Elliman logs another quarterly loss after antitrust settlement

Quarterly losses continue to stack up for Douglas Elliman, compounded by the firm’s multi-million deal to settle antitrust litigation.

The company lost nearly $42 million in the first quarter, more than double what it lost in the same period last year, according to its earnings report. The sum includes a $17.75 million charge to cover the cost of settling class-action lawsuits over broker commissions. 

“The settlement agreement reflects our commitment to mitigating future uncertainties and limiting legal costs,” chairman Howard Lorber said during the company’s earnings call on Friday. “It is not an admission of liability or of the validity of any claim.”

Elliman announced the deal at the end of April, about two months after Lorber vowed to continue fighting, at the time, seven lawsuits naming the company as a defendant. 

“We believe the lawsuits, which are still in the very early stages and will likely take years to litigate, lack merit, and we intend to challenge them,” Lorber said on the firm’s fourth quarter earnings call in March. 

The company reversed its pledge after several other brokerages, including Compass, and the National Association of Realtors opted to strike their own deals with the homeseller plaintiffs. 

Under the terms of the settlement, Elliman agreed to pay $7.75 million with another $10 million in contingency payments depending on the company’s cash-on-hand in the coming years. Elliman will pay the initial settlement charge by June 12 and up to two additional contingency payments between December 2025 and December 2027. 

The net loss last quarter marks the firm’s seventh consecutive quarterly loss, including the $14.8 million loss posted in the fourth quarter of 2023. 

Elliman lost $18.2 million in adjusted EBITDA — earnings before interest, taxes, depreciation and amortization — more than the negative $17.6 million it reported a year ago. 

Revenue totaled more than $200 million last quarter, down from $214 million in the first quarter of 2023. 

The company’s brokerage segment brought in $188 million in income last quarter. Its gross transaction value was $7.1 billion, down from $7.3 billion the previous year. The segment posted an operating loss of $35.3 million — more than the $17.3 million operating loss in the same period last year.  

Higher mortgage rates and the Federal Reserve’s decision to delay interest rate cuts are continuing to hinder the residential market as listing inventory remains low, stifling transactions. 

Lorber pointed to the challenges in the market to explain declines in the company’s earnings results and noted that he expects those factors to continue to impact the market in the coming months. 

But buyers and sellers are beginning to adjust to the higher rate environment, with more homes hitting the market last quarter than the year-ago totals, Lorber said. Listing volume increased nearly 7 percent year-over-year with gains reported in Florida, California, the Hamptons and other parts of Long Island. 

The uptick in listings will likely be reflected in earnings in the second half of 2024, Lorber said. 

The company is continuing to focus on cutting costs to restore profitability. Last year, the firm eliminated 100 positions, slashed advertising expenses and reduced its office footprint. 

“We just have to focus on getting the business to make money for the shareholders and not wait and worry about where the volume is at any particular point,” Lorber said. “We want to keep trimming down the business until we really can’t anymore.”

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