUG.” At February 23, 2023, there were approximately 1,172 holders of record of our common stock. 25 Table of Contents Performance Graph The following graph compares the cumulative total annual return of our Common Stock, the S&P 500 Index, the S&P Small Cap 600 Index, and our Peer Group Index by assuming that $100 was invested in each investment as of December 30, 2021, which represents the day our common stock began trading on the NYSE, and that all cash dividends and distributions were reinvested.
MARKET FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES Our common stock is listed and traded on the New York Stock Exchange under the symbol “DOUG.” At February 29, 2024, there were approximately 1,176 holders of record of our common stock. 27 Table of Contents Performance Graph The following graph compares the cumulative total annual return of our Common Stock, the S&P 500 Index, the S&P Small Cap 600 Index, and our Peer Group Index by assuming that $100 was invested in each investment as of December 30, 2021, which represents the day our common stock began trading on the NYSE, and that all cash dividends and distributions were reinvested.
David Ballard is our Senior Vice President, Enterprise Efficiency and Chief Technology Officer. He has been Vector Group’s Senior Vice President, Enterprise Efficiency and Chief Technology Officer since July 2020 and, from February 2020 28 Table of Contents to July 2020, served as a consultant to Vector Group. Prior to joining Vector Group, Mr.
David Ballard is our Senior Vice President, Enterprise Efficiency and Chief Technology Officer. He has been Vector Group’s Senior Vice President, Enterprise Efficiency and Chief Technology Officer since July 2020 and, from February 2020 to July 2020, served as a consultant to Vector Group. Prior to joining Vector Group, Mr.
(OPEN), Colliers International Group Inc. (CIGI), eXp World Holdings, Inc. (EXPI), Stewart Information Services Corporation (STC), Newmark Group, Inc. (NMRK), Redfin Corporation (RFIN), Offerpad Solutions Inc. (OPAD), Radian Group Inc. (RDN), Walker & Dunlop Inc. (WD), Lending Tree, Inc. (TREE), Marcus & Millichap, Inc. (MMI), Doma Holdings Inc. and RE/MAX Holdings, Inc. (RMAX).
(ZG), loanDepot, Inc. (LDI), Opendoor Technologies Inc. (OPEN), Colliers International Group Inc. (CIGI), eXp World Holdings, Inc. (EXPI), Stewart Information Services Corporation (STC), Newmark Group, Inc. (NMRK), Redfin Corporation (RFIN), Offerpad Solutions Inc. (OPAD), Radian Group Inc. (RDN), Walker & Dunlop Inc. (WD), Lending Tree, Inc. (TREE), Marcus & Millichap, Inc. (MMI), Doma Holdings Inc. and RE/MAX Holdings, Inc. (RMAX).
Durkin 60 President and Chief Executive Officer, Douglas Elliman Realty, LLC 2021 Stephen T. Larkin 53 Vice President of Communications 2021 Daniel A. Sachar 47 Vice President Innovation and Managing Director of New Valley Ventures LLC 2021 Lisa M. Seligman 46 Vice President of Human Resources 2023 Howard M.
Durkin 61 President and Chief Executive Officer, Douglas Elliman Realty, LLC 2021 Stephen T. Larkin 54 Vice President of Communications 2021 Daniel A. Sachar 48 Vice President Innovation and Managing Director of New Valley Ventures LLC 2021 Lisa M. Seligman 47 Vice President of Human Resources 2023 Howard M.
The chart does not reflect the Company’s forecast of future financial performance. 12/30/21 12/31/21 12/31/22 Douglas Elliman Inc. 100 95 35 S&P 500 100 100 82 S&P 600 100 100 84 Peer Group Index 100 100 41 Unregistered Sales of Equity Securities and Use of Proceeds No securities of ours which were not registered under the Securities Act of 1933 were issued or sold by us during the three months ended December 31, 2022. 26 Table of Contents Issuer Purchase of Equity Securities Our purchases of our common stock during the three months ended December 31, 2022 were as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1 to October 31, 2022 — $ — — — November 1 to November 30, 2022 — — — — December 1 to December 31, 2022 367,141 3.99 (1) — — Total 367,141 $ 3.99 — — (1) Represents withholdings of shares as payment of payroll tax liabilities incident to the vesting of an employee’s shares of restricted stock.
The chart does not reflect the Company’s forecast of future financial performance. 12/30/21 12/31/21 12/31/22 12/31/23 Douglas Elliman Inc. 100 95 35 27 S&P 500 100 100 82 103 S&P 600 100 100 84 97 Peer Group Index 100 100 41 67 Unregistered Sales of Equity Securities and Use of Proceeds No securities of ours which were not registered under the Securities Act of 1933 were issued and sold by us during the three months ended December 31, 2023. 28 Table of Contents Issuer Purchase of Equity Securities Our purchases of our common stock during the three months ended December 31, 2023 were as follows: Period Total Number of Shares Purchased Average Price Paid per Share Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs October 1 to October 31, 2023 — $ — — — November 1 to November 30, 2023 — — — — December 1 to December 31, 2023 781,907 2.53 (1) — — Total 781,907 $ 2.53 — — (1) Represents withholdings of shares as payment of payroll tax liabilities incident to the vesting of various employees’ shares of restricted stock.
The shares were immediately canceled. 27 Table of Contents EXECUTIVE OFFICERS OF THE REGISTRANT The table below, together with the accompanying text, presents certain information regarding all our current executive officers as of March 16, 2023.
The shares were immediately canceled. 29 Table of Contents EXECUTIVE OFFICERS OF THE REGISTRANT The table below, together with the accompanying text, presents certain information regarding all our current executive officers as of March 8, 2024.
Lampen also served as Chairman of Ladenburg Thalmann Financial Services from September 2018 to February 2020. From October 2008 to October 2019, Mr. Lampen served as President and Chief Executive Officer as well as a director of Castle Brands Inc. J. Bryant Kirkland III is our Senior Vice President, Chief Financial Officer and Treasurer.
Lampen also served as Chairman of Ladenburg Thalmann Financial Services from September 2018 to February 2020. From October 2008 to October 2019, Mr. Lampen served as President and Chief Executive Officer as well as a director of Castle Brands Inc. J.
Lampen 69 Executive Vice President and Chief Operating Officer 2021 J. Bryant Kirkland III 57 Senior Vice President, Chief Financial Officer and Treasurer 2021 Marc N. Bell 62 Senior Vice President, General Counsel and Secretary 2021 J. David Ballard 55 Senior Vice President, Enterprise Efficiency and Chief Technology Officer 2021 Scott J.
Lampen 70 Executive Vice President and Chief Operating Officer 2021 J. Bryant Kirkland III 58 Senior Vice President and Chief Financial Officer 2021 Marc N. Bell 63 Senior Vice President, General Counsel and Secretary 2021 J. David Ballard 56 Senior Vice President, Enterprise Efficiency and Chief Technology Officer 2021 Scott J.
