Douglas Elliman Inc.

Previous wording

The following discussion should be read in conjunction with our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and Audited Consolidated Financial Statements as of and for the year ended December 31, 2025 and Notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), and our Condensed Consolidated Financial Statements and related Notes as of and for the three and six months ended June 30, 2026. Any forward-looking statements are not historical facts, but rather they are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Any forward-looking statements are subject to several important factors, including those factors discussed under “Risk Factors” in our 2025 Annual Report and this Quarterly Report and “Special Note Regarding Forward-Looking Statements,” that could cause our actual results to differ materially from those indicated in such forward-looking statements. References to “Douglas Elliman” or “Company” refer to Douglas Elliman Inc. Certain references to “Douglas Elliman Realty” refer to the Company’s residential real estate brokerage business, including the operations of Douglas Elliman Realty, LLC and Douglas Elliman of California Inc., unless otherwise specified.

Current wording

The following discussion should be read in conjunction with our Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”) and Audited Consolidated Financial Statements as of and for the year ended December 31, 2025 and Notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2025 (the “2025 Annual Report”), and our Condensed Consolidated Financial Statements and related Notes as of and for the three and nine months ended September 30, 2026. Any forward-looking statements are not historical facts, but rather they are based on current expectations, estimates, assumptions and projections about our industry, business and future financial results. Any forward-looking statements are subject to several important factors, including those factors discussed under “Risk Factors” in our 2025 Annual Report and this Quarterly Report and “Special Note Regarding Forward-Looking Statements,” that could cause our actual results to differ materially from those indicated in such forward-looking statements. References to “Douglas Elliman” or “Company” refer to Douglas Elliman Inc. Certain references to “Douglas Elliman Realty” refer to the Company’s residential real estate brokerage business, including the operations of Douglas Elliman Realty, LLC and Douglas Elliman of California Inc., unless otherwise specified.

Previous wording

In addition to our financial results, prepared in accordance with U.S. GAAP, we use the following business metrics to evaluate our business and identify trends affecting our business. To evaluate our operating performance, we also use Adjusted EBITDA attributed to Douglas Elliman Inc., Adjusted EBITDA margin attributed to Douglas Elliman Inc. and financial measures for the last twelve months ended June 30, 2026 (“Non-GAAP Financial Measures”), which are financial measures not prepared in accordance with U.S. GAAP.

Current wording

In addition to our financial results, prepared in accordance with U.S. GAAP, we use the following business metrics to evaluate our business and identify trends affecting our business. To evaluate our operating performance, we also use Adjusted EBITDA attributed to Douglas Elliman Inc. and financial measures for the last twelve months ended September 30, 2026 (“Non-GAAP Financial Measures”), which are financial measures not prepared in accordance with U.S. GAAP.

Previous wording

Adjusted EBITDA attributed to Douglas Elliman Inc. is a non-GAAP financial measure that represents net income (loss) attributed to Douglas Elliman Inc. adjusted for income tax expense, depreciation and amortization expense, stock-based compensation expense, gain on disposal of the Douglas Elliman Property Management (“DEPM”) business (including the operations of DEPM and related corporate overhead prior to its disposal), impairment of fixed assets, litigation, settlement and related expenses, net, executive severance and separation expenses, restructuring and other items (interest expense, interest income, equity in earnings (losses) from equity-method investments, change in fair value of the derivative embedded within convertible debt, loss on extinguishment of liability and investment and other (losses) gains). Adjusted EBITDA margin attributed to Douglas Elliman Inc. is the quotient of (x) Adjusted EBITDA attributed to Douglas Elliman Inc. divided by (y) revenue. Last twelve months financial measures are non-GAAP financial measures that are calculated by reference to the trailing four-quarter performance for the relevant metric.

Current wording

Adjusted EBITDA attributed to Douglas Elliman Inc. is a non-GAAP financial measure that represents net income (loss) attributed to Douglas Elliman Inc. adjusted for income tax (benefit) expense, depreciation and amortization expense, stock-based compensation expense, gain on disposal of the Douglas Elliman Property Management (“DEPM”) business (including the operations of DEPM and related corporate overhead prior to its disposal), impairment of fixed assets, litigation, settlement and related (benefit) expenses, net, executive severance and separation (benefit) expenses, net, restructuring and other items (interest expense, interest income, equity in earnings (losses) from equity-method investments, change in fair value of the derivative embedded within convertible debt, loss on extinguishment of liability and investment and other (losses) gains). Last twelve months financial measures are non-GAAP financial measures that are calculated by reference to the trailing four-quarter performance for the relevant metric.

