Douglas Elliman quarterly revenue down 40% from year before 

Douglas Elliman suffered sharp declines in the fourth quarter, with revenue down 40% year over year. 

Operating losses for the year were $4.5 million — a significant reversal from 2021, when the firm reported income of just over $102 million. 

The company pointed to low inventory and rising interest rates as key factors in the disappointing results.

"Douglas Elliman's team of world class agents met the challenges of the fourth quarter, which was marked by limited listing inventory and significantly increased mortgage rates," said Howard Lorber, Douglas Elliman chairman, president and CEO, in a statement. 

During the company's earnings webcast, Lorber noted that despite those challenges, "Douglas Elliman outperformed the industry in 2022 with transaction volume and gross transaction volume declining by approximately 18% or 16% respectively." He cited data from the National Association of Realtors indicating that overall transaction volume declined by more than 30% in 2022.

Lorber also stated that "luxury markets are usually the last markets to enter a down cycle and the first markets to emerge when the cycle ends," which could mean "significant growth opportunities in Douglas Elliman luxury markets when market uncertainty subsides."

The company added nearly 400 agents in 2022, and reported an 87% retention rate.

Key numbers

Revenue: $207.3 million in consolidated revenue in Q4, down 40% year over year. For the full year, consolidated revenue was $1.15 billion, compared to $1.35 billion the prior year.

GAAP loss: $21.9 million operating loss for the quarter, compared to operating income of $19.2 million in Q4 2021. Full year operating losses were $4.5 million, a significant drop from operating income of $102.1 million in 2021.

Net loss attributed to Douglas Elliman: $18.4 million in Q4, compared to net income of $20.2 million in Q4 2021. For the full year, losses were $5.6 million, down from a net income of $98.8 million in 2021.

EBITDA (earnings before interest, taxes, depreciation and amortization): Adjusted loss of $17.1 million for Q4 vs. positive $21.3 million for Q4 2021. Full-year adjusted EBITDA was $15 million, an 86% drop from $110.7 million in 2021.

Cash and cash equivalents: $163.9 million as of December 31, 2022, off 24% from a year prior.

Transactions: 4,776 in Q4, a 43% drop from Q4 2021. Full-year transactions were 26,573, down 18% from the year prior. 

What Douglas Elliman had to say 

At the same time that sales were down, the company had higher expenses in most areas (apart from agent commissions), including technology, administrative costs, marketing and operations. 

On an earnings call, Lorber stood by the company's strategy: "We made opportunistic investments in our support network for agents, as well as our technology infrastructure. Well, this increased total expenses from 2020 to 2022. We believe these investments will provide long-term value for our stockholders."

Lorber added that Elliman is now focused on cost-cutting measures, including a hiring freeze, reduced marketing and consolidation of office space. Lorber did not disclose the amount of savings expected from those measures, but said expenses will go down over the next two years as leases expire and consolidation can begin. "I think that'll really be a big help to getting our numbers more in line with where we want to be," said Lorber.