He has served since July 1992 in various financial capacities with us, Vector Group, Liggett and New Valley. Mr. Kirkland has served as Chairman of the Board of Directors, President and Chief Executive Officer of Multi Soft II, Inc. and Multi Solutions II, Inc. since July 2012. Marc N. Bell is our Senior Vice President, General Counsel and Secretary.
Kirkland has served as Chairman of the Board of Directors, President and Chief Executive Officer of Multi Soft II, Inc. and Multi Solutions II, Inc. since July 2012. Marc N. Bell is our Senior Vice President, General Counsel and Secretary.
We are a constituent of the S&P 600 SmallCap Index and selected it and the S&P 500 as our broad-based market indices and our Peer Group Index as a group of peer companies. Our Peer Group Index consists of Anywhere Real Estate Inc. (HOUS), Compass, Inc. (COMP), Zillow Group, Inc. (ZG), loanDepot, Inc. (LDI), Opendoor Technologies Inc.
We were a constituent of the S&P 600 SmallCap Index from December 30, 2021 to June 16, 2023 and selected it and the S&P 500 as our broad-based market indices and our Peer Group Index as a group of peer companies. Our Peer Group Index consists of Anywhere Real Estate Inc. (HOUS), Compass, Inc. (COMP), Zillow Group, Inc.
Added
Bryant Kirkland III is our Senior Vice President and Chief Financial Officer and was our Treasurer from 2021 to January 2024. He has served as Chief Financial Officer and Treasurer of Vector Group since April 2006 and as Vector Group’s Senior Vice President since May 2016. Mr.

Item 7. Management's Discussion & Analysis

Management's Discussion & Analysis (MD&A) — revenue / margin commentary

70 edited+39 added−26 removed64 unchanged
Biggest changeThis platform enhances Douglas Elliman’s suite of offerings for both the renters and landlords it represents. ■ Persefoni AI: a software-as-a-service (“SaaS”) platform built to enable enterprises of all sizes to measure their carbon footprint accurately, dynamically, and regularly across all operations. ■ Envoy: a shared mobility company that sets up fleets of electric vehicles that can be shared by residents of a condominium development, hotel, or shared space. ■ Audience: a subscription-based platform built around proprietary robotic arms that generate hand-written notes on behalf of sales-oriented professionals. ■ Tongo: a financial program that gives real estate agents instant access to future commissions up to 60 days before closing. ■ Guest House: a tech-enabled company focused on the home staging market. ■ Alpaca: investment in Getaway House, Inc., a start-up company that provides cabin rental services in rural areas throughout the United States. ■ PropTech Venture Capital Funds: investments in the following venture capital funds providing New Valley Ventures exposure to opportunities in the emerging PropTech industry. ■ Camber Creek Venture Capital Funds: two funds that invest in a diversified pipeline of new PropTech ventures.
Biggest changeThis platform enhances Douglas Elliman’s suite of offerings for both the renters and landlords it represents. 41 Table of Contents ■ Persefoni AI: a software-as-a-service (“SaaS”) platform built to enable enterprises of all sizes to measure their carbon footprint accurately, dynamically, and regularly across all operations. ■ Envoy: a shared mobility company that sets up fleets of electric vehicles that can be shared by residents of a condominium development, hotel, or shared space.
General and administrative expense consists primarily of compensation, stock-based compensation expense and other personnel-related costs for executive management and administrative employees, including finance and accounting, legal, human resources and communications, the occupancy costs for our headquarters and other offices supporting our administrative functions and, after the Distribution (beginning in 2022), include transition services paid to our former parent, Vector Group, for the use of office space and employees, professional services fees for legal and finance, insurance expenses and talent acquisition expenses. • Technology .
General and administrative expense consists primarily of compensation, stock-based compensation expense and other personnel-related costs for executive management and administrative employees, including finance and accounting, legal, human resources and communications, the occupancy costs for our headquarters and other offices supporting our administrative functions and, after the Distribution (beginning in 2022), include transition service fees paid to our former parent, Vector Group, for the use of office space and employees, professional services fees for legal and finance, insurance expenses and talent acquisition expenses. • Technology .
The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We recognize operating lease expense on a straight-line basis over the lease term. Operating leases are included in operating lease ROU assets and lease liabilities on the combined consolidated balance sheets. Stock-Based Compensation.
The lease terms may include options to extend or terminate the lease when it is reasonably certain that we will exercise that option. We recognize operating lease expense on a straight-line basis over the lease term. Operating leases are included in operating lease ROU assets and lease liabilities on the consolidated balance sheets. Stock-Based Compensation.
In addition, our significant accounting estimates, including our critical accounting estimates, are discussed in the notes to our audited combined consolidated annual financial statements included elsewhere in this Form 10-K. Results of Operations. This section provides an analysis of our results of operations for the years ended December 31, 2022 and 2021.
In addition, our significant accounting estimates, including our critical accounting estimates, are discussed in the notes to our audited combined consolidated annual financial statements included elsewhere in this Form 10-K. Results of Operations. This section provides an analysis of our results of operations for the years ended December 31, 2023 and 2022.
Certain discussions of the changes in our results of operations and liquidity and capital resources from the year ended December 31, 2021 as compared to the year ended December 31, 2020 have been omitted from this Form 10-K and may be found in Item 7.
Certain discussions of the changes in our results of operations and liquidity and capital resources from the year ended December 31, 2022 as compared to the year ended December 31, 2021 have been omitted from this Form 10-K and may be found in Item 7.
This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the years ended December 31, 2022 and 2021, as well as certain contractual obligations and off-balance sheet arrangements that existed at December 31, 2022.
This section provides a discussion of our financial condition and liquidity, an analysis of our cash flows for the years ended December 31, 2023 and 2022, as well as certain contractual obligations and off-balance sheet arrangements that existed at December 31, 2023.
If we conclude that it is more likely than not that a reporting unit’s 34 Table of Contents fair value is less than its carrying value or choose to bypass the optional qualitative assessment, we will then assess recoverability by comparing the fair value of the reporting unit to our carrying amount; otherwise, no further impairment test would be required.
If we conclude that it is more likely than not that a reporting unit’s fair value is less than its carrying value or choose to bypass the optional qualitative assessment, we will then assess recoverability by comparing the fair value of the reporting unit to our carrying amount; otherwise, no further impairment test would be required.
Our market risk management procedures cover material market risks for our market risk sensitive financial instruments. 40 Table of Contents New Accounting Pronouncements Refer to Note 1, Summary of Significant Accounting Policies , to our combined consolidated financial statements for further information on New Accounting Pronouncements . Legislation, Regulation, Taxation and Litigation See Item 1. “ Business,” Item 1A.
Our market risk management procedures cover material market risks for our market risk sensitive financial instruments. New Accounting Pronouncements Refer to Note 1, Summary of Significant Accounting Policies , to our combined consolidated financial statements for further information on New Accounting Pronouncements . Legislation, Regulation, Taxation and Litigation See Item 1. “ Business,” Item 1A.