Previous wording

We believe that Non-GAAP Financial Measures are important measures that supplement analysis of our results of operations and enhance an understanding of our operating performance. We believe Non-GAAP Financial Measures provide a useful measure of operating results unaffected by non-recurring items, differences in capital structures and ages of related assets among otherwise comparable companies. Management uses Non-GAAP Financial Measures as measures to review and assess the operating performance of our business, and management and investors should review both the overall performance (GAAP net income (loss)) and the operating performance (Non-GAAP Financial Measures) of our business. While management considers Non-GAAP Financial Measures to be important, they should be considered in addition to, but not as substitutes for or superior to, other measures of financial performance prepared in accordance with U.S. GAAP, such as operating income (loss), and net income (loss). In addition, Non-GAAP Financial Measures are susceptible to varying calculations and our measurement of Non-GAAP Financial Measures may not be comparable to those of other companies.

Current wording

We believe that the Non-GAAP Financial Measures are important measures that supplement analysis of our results of operations and enhance an understanding of our operating performance. We believe Non-GAAP Financial Measures provide a useful measure of operating results unaffected by non-recurring items, differences in capital structures and ages of related assets among otherwise comparable companies. Management uses the Non-GAAP Financial Measures as measures to review and assess the operating performance of our business, and management and investors should review both the overall performance (GAAP net income (loss)) and the operating performance (the Non-GAAP Financial Measures) of our business. While management considers the Non-GAAP Financial Measures to be important, they should be considered in addition to, but not as substitutes for or superior to, other measures of financial performance prepared in accordance with U.S. GAAP, such as operating income (loss), and net income (loss). In addition, the Non-GAAP Financial Measures are susceptible to varying calculations and our measurement of the Non-GAAP Financial Measures may not be comparable to those of other companies.

Previous wording

(a)Includes results from operations of Residential Management Group, LLC, which conducts business as DEPM, which was disposed on October 24, 2025. This adjustment also includes the corporate allocation to Douglas Elliman Realty, LLC (“DER”) from DEPM. The expenses associated with the corporate allocation to DEPM have continued at DER after the disposal.

Current wording

(a)Includes results from operations of Residential Management Group, LLC, which conducts business as DEPM, which was disposed on October 24, 2025. This adjustment also includes the corporate allocation to Douglas Elliman Realty, LLC (“DER”) from DEPM. The expenses associated with the corporate allocation to DEPM have continued at DER after the disposal. For all periods presented, our presentation and calculation of Adjusted EBITDA attributed to Douglas Elliman Inc. reflects the disposal of DEPM; $2,949 was previously reported as Adjusted EBITDA attributed to Douglas Elliman Inc. for the nine months ended September 30, 2025.

Previous wording

(b)Represents amortization of stock-based compensation. For the last twelve months ended June 30, 2026,$6,594 of stock-based compensation is included within General and administrative expenses and$646 is included within Operations and support expenses on the condensed consolidated statements of operations. For thesix months ended June 30, 2026,$2,682 of stock-based compensation is included within General and administrative expenses and$140 is included within Operations and support expenses on the condensed consolidated statements of operations. For thesix months ended June 30, 2025,$3,626 of stock-based compensation is included within General and administrative expenses and$533 is included within Operations and support expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025,$7,538 of stock-based compensation is included within General and administrative expenses and$1,039 is included within Operations and support expenses on the consolidated statements of operations.

Current wording

(b)Represents amortization of stock-based compensation. For the last twelve months ended September 30, 2026,$6,444 of stock-based compensation is included within General and administrative expenses and$447 is included within Operations and support expenses on the condensed consolidated statements of operations. For thenine months ended September 30, 2026,$4,423 of stock-based compensation is included within General and administrative expenses and$212 is included within Operations and support expenses on the condensed consolidated statements of operations. For thenine months ended September 30, 2025,$5,517 of stock-based compensation is included within General and administrative expenses and$804 is included within Operations and support expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025,$7,538 of stock-based compensation is included within General and administrative expenses and$1,039 is included within Operations and support expenses on the consolidated statements of operations.

Previous wording

(d)Represents unusual litigation, settlement and related expenses, net, incurred in connection with industry-wide antitrust class action lawsuits and other matters related to employees and agents. For the last twelve months ended June 30, 2026, we incurred such expenses of$7,588, net of amounts recovered from insurance, of which$2,041 is included in Antitrust litigation settlement expense and $5,547 is included within General and administrative expenses on the condensed consolidated statements of operations. For thesix months ended June 30, 2026, we incurred such expenses of$2,909, net of amounts recovered from insurance, of which$2,041 is included in Antitrust litigation settlement expense and $868 is included within General and administrative expenses on the condensed consolidated statements of operations. For thesix months ended June 30, 2025, we incurred such expenses of$2,958, which were included within General and administrative expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025, we incurred such expenses of $7,637, which were included within General and administrative expenses on the consolidated statements of operations.

Current wording

(d)Represents unusual litigation, settlement and related (benefit) expenses, net, incurred in connection with industry-wide antitrust class action lawsuits; stockholder derivative litigation; and other matters related to employees and agents and not classified elsewhere in our condensed consolidated statements of operations. For the last twelve months ended September 30, 2026, we incurred a benefit, net of expenses, of$(13,603) of which a benefit of $(15,644) was included within General and administrative expenses and $2,041 was included as Antitrust litigation settlement expense on the condensed consolidated statements of operations. For thenine months ended September 30, 2026, we incurred a benefit, net of expenses, of$(12,527), net of amounts recovered from insurance, of which a benefit of $(14,568) was included within General and administrative expenses and $2,041 was included as Antitrust litigation settlement expense on the condensed consolidated statements of operations. For thenine months ended September 30, 2025, we incurred such expenses of$8,713, net of amounts recovered from insurance, which were included within General and administrative expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025, we incurred such expenses of $7,637, which were included within General and administrative expenses on the consolidated statements of operations.

Previous wording

(e) For the last twelve months ended June 30, 2026, expense of$194 is included within General and administrative expenses on the condensed consolidated statement of operations. For thesix months ended June 30, 2025, benefit of $493, net of amounts recovered from insurance, is included within General and administrative expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025, the benefit of $299 includes insurance proceeds received and is included within General and administrative expenses on the consolidated statement of operations.

Current wording

(e) For the last twelve months ended September 30, 2026, expense of$194 is included within General and administrative expenses on the condensed consolidated statement of operations. For thenine months ended September 30, 2025, benefit of $493, net of amounts recovered from insurance, is included within General and administrative expenses on the condensed consolidated statements of operations. For the year ended December 31, 2025, the benefit of $299 includes insurance proceeds received and is included within General and administrative expenses on the consolidated statement of operations.

Previous wording

The presentation of our business’s financial information for the three and six months ended June 30, 2026 and 2025 is reported as one segment. For more information, see Note 11, “Segment Information” to our condensed consolidated financial statements.

Current wording

The presentation of our business’s financial information for the three and nine months ended September 30, 2026 and 2025 is reported as one segment. For more information, see Note 11, “Segment Information” to our condensed consolidated financial statements.

Previous wording

The following table sets forth our revenues and operating loss for the three months ended June 30, 2026 compared to the three months ended June 30, 2025:

Current wording

The following table sets forth our revenues and operating income (loss) for the three months ended September 30, 2026 compared to the three months ended September 30, 2025:

Previous wording

The increase in revenues, excluding revenues from the property management business, was primarily due to an increase in commissions and other brokerage income of $22,187, which was driven by an increase in revenues from existing home sales in Florida of $28,223, and $3,405 in the Northeast region, which excludes New York City. Additionally, revenues from Development Marketing increased by $4,179 and the increase was from our Florida and Texas markets. These increases were partially offset by declines from the sales of existing homes in the West region of $7,172, which were associated with Colorado and California, and New York City of $6,523 for the 2026 period compared to the 2025 period.

Current wording

The decline in revenues for the 2026 period compared to the 2025 period, excluding revenues from the property management business, was primarily due to a decline in revenues from Development Marketing of $15,088. Additionally, revenues from sales of existing homes in the West region declined by $6,725, which were primarily associated with California and Colorado, and revenues from sales of existing homes in New York City declined by $3,861. These decreases were partially offset by increases in revenues from existing home sales in Florida of $24,162 for the 2026 period compared to the 2025 period.

Previous wording

Real Estate Agent Commissions. As a result of an increase in our commissions and other brokerage income, our real estate agent commissions expense was $224,259 for the three months ended June 30, 2026 compared to $204,594 for the three months ended June 30, 2025, representing an increase of $19,665. Real estate agent commissions expense, as a percentage of revenues, increased to 79.1% for the three months ended June 30, 2026 compared to 75.4% (78.4% excluding property management revenues) for the three months ended June 30, 2025. The increase in real estate agent commissions expense as a percentage of revenues in the 2026 period was primarily driven by a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which customarily pay higher commission rates.

Current wording

Real Estate Agent Commissions. Our real estate agent commissions expense was $200,047 for the three months ended September 30, 2026 compared to $192,771 for the three months ended September 30, 2025, representing an increase of $7,276. Real estate agent commissions expense, as a percentage of revenues, increased to 79.4% for the three months ended September 30, 2026 compared to 73.3% (76.1% excluding property management revenues) for the three months ended September 30, 2025. The increase in real estate agent commissions expense as a percentage of revenues in the 2026 period was primarily driven by a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which customarily pay higher commission rates and a decline in revenues from our Development Marketing business, which customarily pays lower commission rates. For the three months ended September 30, 2026, revenues from existing home sales in Florida increased to 28.8% of our revenues compared to 19.1% (adjusting for property management) for the three months ended September 30, 2025. Further, revenues from Development Marketing declined to 3.6% of our revenues compared to 9.5% (adjusting for property management), respectively.

Previous wording

Our gross profit, as a percentage of revenues, declined due to the absence of property management revenues as well as a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which customarily pay higher commission rates.