The forward-looking statements speak only as of the date they are made. 41 Table of Contents ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk” is incorporated herein by reference.
The forward-looking statements speak only as of the date they are made. ITEM 7A. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK The information under the caption “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Market Risk” is incorporated herein by reference.
As of December 31, 2022, we were not aware of any indemnification agreements that would or are reasonably expected to have a current or future material adverse impact on our financial position, results of operations or cash flows. As of December 31, 2022, we had outstanding approximately $3,107 of letters of credit, collateralized by certificates of deposit.
As of December 31, 2023, we were not aware of any indemnification agreements that would or are reasonably expected to have a current or future material adverse impact on our financial position, results of operations or cash flows. As of December 31, 2023, we had outstanding approximately $3,045 of letters of credit, collateralized by certificates of deposit.
This section provides a general description of our business, as well as other matters that we believe are important in understanding our results of operations and financial condition and in anticipating future trends. Critical Accounting Estimates.
This section provides a general description of our business, as well as other matters, including recent developments, that we believe are important in understanding our results of operations and financial condition and in anticipating future trends. Critical Accounting Estimates.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2021 filed with the Securities and Exchange Commission on March 31, 2022. Liquidity and Capital Resources.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-K for the fiscal year ended December 31, 2022 filed with the Securities and Exchange Commission on March 16, 2023. Liquidity and Capital Resources.
Factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, without limitation, the following: • general economic and market conditions and any changes therein, including due to macroeconomic conditions, interest rate fluctuations, inflation, acts of war and terrorism or otherwise, • governmental regulations and policies, including with respect to regulation of the real estate market or monetary and fiscal policy and its effect on overall economic activity, in particular, mortgage interest rates, • litigation risks, • adverse changes in global, national, regional and local economic and market conditions, including those related to pandemics and health crises, • our ability to effectively manage the impacts of any government-mandated or encouraged suspension of our business operations, • the impacts of the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act of 2017, including the continued impact on the markets of our business, • effects of industry competition, • severe weather events or natural or man-made disasters, including the increasing severity or frequency of such events due to climate change or otherwise, or other catastrophic events that may disrupt our business and have an unfavorable impact on home sale activity, • the level of our expenses, including our corporate expenses as a standalone public company, • the tax-free treatment of the Distribution, • our lack of operating history as a public company and costs associated with being a standalone public company, • the failure of Vector Group to satisfy its respective obligations under the Transition Services Agreement or other agreements entered into in connection with the Distribution; and • the additional factors described under “Risk Factors” in this report.
Factors that could cause actual results to differ materially from those suggested by the forward-looking statements include, without limitation, the following: • general economic and market conditions and any changes therein, including due to macroeconomic conditions, interest rate fluctuations, inflation, acts of war and terrorism or otherwise, • governmental regulations and policies, including with respect to regulation of the real estate market or monetary and fiscal policy and its effect on overall economic activity, in particular, mortgage interest rates, • litigation and regulatory risk, including as a result of litigation or regulatory scrutiny of NAR and MLS rules regarding commission structure, • adverse changes in global, national, regional and local economic and market conditions, including those related to pandemics and health crises, • our ability to effectively manage the impacts of any government-mandated or encouraged suspension of our business operations, • the impacts of the Inflation Reduction Act of 2022 and the Tax Cuts and Jobs Act of 2017, including the continued impact on the markets of our business, • effects of industry competition, • severe weather events or natural or man-made disasters, including the increasing severity or frequency of such events due to climate change or otherwise, or other catastrophic events that may disrupt our business and have an unfavorable impact on home sale activity, • the level of our expenses, including our corporate expenses as a standalone public company, • the tax-free treatment of the Distribution, • our relative lack of operating history as a public company, • the failure of Vector Group to satisfy its respective obligations under the Transition Services Agreement or other agreements entered into in connection with the Distribution; and • the additional factors described under “Risk Factors” in this report.
The primary components of our operating expenses, the changes in which are described in the following discussion of our results of operations, are defined below: • Sales and marketing .
The primary components of our operating expenses, the changes in which are described in the following discussion of our results of operations, are summarized below: • Sales and marketing .
“ Risk Factors, ” Item 3. “ Legal Proceedings ” and Note 14 to our combined consolidated financial statements, which contain a description of litigation. SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS In addition to historical information included in this annual report on Form 10-K, this report contains “forward-looking statements” within the meaning of the federal securities law.
“ Risk Factors, ” Item 3. “ Legal Proceedings ” and Note 13 to our combined consolidated financial statements, which contain a description of litigation. 43 Table of Contents SPECIAL NOTE REGARDING FORWARD-LOOKING STATEMENTS In addition to historical information included in this annual report on Form 10-K, this report contains “forward-looking statements” within the meaning of the federal securities law.
More than a century later, the Douglas Elliman brand is still associated with service, luxury and forward thinking — our markets are primarily international finance and technology hubs that are densely populated and offer housing inventory at premium price points.
More than a century later, the Douglas Elliman brand is still associated with service, luxury and forward thinking — our markets are primarily international finance and technology 32 Table of Contents hubs that are densely populated and offer housing inventory at premium price points.
Any forward-looking statements are subject to a number of important factors, including those factors discussed under “Risk Factors” and “Special Note on Forward-Looking Statements,” that could cause our actual results to differ materially from those indicated in such forward-looking statements.
Any forward-looking statements are subject to several important factors, including those factors discussed under “Risk Factors” and “Special Note on Forward-Looking Statements,” that could cause our actual results to differ materially from those indicated in such forward-looking statements.
The investment will complement Douglas Elliman’s business in the Hamptons and align Humming Homes’ geographical growth with Douglas Elliman’s footprint in locations such as Aspen, Florida and Southern California. 38 Table of Contents ■ MoveEasy: a client- and customer-facing digital concierge service designed to assist clients and customers moving into and “setting up” their new homes, while offering additional services to maintain their homes.
The investment will complement Douglas Elliman’s business in the Hamptons and align Humming Homes’ geographical growth with Douglas Elliman’s footprint in locations such as Aspen, Florida and Southern California. ■ LiveEasy: a client- and customer-facing digital concierge service designed to assist clients and customers moving into and “setting up” their new homes, while offering additional services to maintain their homes.
Despite various “agentless” models such as “iBuying,” approximately 86% of buyers and sellers were assisted by a real estate agent or broker when purchasing or selling their home between July 2021 and June 2022, according to the National Association of Realtors (“NAR”), highlighting the central role agents continue to play in real estate transactions.
Despite various “agentless” models such as “iBuying,” approximately 89% of buyers and sellers were assisted by a real estate agent or broker when purchasing or selling their home between July 2022 and June 2023, according to the National Association of Realtors, or NAR, highlighting the central role agents continue to play in real estate transactions.
The average transaction value of a home we sold in 2022 was approximately $1.62 million — significantly higher than our principal competitors. 30 Table of Contents We are building on our record of innovation. Douglas Elliman is focused on digitizing, integrating and simplifying real estate activities for agents and elevating their clients’ experiences.