Current wording

Our gross profit, as a percentage of revenues, for the three months ended September 30, 2026 declined due to the absence of property management revenues as well as the sales mix trends discussed above in Real Estate Agent Commissions.

Previous wording

The decline in operating loss was primarily due to the increase in gross profit, after excluding our property management business as well as lower operating expenses in the 2026 period and was partially offset by the absence of operating income from our property management business in the 2026 period.

Current wording

The positive change in operating income was primarily due to the declines in “general and administrative” expenses discussed above, partially offset by lower gross profit in the 2026 period and the absence of operating income from our property management business in the 2026 period.

Previous wording

Other income (expenses). Other income was $691 for the three months ended June 30, 2026 compared to other expense of $17,093 for the three months ended June 30, 2025. For the three months ended June 30, 2026, other income consisted primarily of interest income of $719. For the three months ended June 30, 2025, other expense primarily consisted of a $16,969 loss from the change in fair value of the derivative embedded within convertible debt and interest expense of $1,545, partially offset by interest income of $1,259.

Current wording

Other income (expenses). Other income was $434 for the three months ended September 30, 2026 compared to other expense of $14,276 for the three months ended September 30, 2025. For the three months ended September 30, 2026, other income consisted primarily of interest income of $953 and investments loss of $524, primarily due to an impairment of a PropTech investment of $500. For the three months ended September 30, 2025, other expense primarily consisted of a $15,445 loss from the change in fair value of the derivative embedded within convertible debt and interest expense of $1,573, partially offset by interest income of $1,366 and the $1,225 gain from the monetization of our remaining interest of a PropTech investment in July 2025.

Previous wording

Loss before provision for income taxes. Loss before income taxes was $19,010 and $28,909 for the six months ended June 30, 2026 and 2025, respectively.

Current wording

Income (loss) before provision for income taxes. Income before income taxes was $6,756 for the three months ended September 30, 2026. Loss before income taxes was $24,931 for the three months ended September 30, 2025.

Previous wording

Income tax expense. There was no income tax expense for the three months ended June 30, 2026 and 2025. Wecalculate our provision for income taxes for interim reporting periods based upon our estimate of the annual effective income tax rate based on full year projections, which does not include the impact of discrete items. We then apply the annual effective income tax rate against year-to-date pretax income to record income tax expense and then adjust our provision for income tax expense for any discrete items, if any. We did not record a provision for income taxes during the three months ended June 30, 2026 and 2025, respectively, because we had established a valuation allowance for the full amount of our deferred tax assets.

Current wording

Income tax (benefit) expense. There was income tax benefit of $678 for the three months ended September 30, 2026. Income tax expense was $11 for the three months ended September 30, 2025. Wecalculate our provision for income taxes for interim reporting periods based upon our estimate of the annual effective income tax rate based on full year projections, which does not include the impact of discrete items. We then apply the annual effective income tax rate against year-to-date pretax income to record income tax (benefit) expense and then adjust our provision for income tax expense for any discrete items. The income tax benefit for the three months ended September 30, 2026 related to discrete items associated with the true-up of income tax expense associated with the filing of our income tax returns in September 2026. We did not record a provision for income taxes during the three months ended September 30, 2025 because we had established a valuation allowance for the full amount of our deferred tax assets and there were no discrete items.

Previous wording

The following table sets forth our revenues and operating loss for the six months ended June 30, 2026 compared to the six months ended June 30, 2025:

Current wording

The following table sets forth our revenues and operating loss for the nine months ended September 30, 2026 compared to the nine months ended September 30, 2025:

Previous wording

Revenues. Our revenues for the six months ended June 30, 2026 and 2025, respectively, were as follows:

Current wording

Revenues. Our revenues for the nine months ended September 30, 2026 and 2025, respectively, were as follows:

Previous wording

The decline in revenues, excluding revenues from our property management business, was primarily due to lower revenues from commissions and other brokerage income. For the six months ended June 30, 2026, our commissions and other brokerage income from existing homes sales decreased by $21,248 in New York City, $14,782 in the West region, and $339 in the Northeast region (excluding New York City). Additionally, our revenues from Development Marketing decreased by $2,942, primarily related to the Florida and New York City markets, during the 2026 period compared to 2025. However, these declines were partially offset by an increase in commissions and other brokerage income from existing home sales in the Florida market of $32,087 during the six months ended June 30, 2026 compared to the 2025 period.

Current wording

However, these declines were partially offset by an increase in commissions and other brokerage income from existing home sales in the Florida market of $56,249 during the nine months ended September 30, 2026 compared to the 2025 period.

Previous wording

Operating expenses. Our operating expenses for the six months ended June 30, 2026 and 2025, respectively, were as follows:

Current wording

Operating expenses. Our operating expenses for the nine months ended September 30, 2026 and 2025, respectively, were as follows:

Previous wording

Real Estate Agent Commissions. Our real estate agent commissions expense was $391,650 for the six months ended June 30, 2026, compared to $391,119 for the six months ended June 30, 2025, representing an increase of $531. Real estate agent commissions expense, as a percentage of revenues, increased to 78.7% for the six months ended June 30, 2026, compared to 74.5% (77.5% excluding property management revenues) for the six months ended June 30, 2025. This increase in real estate agent commissions expense as a percentage of revenues in 2026 period was primarily driven by a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which customarily pay higher commission rates.

Current wording

Real Estate Agent Commissions. Our real estate agent commissions expense was $591,697 for the nine months ended September 30, 2026, compared to $583,890 for the nine months ended September 30, 2025, representing an increase of $7,807. Real estate agent commissions expense, as a percentage of revenues, increased to 78.9% for the nine months ended September 30, 2026, compared to 74.1% (77.0% excluding property management revenues) for the nine months ended September 30, 2025. This increase in real estate agent commissions expense as a percentage of revenues in the 2026 period was primarily driven by a higher percentage of our revenues from existing home sales generated from markets (primarily Florida) which customarily pay higher commission rates. For the nine months ended September 30, 2026, revenues from existing home sales in Florida increased to 32.9% of our revenues compared to 25.2% (adjusting for property management) for the nine months ended September 30, 2025.

Previous wording

Gross profit. We define gross profit as the remaining portion after real estate agent commissions are subtracted from our revenues. Our gross profit for the six months ended June 30, 2026 and 2025, respectively, was as follows:

Current wording

Gross profit. We define gross profit as the remaining portion after real estate agent commissions are subtracted from our revenues. Our gross profit for the nine months ended September 30, 2026 and 2025, respectively, was as follows:

Previous wording

Operating expenses, excluding real estate agent commissions expense. Our operating expenses, excluding real estate agent commissions expense, for the six months ended June 30, 2026 and 2025, respectively, were as follows:

Current wording

Operating expenses, excluding real estate agent commissions expense. Our operating expenses, excluding real estate agent commissions expense, for the nine months ended September 30, 2026 and 2025, respectively, were as follows:

Previous wording

Sales and Marketing. Sales and marketing expenses were $37,468 for the six months ended June 30, 2026, compared to $39,808, which included $555 associated with our property management business, for the six months ended June 30, 2025. The decline in expenses is attributable to expense rationalization efforts to streamline our sales and marketing process.

Current wording

Sales and Marketing. Sales and marketing expenses were $57,451 for the nine months ended September 30, 2026, compared to $59,519, which included $825 associated with our property management business, for the nine months ended September 30, 2025. The decline in expenses is attributable to expense rationalization efforts to streamline our sales and marketing process.

Previous wording

Operating loss. Our operating loss for the three months ended June 30, 2026 and 2025, respectively, was as follows:

Current wording

Operating loss. Our operating loss for the nine months ended September 30, 2026 and 2025, respectively, was as follows:

Previous wording

Other income (expenses). Other income was $1,926 for the six months ended June 30, 2026, compared to other expense of $18,028 for the six months ended June 30, 2025. For the six months ended June 30, 2026, other income primarily consisted of interest income of $1,609. For the six months ended June 30, 2025, other expense primarily consisted of the $17,715 loss from the change in fair value of the derivative embedded within convertible debt and interest expense of $3,075, partially offset by interest income of $2,620.

Current wording

Other income (expenses). Other income was $2,360 for the nine months ended September 30, 2026, compared to other expense of $32,304 for the nine months ended September 30, 2025. For the nine months ended September 30, 2026, other income primarily consisted of interest income of $2,562 and investments loss of $581, primarily due to an impairment of a PropTech investment of $500. For the nine months ended September 30, 2025, other expense primarily consisted of the $33,160 loss from the change in fair value of the derivative embedded within convertible debt and interest expense of $4,648, partially offset by interest income of $3,986 and a $1,225 gain from the monetization of a PropTech investment.

Previous wording

Loss before provision for income taxes. Loss before income taxes was $2,734 and $22,625 for the three months ended June 30, 2026 and 2025, respectively.

Current wording

Loss before provision for income taxes. Loss before income taxes was $12,254 and $53,840 for the nine months ended September 30, 2026 and 2025, respectively.

Previous wording

Income tax expense. There was no income tax expense for the six months ended June 30, 2026 and 2025. Wecalculate our provision for income taxes for interim reporting periods based upon our estimate of the annual effective income tax rate based on full year projections, which does not include the impact of discrete items. We then apply the annual effective income tax rate against year-to-date pretax income to record income tax expense and then adjust our provision for income tax expense for any discrete items, if any. We did not record a provision for income taxes during the six months ended June 30, 2026 and 2025, respectively, because we had established a valuation allowance for the full amount of our deferred tax assets.