The average transaction value of a home we sold in 2023 was approximately $1.59 million — significantly higher than our principal competitors. We are building on our record of innovation. Douglas Elliman is focused on digitizing, integrating and simplifying real estate activities for agents and elevating their clients’ experiences.
We follow ASC 350, Intangibles — Goodwill and Other, and subsequent updates including ASU 2011-08, Testing Goodwill for Impairment and ASU 2017-14, Simplifying the Test for Goodwill Impairment.
We follow ASC 350, Intangibles — Goodwill and Other, and subsequent updates including Accounting Standards Update (“ASU”) 2011-08, Testing Goodwill for Impairment and ASU 2017-14, Simplifying the Test for Goodwill Impairment.
We had cash and cash equivalents of approximately $163,859 as of December 31, 2022 and, in addition to cash provided from operations, such cash is available to be used to fund such liquidity requirements as well as other anticipated liquidity needs in the normal course of business.
We had cash and cash equivalents of approximately $119,808 as of December 31, 2023 and, in addition to cash provided from operations, such cash is available to be used to fund such liquidity requirements as well as other anticipated liquidity needs in the normal course of business.
Agents are able to generate significant repeat business from clients and referrals, with 63% of home sellers and 50% of home buyers between July 2021 and June 2022 choosing to work with an agent they had used in the past or through a referral, according to the NAR.
Agents are able to generate significant repeat business from clients and referrals, with 65% of home sellers and 56% of home buyers between July 2022 and June 2023 choosing to work with an agent they had used in the past or from a referral, according to the NAR.
We are exposed to credit losses for various amounts due from real estate agents, which are included in other current assets on the combined consolidated balance sheets, net of an allowance for credit losses.
We are exposed to credit losses for various amounts due from real estate agents, which are included in Agent receivables, net on the consolidated balance sheets, net of an allowance for credit losses.
However, we target earning an attractive rate of return from the capital appreciation of our PropTech investments. Liquidity and Capital Resources Cash and cash equivalents declined by $57,484 and increased by $122,164 in 2022 and 2021, respectively. Restricted Cash, which is included in cash and cash equivalents, was $7,523 and $17,243 as of December 31, 2022 and 2021 , respectively.
However, we target earning an attractive rate of return from the capital appreciation of our PropTech investments. Liquidity and Capital Resources Cash and cash equivalents declined by $41,865 and $57,484 in 2023 and 2022, respectively. Restricted cash, which is included in cash and cash equivalents, was $9,709 and $7,523 as of December 31, 2023 and 2022 , respectively.
In partnership with residential real estate brokerages, MoveEasy is delivered in a white-labeled format that features the name and contact information of the selling agent. ■ Fyxify: a tech-enabled platform that utilizes direct scheduling and operating technology to avoid the inefficiencies of home repairs (for example: calling around, mystery repair costs and wasting time). ■ EVPassport: an entity that offers complete electronic vehicle charging solutions including hardware and software. ■ Bilt: a leading loyalty program and co-branded credit card for renters to earn points on their rent payments.
In partnership with residential real estate brokerages, LiveEasy is delivered in a white-labeled format that features the name and contact information of the selling agent. ■ Fyxify: a tech-enabled platform that utilizes direct scheduling and operating technology to avoid the inefficiencies of home repairs (for example: calling around, mystery repair costs and wasting time). ■ EVPassport: an entity that offers complete electronic vehicle charging solutions including hardware and software.
Therefore, we are required to make many subjective assumptions and judgments regarding our income tax exposures. Interpretations of and guidance surrounding income tax laws and regulations change over time and, as a result, changes in our subjective assumptions and judgments may materially affect amounts recognized in our combined consolidated financial statements.
Interpretations of and guidance surrounding income tax laws and regulations change over time and, as a result, changes in our subjective assumptions and judgments may materially affect amounts recognized in our combined consolidated financial statements.
See Item 7, “Key Business Metrics and Non-GAAP Financial Measures.” Despite these recent changes, we believe our competitive advantages in the luxury markets distinguish us from our competitors and our comprehensive suite of real estate solutions, our industry-leading brand name, and our talented team of employees and agents set us apart in the industry.
Despite these recent changes, we believe our competitive advantages in the luxury markets distinguish us from our competitors and our comprehensive suite of real estate solutions, our industry-leading brand name, and our talented team of employees and agents set us apart in the industry.
Technology expense consists primarily of compensation and other personnel-related costs for employees in the product, engineering and technology functions, website hosting expenses, software licenses and equipment, third-party consulting costs, data licenses of PropTech and other related expenses associated with the implementation of our technology initiatives. 35 Table of Contents Year Ended December 31, 2022 Compared to Year Ended December 31, 2021 The following table sets forth our revenue and operating (loss) income by segment for the year ended December 31, 2022 compared to the year ended December 31, 2021: Year Ended December 31, 2022 2021 (Dollars in thousands) Revenues by segment: Real estate brokerage segment $ 1,153,177 $ 1,353,138 Operating (loss) income by segment: Real estate brokerage segment $ 21,993 $ 102,098 Corporate and other segment (26,534) — Total operating (loss) income $ (4,541) $ 102,098 Real estate brokerage segment Operating income $ 21,993 $ 102,098 Depreciation and amortization 8,012 8,561 Stock-based compensation 4,195 — Adjusted EBITDA 34,200 110,659 Adjusted EBITDA attributed to non-controlling interest 342 40 Adjusted EBITDA attributed to Douglas Elliman $ 34,542 $ 110,699 Corporate and other segment Operating loss $ (26,534) $ — Stock-based compensation 6,943 — Adjusted EBITDA attributed to Douglas Elliman $ (19,591) $ — Year ended December 31, 2022 Compared to Year ended December 31, 2021 Revenues .
Technology expense consists primarily of compensation and other personnel-related costs for employees in the product, engineering and technology functions, website hosting expenses, software licenses and equipment, third-party consulting costs, data licenses of PropTech and other related expenses associated with the implementation of our technology initiatives. 38 Table of Contents Year Ended December 31, 2023 Compared to Year Ended December 31, 2022 The following table sets forth our revenue and operating (loss) income by segment for the year ended December 31, 2023 compared to the year ended December 31, 2022: Year Ended December 31, 2023 2022 (Dollars in thousands) Revenues by segment: Real estate brokerage segment $ 955,578 $ 1,153,177 Operating (loss) income by segment: Real estate brokerage segment $ (36,769) $ 21,993 Corporate and other segment (27,728) (26,534) Total operating loss $ (64,497) $ (4,541) Real estate brokerage segment Operating income $ (36,769) $ 21,993 Depreciation and amortization 8,026 8,012 Restructuring 2,377 — Stock-based compensation 4,539 4,195 Adjusted EBITDA (21,827) 34,200 Adjusted EBITDA attributed to non-controlling interest 326 342 Adjusted EBITDA attributed to Douglas Elliman $ (21,501) $ 34,542 Corporate and other segment Operating loss $ (27,728) $ (26,534) Stock-based compensation 8,536 6,943 Adjusted EBITDA attributed to Douglas Elliman $ (19,192) $ (19,591) Year ended December 31, 2023 Compared to Year ended December 31, 2022 Revenues .
Real estate commissions earned by our Real Estate brokerage businesses are recognized as revenue when the real estate sale is completed or lease agreement is executed, which is the point in time that the performance obligation is satisfied.
Real estate commissions earned by our Real Estate brokerage businesses are recognized as revenue when the real estate sale is completed or lease agreement is executed, which is the point in time that the performance obligation is satisfied. Any commission and other payments received in advance are deferred until the satisfaction of the performance obligation.
Operating income was $21,993 for the year ended December 31, 2022 compared to $102,098 for the year ended December 31, 2021. The decline in operating income is primarily associated with the decline in revenues, expenses associated with non-cash stock compensation, business growth, agent support, expansion into new markets and technology. Corporate and Other. Corporate and Other loss.
Operating loss was $36,769 for the year ended December 31, 2023 compared to operating income of $21,993 for the year ended December 31, 2022. The decline in operating income is primarily associated with the decline in revenues, expenses associated with restructuring, non-cash stock compensation and expansion into new markets. Corporate and Other. Corporate and Other loss.
Our investment philosophy is to maximize return on investments using a reasonable expectation for return when investing in equity-method investments and PropTech investments as well as making capital expenditures. Cash used in financing activities was $30,003 in 2022 and cash provided by financing activities was $3,196 in 2021.
Our investment philosophy is to maximize return on investments using a reasonable expectation for return when investing in equity-method investments and PropTech investments as well as making capital expenditures. 42 Table of Contents Cash used in financing activities was $6,212 and $30,003 in 2023 and 2022, respectively.
Any commission and other payments received in advance are deferred until the satisfaction of the performance obligation. 33 Table of Contents Corresponding agent commission expenses, including any advance commission or other direct expense payments, are deferred and recognized as cost of sales concurrently with related revenues.
Corresponding agent commission expenses, including any advance commission or other direct expense payments, are deferred and recognized as cost of sales concurrently with related revenues.
We historically estimated our allowance for credit losses on receivables from agents based on an evaluation of aging, agent sales in pipeline, any security, specific exposures, and historical experience of collections from the individual agents.
We historically estimated our allowance for credit losses on receivables from agents based on an evaluation of aging, agent sales in pipeline, any security, specific exposures, and historical experience of collections from the individual agents. We estimated that the credit losses for these receivables were $5,575 and $10,916 at December 31, 2023 and December 31, 2022, respectively.
Cash used in investing activities was $12,737 and $8,858 in 2022 and 2021, respectively. In 2022 , cash used in investing activities was comprise d of capital expenditures of $8,537, purchase of investments of $3,875 in our PropTech business, and investments of $400 in equity-method investments. This was offset by $75 of distributions from equity-method investments.
In 2022, cash used in investing activities was comprised of capital expenditures of $8,537, the purchase of investments of $3,875, and investments of $400 in equity-method. This was offset by $75 of distributions from equity-method investments.
Therefore, after the Distribution, we have recorded an income tax provision at current income tax rates. Results of Operations The following discussion provides an assessment of our results of operations, capital resources and liquidity and should be read in conjunction with our combined consolidated financial statements and related notes included elsewhere in this annual report on Form 10-K.
Results of Operations The following discussion provides an assessment of our results of operations, capital resources and liquidity and should be read in conjunction with our combined consolidated financial statements and related notes included elsewhere in this Form 10-K.
This keeps Douglas Elliman and our agents on the cutting edge of the industry with innovative solutions and services that can be integrated into our technology, while also remaining asset-light. Furthermore, we maintain upside potential in the success of our PropTech partners in which we invest through minority stakes in their capital structures.
We believe these collaborative relationships are mutually beneficial because they keep Douglas Elliman both asset light and on the cutting edge by offering our agents innovative solutions and services that can be integrated into our technology. Furthermore, we maintain upside potential in the success of our PropTech partners in which we invest through minority stakes in their capital structures.
As a result of declines in commissions and other brokerage income, our real estate agent commissions expense was $836,803 for the year ended December 31, 2022 compared to $985,523 for the year ended December 31, 2021, a decline of $148,720 (15.1%).
Real Estate Agent Commissions. Because of declines in commissions and other brokerage income, our real estate agent commissions expense was $706,162 for the year ended December 31, 2023 compared to $836,803 for the year ended December 31, 2022, a decline of $130,641 (15.6%).
Douglas Elliman is well positioned to capitalize on opportunities in the U.S. residential real estate market with a leading luxury brand and a comprehensive suite of technology-enabled real estate services and investments.
Douglas Elliman boasts a prestigious luxury brand that is complemented by a comprehensive suite of technology-enabled real estate services and investments. These distinguishing qualities position us to capitalize on opportunities in the U.S. residential real estate market.
The following table sets forth our combined consolidated statements of operations data for the Real Estate Brokerage segment for the year ended December 31, 2022 compared to the year ended December 31, 2021: Year Ended December 31, 2022 2021 (Dollars in thousands) Revenues: Commissions and other brokerage income $ 1,099,885 95.4% $ 1,292,416 95.5% Property management 36,022 3.1% 37,345 2.8% Other ancillary services 17,270 1.5% 23,377 1.7% Total revenues $ 1,153,177 100% $ 1,353,138 100% Operating expenses: Real estate agent commissions $ 836,803 72.6% $ 985,523 72.8% Sales and marketing 85,763 7.4% 77,174 5.7% Operations and support 72,946 6.3% 71,641 5.3% General and administrative 104,887 9.1% 92,798 6.9% Technology 22,773 2.0% 15,343 1.1% Depreciation and amortization 8,012 0.7% 8,561 0.6% Operating income $ 21,993 1.9% $ 102,098 7.5% Revenues.
The following table sets forth our combined consolidated statements of operations data for the Real Estate Brokerage segment for the year ended December 31, 2023 compared to the year ended December 31, 2022: Year Ended December 31, 2023 2022 (Dollars in thousands) Revenues: Commissions and other brokerage income $ 906,069 94.8% $ 1,099,885 95.4% Property management 35,542 3.7% 36,022 3.1% Other ancillary services 13,967 1.5% 17,270 1.5% Total revenues $ 955,578 100% $ 1,153,177 100% Operating expenses: Real estate agent commissions $ 706,162 73.9% $ 836,803 72.6% Sales and marketing 83,670 8.8% 85,763 7.4% Operations and support 70,605 7.4% 72,946 6.3% General and administrative 97,719 10.2% 104,887 9.1% Technology 23,788 2.5% 22,773 2.0% Restructuring 2,377 0.2% — —% Depreciation and amortization 8,026 0.8% 8,012 0.7% Operating (loss) income $ (36,769) (3.8)% $ 21,993 1.9% Revenues.