Current wording

Income tax (benefit) expense. There was income tax benefit of $678 for the nine months ended September 30, 2026. Income tax expense was $11 for the nine months ended September 30, 2025. Wecalculate our provision for income taxes for interim reporting periods based upon our estimate of the annual effective income tax rate based on full year projections, which does not include the impact of discrete items. We then apply the annual effective income tax rate against year-to-date pretax income to record income tax (benefit) expense and then adjust our provision for income tax expense for any discrete items. The income tax benefit for the nine months ended September 30, 2026 related to discrete items associated with the true-up of income tax expense associated with the filing of our income tax returns in September 2026. We did not record a provision for income taxes during the nine months ended September 30, 2025 because we had established a valuation allowance for the full amount of our deferred tax assets and there were no discrete items.

Previous wording

Cash, cash equivalents and restricted cash declined by $8,840 to $113,869, which included $8,644 of restricted cash, during the six months ended June 30, 2026. This compares to an increase of $2,488, to $144,709, which included restricted cash of $8,375, during the six months ended June 30, 2025.

Current wording

Cash, cash equivalents and restricted cash declined by $13,148 to $109,561, which included $6,883 of restricted cash, during the nine months ended September 30, 2026. This compares to an increase of $8,686, to $150,907, which included restricted cash of $7,904, during the nine months ended September 30, 2025. The decline in the nine months ended September 30, 2026 was primarily the result of the purchase of $19,935 of a U.S. Treasury Bill, which matures in March 2027.

Previous wording

Cash used in operations was $7,739 for the six months ended June 30, 2026, compared to $4,974 for the six months ended June 30, 2025. The increase in the cash used in operations in the 2026 period was attributable to an increase in operating loss as well as increased payments of accrued compensation in 2026 and income tax liabilities, which were attributable to the gain on the October 2025 disposal of our property management business, in the 2026 period. These amounts were offset by an increase to the net changes in contract liabilities and related contract assets, which was associated with increased progress payments from our development marketing business, as well as the receipt of a portion of the settlement related to the Strougo litigation for the six months ended June 30, 2026.

Current wording

Cash provided from operations was $8,960 and $505 for the nine months ended September 30, 2026 and 2025, respectively. The increase in the cash provided by operations in the 2026 period was attributable to the decline in operating loss as well as an increase to the net changes in contract liabilities and related contract assets of $12,595, which was primarily associated with increased progress payments from our development marketing business. These amounts were partially offset by increased payments in 2026 of income tax liabilities, which were attributable to the gain on the October 2025 disposal of our property management business, and accrued compensation.

Previous wording

Cash used in investing activities was $1,071 for the six months ended June 30, 2026, compared to cash provided by investing activities of $7,548 for the six months ended June 30, 2025. For the six months ended June 30, 2026, cash used in investing activities was comprised primarily of capital expenditures of $943 and the purchase of subsidiaries of $100 due to the acquisition of the non-controlling interest of Real Estate Associates of Houston LLC. For the six months ended June 30, 2025, cash provided by investing activities was comprised of proceeds from the sale of short-term investments of $97,677 and was partially offset by the purchase of short-term investments of $87,873 and capital expenditures of $2,251.

Current wording

Cash used in investing activities was $22,029 for the nine months ended September 30, 2026, compared to cash provided by investing activities of $8,266 for the nine months ended September 30, 2025. For the nine months ended September 30, 2026, cash used in investing activities was comprised primarily of the purchase of U.S. Treasury Bills maturing in March 2027 of $19,935, payments related to the disposal of the property management business of $709, capital expenditures of $1,319 and the purchase of subsidiaries of $100 due to the acquisition of the non-controlling interest of Real Estate Associates of Houston LLC. For the nine months ended September 30, 2025, cash provided by investing activities was comprised of proceeds from the sale of short-term investments of $97,677 and proceeds from the sale of investments of $1,611 in our PropTech business. These inflows were partially offset by the purchase of short-term investments of $87,873 and capital expenditures of $3,041.

Previous wording

Cash used in financing activities was $30 for the six months ended June 30, 2026, compared to $86 for the six months ended June 30, 2025, which was comprised of withholding of shares as payment of payroll tax liabilities.

Current wording

Cash used in financing activities was $79 for the nine months ended September 30, 2026, compared to $85 for the nine months ended September 30, 2025, which was comprised of withholding of shares as payment of payroll tax liabilities.

Previous wording

We had cash and cash equivalents of approximately $105,225 as of June 30, 2026 and, in addition to any 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. Management currently anticipates that these amounts, as well as expected cash flows from our operations and proceeds from any financings to the extent available, should be sufficient to meet our liquidity needs over the next twelve months.

Current wording

We had cash and cash equivalents of approximately $102,678 and $19,935 in a U.S. Treasury Bill maturing in March 2027, which is classified as "Short-term investment" on our condensed consolidated balance sheet as of September 30, 2026. In addition to any 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. Management currently anticipates that these amounts, as well as expected cash flows from our operations and proceeds from any financings to the extent available, should be sufficient to meet our liquidity needs over the next twelve months.