Reconciliations of these non-GAAP measures have been provided in the table below. 32 Table of Contents Computation of Adjusted EBITDA attributed to Douglas Elliman Year ended December 31, 2022 2021 Net (loss) income attributed to Douglas Elliman Inc. $ (5,622) $ 98,838 Interest income, net (1,779) (83) Income tax expense 6,503 2,133 Net loss attributed to non-controlling interest (777) (186) Depreciation and amortization 8,012 8,561 Stock-based compensation (a) 11,138 — Equity in losses from equity method investments (b) 563 278 Change in fair value of contingent liability — 1,647 Other, net (3,429) (529) Adjusted EBITDA 14,609 110,659 Adjusted EBITDA attributed to non-controlling interest 342 40 Adjusted EBITDA attributed to Douglas Elliman $ 14,951 $ 110,699 Real estate brokerage segment Operating income $ 21,993 $ 102,098 Depreciation and amortization 8,012 8,561 Stock-based compensation 4,195 — Adjusted EBITDA 34,200 110,659 Adjusted EBITDA attributed to non-controlling interest 342 40 Adjusted EBITDA attributed to Douglas Elliman $ 34,542 $ 110,699 Corporate and other segment Operating loss $ (26,534) $ — Stock-based compensation 6,943 — Adjusted EBITDA attributed to Douglas Elliman $ (19,591) $ — Total adjusted EBITDA attributed to Douglas Elliman $ 14,951 $ 110,699 _____________________________ (a) Represents amortization of stock-based compensation. $4,195 is attributable to the Real estate brokerage segment and $6,943 is attributable to the Corporate and other segment.
Reconciliations of these non-GAAP measures have been provided in the table below. 34 Table of Contents Computation of Adjusted EBITDA attributed to Douglas Elliman Year ended December 31, 2023 2022 Net loss attributed to Douglas Elliman Inc. $ (42,552) $ (5,622) Interest income, net (5,813) (1,779) Income tax (benefit) expense (15,053) 6,503 Net loss attributed to non-controlling interest (614) (777) Depreciation and amortization 8,026 8,012 Stock-based compensation (a) 13,075 11,138 Equity in losses from equity method investments (b) 168 563 Restructuring 2,377 — Other, net (633) (3,429) Adjusted EBITDA (41,019) 14,609 Adjusted EBITDA attributed to non-controlling interest 326 342 Adjusted EBITDA attributed to Douglas Elliman $ (40,693) $ 14,951 Real estate brokerage segment Operating (loss) income $ (36,769) $ 21,993 Depreciation and amortization 8,026 8,012 Stock-based compensation 4,539 4,195 Restructuring 2,377 — Adjusted EBITDA (21,827) 34,200 Adjusted EBITDA attributed to non-controlling interest 326 342 Adjusted EBITDA attributed to Douglas Elliman $ (21,501) $ 34,542 Corporate and other segment Operating loss $ (27,728) $ (26,534) Stock-based compensation 8,536 6,943 Adjusted EBITDA attributed to Douglas Elliman $ (19,192) $ (19,591) Total adjusted EBITDA attributed to Douglas Elliman $ (40,693) $ 14,951 _____________________________ (a) Represents amortization of stock-based compensation. $4,539 is attributable to the Real estate brokerage segment and $8,536 is attributable to the Corporate and other segment.
Gross transaction value by quarter for the year ended December 31, 2022 was $11.7 billion for the three months ended March 31, 2022, $13.6 billion for the three months ended June 30, 2022, $10.2 billion for the three months ended September 30, 2022 (previously reported $11.0 billion) and $7.5 billion for the three months ended December 31, 2022.
Gross Transaction Value by quarter for the year ended December 31, 2023 was $7.3 billion for the three months ended March 31, 2023, $9.9 billion for the three months ended June 30, 2023, $9.3 billion for the three months ended September 30, 2023 and $7.9 billion for the three months ended December 31, 2023.
To evaluate our operating performance, we also use Adjusted EBITDA attributed to Douglas Elliman and Adjusted EBITDA attributed to Douglas Elliman Margin and financial measures for the year ended December 31, 2022 (“Non-GAAP Financial Measures”), which are financial measures not prepared in accordance with GAAP. 31 Table of Contents Year ended December 31, 2022 2021 Key Business Metrics Total transactions (1) 26,573 32,400 Gross transaction value (in billions) (2) $ 42.9 $ 51.2 Average transaction value per transaction (in thousands) (3) $ 1,616.3 $ 1,580.0 Number of Principal Agents (4) 5,407 5,189 Annual Retention (5) 87 % 94 % Net (loss) income attributed to Douglas Elliman Inc. $ (5,622) $ 98,838 Net (loss) income margin (0.49) % 7.30 % Non-GAAP Financial Measures Adjusted EBITDA attributed to Douglas Elliman Inc. $ 14,951 $ 110,699 Adjusted EBITDA margin attributed to Douglas Elliman Inc. 1.30 % 8.18 % _____________________________ (1) We calculate total transactions by taking the sum of all transactions closed in which our agent represented the buyer or seller in the purchase or sale of a home (excluding rental transactions).
To evaluate our operating performance, we also use Adjusted EBITDA attributed to Douglas Elliman and Adjusted EBITDA attributed to Douglas Elliman Margin and financial measures for the year ended December 31, 2023 (“Non-GAAP Financial Measures”), which are financial measures not prepared in accordance with GAAP. 33 Table of Contents Year ended December 31, 2023 2022 Key Business Metrics Total transactions (1) 21,606 26,573 Gross Transaction Value (in billions) (2) $ 34.4 $ 42.9 Average transaction value per transaction (in thousands) (3) $ 1,592.3 $ 1,616.3 Number of Principal Agents (4) 5,150 5,407 Annual Retention (5) 92 % 87 % Certain GAAP Financial Information Net loss attributed to Douglas Elliman Inc. $ (42,552) $ (5,622) Net loss margin (4.45) % (0.49) % Non-GAAP Financial Measures Adjusted EBITDA attributed to Douglas Elliman Inc. $ (40,693) $ 14,951 Adjusted EBITDA margin attributed to Douglas Elliman Inc.
After the Distribution, we are incurring expenses necessary to operate a standalone public company, including pursuant to a Transition Services Agreement entered into with Vector Group in connection with the Distribution. Key Business Metrics and Non-GAAP Financial Measures In addition to our financial results, we use the following business metrics to evaluate our business and identify trends affecting our business.
After the Distribution, we are incurring expenses necessary to operate a standalone public company, including pursuant to a Transition Services Agreement entered into with Vector Group in connection with the Distribution.
Under development marketing service arrangements, dedicated staff are required for a subject property and these costs are typically reimbursed from the customer through advance payments that are recoupable from future commission earnings.
Under development marketing service arrangements, dedicated staff are required for a subject property and these costs are typically reimbursed from the customer through advance payments that are recoupable from future commission earnings. 36 Table of Contents Advance payments received and associated direct costs paid are deferred, allocated to each unit in the subject property, and recognized at the time of the completed sale of each unit.