Previous wording

Real Estate Brokerage Antitrust Litigation Settlements. On April 26, 2024, we entered into a settlement agreement to resolve all claims on a nationwide basis in the pending seller class action litigations, Gibson v. NAR, No. 4:23-cv-00788-SRB (W.D. Mo.)and Umpa v. NAR, 4:23-cv-00945-SRB (W.D. Mo.) alleging claims on behalf of sellers against Douglas Elliman Inc. and our subsidiaries. That settlement agreement is currently being challenged on appeal in the U.S. Court of Appeals for the Eighth Circuit. Under the settlement agreement, we paid $7,750 and $5,000 into an escrow fund on June 12, 2024 and December 29, 2025, respectively, and have also agreed to pay $5,000 contingent payment subject to certain financial contingencies on or before December 31, 2027. The remaining contingent payment may be accelerated under certain circumstances.

Current wording

Real Estate Brokerage Antitrust Litigation Settlements. On April 26, 2024, we entered into a settlement agreement to resolve all claims on a nationwide basis in the pending seller class action litigations, Gibson v. NAR, No. 4:23-cv-00788-SRB (W.D. Mo.)and Umpa v. NAR, 4:23-cv-00945-SRB (W.D. Mo.) alleging claims on behalf of sellers against Douglas Elliman Inc. and our subsidiaries. On September 1, 2026, the U.S. Court of Appeals for the Eighth Circuit affirmed the final approval of the Gibson Settlement Agreement, rejecting all objections raised on appeal, finding the settlements to be fair, reasonable, and adequate. On October 7, 2026, the Eighth Circuit denied a request for en banc reconsideration of its decision by the full court. Under the settlement agreement, we paid $7,750 and $5,000 into an escrow fund on June 12, 2024 and December 29, 2025, respectively, and have also agreed to pay a $5,000 contingent payment subject to certain financial contingencies on or before December 31, 2027. The remaining contingent payment may be accelerated under certain circumstances.

Previous wording

In April 2026, the Company opted into a settlement agreement with the purported class of home buyers in Tuccori v. At World Properties, LLC, et al. (N.D. Ill.), a case that consolidated certain purported class actions lawsuits filed by home buyers. This settlement is structured to resolve the claims asserted against us in, or arising from the same factual predicates as, the Lutz vs. HomeServices of America, Inc. et al lawsuit, pending in the U.S. District Court for the Southern District of Florida, No. 4:24-cv-10040 (KMM). Although we were not a defendant in Tuccori, the opt‑in settlement releases us, our subsidiaries and affiliated agents from the claims against us in Lutz. Under the Tuccori settlement agreement, we paid $100 into an escrow fund on June 23, 2026 and agreed to make three additional $647 payments within one, two and three years of the effective date of the settlement, respectively. The amount payable by us under the Tuccori settlement agreement was recorded as a noncurrent liability at June 30, 2026. The Tuccori settlement agreement is subject to court approval, and a final approval hearing is scheduled for November 2, 2026.

Current wording

In April 2026, the Company opted into a settlement agreement with the purported class of home buyers in Tuccori v. At World Properties, LLC, et al. (N.D. Ill.), a case that consolidated certain purported class actions lawsuits filed by home buyers. This settlement is structured to resolve the claims asserted against us in, or arising from the same factual predicates as, the Lutz vs. HomeServices of America, Inc. et al lawsuit, pending in the U.S. District Court for the Southern District of Florida, No. 4:24-cv-10040 (KMM). Although we were not a defendant in Tuccori, the opt‑in settlement releases us, our subsidiaries and affiliated agents from the claims against us in Lutz. Under the Tuccori settlement agreement, we paid $100 into an escrow fund on June 23, 2026 and agreed to make three additional $647 payments within one, two and three years of the effective date of the settlement, respectively. The amount payable by us under the Tuccori settlement agreement was recorded as a noncurrent liability at September 30, 2026. The Tuccori settlement agreement is subject to court approval, and a final approval hearing occurred on November 2, 2026. The court’s decision remains pending.

Previous wording

Derivative Litigation Settlement. On November 14, 2025, a Verified Stockholder Derivative Complaint, Barbara Strougo derivatively on behalf of Douglas Elliman, Inc. vs. Howard M. Lorber, et al., also known as the Strougo Litigation, was filed in the Court of Chancery of the State of Delaware on behalf of Douglas Elliman Inc., as nominal defendant, against certain of its current and former directors and officers. The parties to the Strougo Litigation reached an agreement to settle it on the terms and conditions set forth in a Stipulation and Agreement of Compromise, Settlement, and Release that was filed with the Chancery Court on February 19, 2026. The Strougo settlement agreement provides for the final dismissal of the Strougo Litigation in exchange for (i) a settlement payment to us of $17,500, subject to reductions for attorneys’ fees and expenses, and (ii) the implementation by us of certain corporate-governance enhancements and reforms. Certain of our insurers agreed to fund the settlement. The Chancery Court held a settlement fairness hearing related to the Strougo settlement agreement on June 29, 2026 and, on July 7, 2026, entered a Final Order and Judgment approving the Strougo settlement agreement and awarding plaintiff’s counsel attorneys’ fees and expenses in the amount of $1,870, to be deducted from the $17,500 settlement payment. We received $2,500 of the settlement payment in June 2026 and we recorded and deferred within other current liabilities as of June 30, 2026 because the Strougo settlement agreement had not been approved by the Chancery Court on June 30, 2026. The additional $15,000 was received in July 2026.

Current wording

Derivative Litigation Settlement. On November 14, 2025, a Verified Stockholder Derivative Complaint, Barbara Strougo derivatively on behalf of Douglas Elliman, Inc. vs. Howard M. Lorber, et al., also known as the Strougo Litigation, was filed in the Court of Chancery of the State of Delaware on behalf of Douglas Elliman Inc., as nominal defendant, against certain of its current and former directors and officers. The parties to the Strougo Litigation reached an agreement to settle it on the terms and conditions set forth in a Stipulation and Agreement of Compromise, Settlement, and Release that was filed with the Chancery Court on February 19, 2026. The Strougo settlement agreement provides for the final dismissal of the Strougo Litigation in exchange for (i) a settlement payment to us of $17,500, subject to reductions for attorneys’ fees and expenses, and (ii) the implementation by us of certain corporate governance enhancements and reforms. Certain of our insurers agreed to fund the settlement. The Chancery Court held a settlement fairness hearing related to the Strougo settlement agreement on June 29, 2026 and, on July 7, 2026, entered a Final Order and Judgment approving the Strougo settlement agreement and awarding plaintiff’s counsel attorneys’ fees and expenses in the amount of $1,870, to be deducted from the $17,500 settlement payment. We recorded the net proceeds of the litigation settlement of $15,630 as a reduction to the “General and administrative expenses” for the three and nine months ended September 30, 2026.

Previous wording

Technology Adoption and Implementation. In June 2026, we executed an agreement to purchase technology licenses, products related to our workspace platform and certain cloud computing services. As part of the agreement, we have received various credits, which may offset or reduce the commitment, as well as other discounts. We may elect to cancel the remaining commitment in return for a cancellation fee of 35% of total remaining commitment amount and loss of any discounts, remaining credits or other incentives provided under the agreement. For additional information regarding our purchase obligations, see Note 8 “Commitments and Contingencies” to our condensed consolidated financial statements.

Current wording

Technology Adoption and Implementation. In June 2026, we executed an agreement to purchase technology licenses, products related to our workspace platform and certain cloud computing services. As part of the agreement, we have received various credits, which may offset or reduce the commitment, as well as other discounts. We may elect to cancel the remaining commitment in return for a cancellation fee of 35% of the total remaining commitment amount and loss of any discounts, remaining credits or other incentives provided under the agreement. For additional information regarding our purchase obligations, see Note 8 “Commitments and Contingencies” to our condensed consolidated financial statements.

Previous wording

As of June 30, 2026 and December 31, 2025, we had outstanding approximately $2,811 and $2,645, respectively, of letters of credit, collateralized by certificates of deposit. The letters of credit have been issued as security deposits for leases of office space.

Current wording

As of September 30, 2026 and December 31, 2025, we had outstanding approximately $2,649 and $2,645, respectively, of letters of credit, collateralized by certificates of deposit. The letters of credit have been issued as security deposits for leases of office space.

Previous wording

As a service to its customers, Portfolio Escrow Inc., a subsidiary of Douglas Elliman, administers escrow and trust deposits which represent undisbursed amounts received for the settlement of real estate transactions. Deposits at FDIC-insured institutions are insured up to $250. Portfolio Escrow Inc. had escrow funds on deposit of $36,283 as of each of June 30, 2026 and December 31, 2025, respectively, and corresponding escrow funds in holding of the same amount. While these deposits are not assets of Portfolio Escrow Inc., the subsidiary of Douglas Elliman (and, therefore, are excluded from the accompanying condensed consolidated balance sheets), the subsidiary of ours remains contingently liable for the disposition of these deposits.

Current wording

As a service to its customers, Portfolio Escrow Inc., a subsidiary of Douglas Elliman, administers escrow and trust deposits which represent undisbursed amounts received for the settlement of real estate transactions. Deposits at FDIC-insured institutions are insured up to $250. Portfolio Escrow Inc. had escrow funds on deposit of $34,069 and $36,283 as of September 30, 2026 and December 31, 2025, respectively, and corresponding escrow funds in holding of the same amount. While these deposits are not assets of Portfolio Escrow Inc., the subsidiary of Douglas Elliman (and, therefore, are excluded from the accompanying condensed consolidated balance sheets), the subsidiary of ours remains contingently liable for the disposition of these deposits.