In addition, our revenues from DEDM declined by $10,542 in 2022 compared to 2021. Operating Expenses. Our operating expenses were $1,131,184 for the year ended December 31, 2022 compared to $1,251,040 for the year ended December 31, 2021, a decline of $119,856, due primarily to declines in real estate brokerage 37 Table of Contents commissions.
In addition, our revenues from DEDM declined by $15,210 in 2023 compared to 2022. Operating Expenses. Our operating expenses were $992,347 for the year ended December 31, 2023 compared to $1,131,184 for the year ended December 31, 2022, a decline of $138,837, due primarily to declines in real estate brokerage commissions. The primary components of operating expenses are described below.
In addition to entering into business relationships with PropTech companies, as described further below, we are committed to creating over time a portfolio of PropTech companies that, through our business and investment relationship, have access to our agents and their clients, as well as our knowledge and experience, to grow their own businesses, while benefiting our operations.
In addition to entering into business relationships with these PropTech companies, we are committed to creating over time a dynamic portfolio of PropTech companies by leveraging relationships to provide them access to our agents and their clients, as well as our knowledge and experience.
Total transactions by quarter for the year ended December 31, 2022 were 7,212 for the three months ended March 31, 2022, 7,789 for the three months ended June 30, 2022, 6,796 for the three months ended September 30, 2022 (previously reported 7,212) and 4,776 for the three months ended December 31, 2022.
Total transactions by quarter for the year ended December 31, 2023 were 4,627 for the three months ended March 31, 2023, 6,044 for the three months ended June 30, 2023, 5,913 for the three months ended September 30, 2023 and 5,022 for the three months ended December 31, 2023.
This was offset by equity losses from equity method investments of $563. 36 Table of Contents Income before provision for income taxes . Income before income taxes was $104 and $100,785 for the years ended December 31, 2022 and 2021, respectively. Income tax expense .
This was partially offset by equity losses from equity method investments of $168. (Loss) Income before provision for income taxes . Loss before income taxes was $58,219 for the year ended December 31, 2023 and income before income taxes was $104 for the year ended December 31, 2022. Income tax (benefit) expense .
Real estate agent commissions expense, as a percentage of revenues, decreased to 72.6% for the year ended December 31, 2022 compared to 72.8% for the year ended December 31, 2021. Sales and Marketing. Sales and marketing expenses were $85,763 for the year ended December 31, 2022 compared to $77,174 for the year ended December 31, 2021.
Real estate agent commissions expense, as a percentage of revenues, increased to 73.9% for the year ended December 31, 2023 compared to 72.6% for the year ended December 31, 2022.
The increase was primarily due to additional promotional sponsorships and events in the 2022 period because of the reopening of the economy. Operations and support. Operations and support expenses were $72,946 for the year ended December 31, 2022 compared to $71,641 for the year ended December 31, 2021.
The decline was primarily due to reduced advertising expenditures and promotional sponsorships and events in 2023. 40 Table of Contents Operations and support. Operations and support expenses were $70,605 for the year ended December 31, 2023 compared to $72,946 for the year ended December 31, 2022.
(b) Represents equity in losses recognized from the Company’s investment in an equity method investment that is accounted for under the equity method and is not consolidated in the Company’s financial results. Critical Accounting Estimates General.
(b) Represents equity in losses recognized from the Company’s investments in equity method investments that are accounted for under the equity method and are not consolidated in the Company’s financial results. 35 Table of Contents Recent Developments Litigation.
In 2022, our commission and other brokerage income generated from the sales of existing homes declined by $91,738 in our Florida market, $41,263 in the Northeast region, which excludes New York City, $32,594 in New York City and $16,394 in the West region (which includes $29,499 related to our Texas market, which we began consolidating in August 2021), in each case compared to the 2021 period.
In 2023, our commission and other brokerage income generated from the sales of existing homes declined by $87,831 in New York City, $37,237 in our Florida market, $30,710 in the Northeast region, which excludes New York City, and $22,828 in the West region, in each case compared to the 2022 period.
As of December 31, 2022 our PropTech investments include: ■ Rechat: a lead-to-close fully-mobile technology dashboard for real estate agents including marketing, customer relationship management and transaction-management software. Douglas Elliman has a multi-year services agreement with Rechat for its agents, who are increasingly requesting and requiring superior access to technology and back-office support services.
Douglas Elliman has a multi-year services agreement with Rechat for its agents, who are increasingly requesting and requiring superior access to technology and back-office support services.
Repeat business, as well the ability to provide ancillary services, allows agents to extend their client relationships and generate significant lifetime value. Industry trends in 2022. After a strong 2021, when existing home sales reported by the NAR reached their highest level since 2006, the residential real estate brokerage industry encountered significant challenges in 2022.
After a strong 2021, when existing home sales reported by the NAR reached their highest level since 2006, the residential real estate brokerage industry began experiencing significant challenges in 2022, which have continued to date.
In the fourth quarter of 2022, our Gross Transaction Value and transactions of homes sold declined by approximately 40% and 43%, respectively, compared to the 2021 fourth quarter.
By comparison, our transactions of homes sold declined by 19% to 21,606 in 2023 from 26,573 in 2022. However, the rate of decline gradually subsided during 2023 and, in the fourth quarter of 2023, our Gross Transaction Value and transactions of homes sold increased by approximately 5% and 5%, respectively, compared to the 2022 fourth quarter.
“Management’s Discussion and Analysis of Financial Condition and Results of Operations Business - Overview - Industry Trends in 2022.” Our revenues from commission and other brokerage income were $1,099,885 for the year ended December 31, 2022 compared to $1,292,416 for the year ended December 31, 2021, a decline of $192,531.
Our revenues from commission and other brokerage income were $906,069 for the year ended December 31, 2023 compared to $1,099,885 for the year ended December 31, 2022, a decline of $193,816.
The decline of $199,961 (14.8%) was primarily related to a decline of $192,531 in our commission and other brokerage income because of lower revenues from existing home sales caused, in part, by lower listing inventory and the volatility in the financial markets as well as increases in mortgage rates.
Since June 2022, our operating results have been negatively impacted by a reduction of revenues from existing home sales caused, in part, by lower listing inventory and the volatility in the financial markets as well as increases in mortgage rates.
Advance payments received and associated direct costs paid are deferred, allocated to each unit in the subject property, and recognized at the time of the completed sale of each unit. Development marketing service arrangements also include direct fulfillment costs incurred in advance of the satisfaction of the performance obligation.
Development marketing service arrangements also include direct fulfillment costs incurred in advance of the satisfaction of the performance obligation.
These factors were partially offset by increased revenues from the Texas market, which we began consolidating in August 2021. Operating expenses . Our operating expenses were $1,157,718 for the year ended December 31, 2022 compared to $1,251,040 for the year ended December 31, 2021. The decline of $93,322 was due primarily to declines in real estate brokerage commissions of $148,720.
Our operating expenses were $1,020,075 for the year ended December 31, 2023 compared to $1,157,718 for the year ended December 31, 2022. The $137,643 decline was due primarily to declines in real estate brokerage commissions of $130,641. Operating loss .
For the year ended December 31, 2022, other income primarily consisted of investment and other income, primarily associated with our PropTech investments of $2,839, income from the indemnification by Vector Group under the Tax Disaffiliation Agreement of $589, and interest income, net of $1,779.
Other income was $6,278 for the year ended December 31, 2023 compared to other income of $4,645 for the year ended December 31, 2022. For the year ended December 31, 2023, other income primarily consisted of interest income, net of $5,813 and investment and other income, primarily associated with our PropTech investments of $633.
These challenges began during the second quarter of 2022 and included, among other things, a reduced inventory of homes available for sale as well as higher mortgage rates. According to the NAR, sales of existing homes declined by 34.0% in December 2022 from December 2021 and total homes sold in 2022 was the lowest since 2014.
These challenges have been marked by a reduced inventory of homes available for sale, which we believe has been caused by elevated mortgage rates since early 2022. According to the NAR, sales of existing homes of 4.09 million in 2023, which was the lowest amount since 1995, declined from 5.03 million in 2022 and 6.12 million in 2021.
Operating loss was $4,541 for the year ended December 31, 2022 compared to operating income of $102,098 for the year ended December 31, 2021.
Operating loss was $64,497 for the year ended December 31, 2023 compared to a loss of $4,541 for the year ended December 31, 2022. The $59,956 increase in operating loss was primarily due to the net impact of declines in commission and other brokerage revenues. Other income (expenses) .
We anticipate that the results for the first quarter of 2023 will reflect these same trends of significant year over year declines and the NAR and other real estate industry consortiums are forecasting continued challenges for the U.S. residential real estate market in 2023.
Based on cash receipts in January and February 2024, we expect these modest increases to continue in the first quarter of 2024 and the NAR and other real estate industry consortiums are forecasting similar increases in the U.S. residential real estate market in 2024.
We performed a qualitative assessment for the year ended December 31, 2022, which did not result in additional impairment charges related to our goodwill or trademark. Income Taxes. The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous.
The application of income tax law is inherently complex. Laws and regulations in this area are voluminous and are often ambiguous. Therefore, we are required to make many subjective assumptions and judgments regarding our income tax exposures.
Summary of PropTech Investments As of December 31, 2022, New Valley Ventures had investments (at a carrying value) of approximately $14.8 million in PropTech companies. This amounts to approximately 3% of the value of Douglas Elliman’s total assets, which totaled approximately $550 million, as of December 31, 2022.
The operating loss at the Corporate and Other segment was $27,728 for the year ended December 31, 2023 compared to $26,534 for the year ended December 31, 2022. Summary of PropTech Investments As of December 31, 2023, New Valley Ventures had investments in PropTech companies and funds (at a carrying value) of approximately $13.4 million.
Cash used in operations was $14,744 in 2022 and cash provided from operations was $127,826 in 2021. The decline in the 2022 period was related to lower operating income as a result of the decline in revenues and inclusion of expenses associated with Douglas Elliman operating as a standalone public company and increased expenses in our brokerage segment.
Cash used in operations was $30,415 and $14,744 in 2023 and 2022, respectively. The increase of cash used in operations in 2023 was related to lower operating income which was primarily the result of the decline in revenues.
Income tax expense was $6,503 and $2,133 for the years ended December 31, 2022 and 2021, respectively. The difference is primarily related to income tax expense before and after the Distribution offset by lower income before provision for income taxes for the year ended December 31, 2022.
Income tax benefit was $15,053 for the year ended December 31, 2023 and income tax expense was $6,503 for the year ended December 31, 2022.
The $199,961 (14.8%) decline in revenues was primarily due to a $199,961 decline in the Real Estate Brokerage segment’s revenues because of lower revenues from existing home sales caused, in part, by lower listing inventory and the volatility in the financial markets as well as increases in mortgage rates.
Our revenues were $955,578 for the year ended December 31, 2023 compared to $1,153,177 for the year ended December 31, 2022. The $197,599 decline was primarily related to a decline of $193,816 in our commission and other brokerage income because of lower revenues from existing home sales caused, in part, by lower listing inventory and elevated mortgage rates.
General and administrative expenses were $104,887 for the year ended December 31, 2022 compared to $92,798 for the year ended December 31, 2021. The increase in expenses was primarily because of non-cash stock compensation, the expansion into the Texas region and incremental expenses to support business growth and wage inflation. Technology.
The decline is primarily related to reductions in personnel as well as lower incentive compensation expense in 2023. General and administrative. General and administrative expenses were $97,719 for the year ended December 31, 2023 compared to $104,887 for the year ended December 31, 2022.
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By comparison, our Gross Transaction Value declined by 16.2% in 2022 compared to 2021, from $51,200,000 in 2021 to $42,900,000 in 2022, reflecting the relative strength of the luxury markets in which we operate. In addition, our transactions of homes sold declined by 18% to 26,573 in 2022 from 32,400 in 2021.
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Repeat business, as well the ability to provide ancillary services, allows agents to extend their client relationships and generate significant lifetime value. Industry trends in 2023.
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We have maintained stable agent retention and our Principal Agents increased to 5,407 as of December 31, 2022 from 5,189 as of December 31, 2021.
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We believe the increases in the fourth quarter of 2023 reflected the gradual stabilization of home purchasing activity during 2023. This trend resulted in our first year-over-year increases in quarterly revenue, Gross Transaction Value and transactions since the first quarter of 2022.
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Based on our historical credit losses on receivables from agents, current and expected future market trends, it was determined that the requirements of Accounting Standards Update (“ASU”) No. 2016-13 did not result in a material impact on our allowance for credit losses as of January 1, 2020 of $6,132, we estimated that the credit losses for these receivables were $10,916 and $8,607 at December 31, 2022 and 2021, respectively.
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Douglas Elliman was recently named the most trusted real estate brokerage firm in the United States as part of the America's Most Trusted Series by Lifestory Research.
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As discussed in Note 9 to our combined consolidated financial statements, during the first quarter of 2020, we performed quantitative assessments of our goodwill and our trademark intangible asset in conjunction with our quarterly review for indicators of impairment. The quantitative assessments resulted in impairment charges to goodwill of $46,252 and to the trademark intangible asset of $12,000.
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Key Business Metrics and Non-GAAP Financial Measures In addition to our financial results, prepared in accordance with GAAP, we use the following business metrics to evaluate our business and identify trends affecting our business.
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Our revenues were $1,153,177 for the year ended December 31, 2022 compared to $1,353,138 for the year ended December 31, 2021.
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(4.26) % 1.30 % _____________________________ (1) We calculate total transactions by taking the sum of all transactions closed in which our agent represented the buyer or seller in the purchase or sale of a home (excluding rental transactions).

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