Welcome to Douglas Elliman's Second Quarter 2025 Earnings Conference Call. This call is being recorded and simultaneously webcast. An archived version of the webcast will be available on the Investor Relations section of the company's website, located at investors.elliman.com for 1 year. I would now like to turn the conference over to Douglas Elliman, Vice President of Finance, Heather Capriola.

Thank you, and good morning. On the call with me today is Michael Liebowitz, President and CEO of Douglas Elliman Inc.; and Bryant Kirkland, CFO of Douglas Elliman. During this call, the terms adjusted EBITDA and adjusted net loss will be used as well as last 12 months or LTM metrics. These terms are non-GAAP financial measures and should be considered in addition to, but not as a substitute for, other measures of financial performance prepared in accordance with GAAP. Reconciliations to adjusted EBITDA and adjusted net loss are contained in the company's earnings release, which has been posted to the Investor Relations section of the company's website. Before the call begins, I would like to read a safe harbor statement. The statements made during this conference call that are not historical facts are forward-looking statements that are subject to risks and uncertainties that could cause actual results to differ materially from those set forth in or implied by forward-looking statements. These risks are described in more detail in the company's Securities and Exchange Commission filings. Now I would like to turn the call over to the Chief Executive Officer of Douglas Elliman, Michael S. Liebowitz.

Thank you, Heather. Good morning, and thank you for joining us. I am pleased to share that Douglas Elliman continues to make meaningful progress as we execute our strategy to drive growth, improve profitability and position the company for long-term success. On today's call, we will discuss the current operating environment and Douglas Elliman's financial results for the 3 and 6 months ended June 30, 2025. All numbers presented this morning will be as of June 30, 2025, unless otherwise stated. We will then provide closing comments and open the call for questions. Before we turn to our second quarter 2025 results, I would like to begin by providing industry updates and summarizing some of our recent accomplishments. In the first half of 2025 our revenues increased by 8% year-over-year to $524.8 million, marking our strongest first half revenue performance since 2022. We also delivered significant improvement towards restoring our profitability with notable reductions in operating losses when compared to the first half of 2024. Our agents and employees remain at the center of everything we do. Their hard work and commitment to excellence drive our success. We are proud to support them with the tools and technology they need to excel in today's market. After a challenging period in the middle of the second quarter, which Bryant will discuss later, we remain optimistic about the third quarter and the second half of 2025, thanks to encouraging recent trends including continued demand for luxury homes, rising average transaction values and a strong development marketing pipeline. These results reflect the strength of our iconic brands, the dedication of our agents and the resilience of the luxury markets we serve. Now let us look to the future. We are focused on executing our strategic growth initiatives, including the recent launches of Elliman Capital and Elliman International. In July 2025, we were pleased to announce the creation of Elliman Capital, an innovative mortgage platform developed with associated mortgage bankers, which we expect to provide a licensing revenue stream and represent a transformative advancement in our comprehensive service offering. The platform was initially launched in Florida, and we hope to expand it to all states where Douglas Elliman operates. Elliman Capital will provide our clients with access to an extensive and creative range of financing products. This new platform fosters convenience and oversight throughout the entire real estate transaction process, enabling our agents to provide seamless support from the initial property search through closing. In June 2025, we were also incredibly proud to launch Elliman International, which extends our renowned bespoke service to key global markets. This initiative will enable us to directly serve the growing international real estate needs of our clients without any intermediaries. Our initial focus will be on high-end luxury demand in Latin America, the Middle East, Europe, Asia Pacific, and other emerging wealth centers. Our international expansion will begin with immediate activation of certain core services for existing clients and will showcase our preeminent development marketing division. Given the scarcity of listing inventory of ultra-luxury homes in many of our markets, our development marketing division continues to be a cornerstone of our long-term growth strategy. Bryant will discuss the successes of this division later in the call. Moving forward, we continue to evaluate complementary transactions and ancillary businesses such as title, escrow, insurance brokerage, and property management. Now I would like to discuss our industry and will briefly address the practice of private listings. At Douglas Elliman, we have a long-standing commitment to offering clients greater choice and flexibility while continuing to promote equal access to listings and uphold a transparent, fair housing market. The decision to list property privately must originate from the seller. Our brokerage does not push, incentivize, or default to private listings. With a larger percentage of luxury homes in our inventory, private listings may be the right fit because they are valid seller-driven reasons to withhold a property from public view, including personal privacy, timing, or a desire to test the market. Our approach differs from brokerage-led exclusivity models in that we offer private listings as one option among many, empowering clients to make informed decisions based on their unique needs rather than applying a one-size-fits-all model. Additionally, we believe co-broking remains the most effective path for most sellers, as broad exposure in the most reliable way to maximize value drives competition and fulfills our fiduciary obligation to act in our clients' best interest. Any Douglas Elliman private listing platform will require sellers to review and sign acknowledging the potential risk of reduced exposure. The platform will also include strong guardrails to ensure compliance with other listing platforms such as broker oversight, audit logs, and technical controls. We believe this transparent client-first approach sets us apart from our competitors and builds long-term trust and value. In summary, our growth initiatives, coupled with a disciplined approach to capital allocation, cost management, and investment are transforming Douglas Elliman into a more diversified, resilient, and growth-oriented real estate services company to deliver sustainable long-term value for stockholders. With the launch of Elliman International, we're very excited to extend our renowned service beyond the U.S. and build a direct presence in key international luxury markets, further advancing our evolution into a truly global brand. With that, I will turn it over to Bryant, who will provide more details on our financial performance and the trends shaping the residential real estate market.

Thank you, Michael. And we are confident that the positive momentum in our financial performance beginning in 2024 and continuing through the first half of 2025 has positioned Douglas Elliman for long-term success. Results from the first half of 2025 indicate that our core operations are starting to reflect the impact of the strategic actions we have taken over the past two years. In particular, the first half benefited from a favorable sales mix, highlighted by strong contributions from development marketing as well as New York City and its suburbs, which are our most profitable markets. Specifically, revenues from existing home sales in our New York and Northeast markets increased by $16.8 million or 7.9% from the 2024 first half and development marketing's first half revenue increased by $17.7 million from the 2024 first half. In the second quarter of 2025, compared to the second quarter of 2024, we experienced a challenging period in May to early June when our results were negatively impacted by exogenous economic pressures and industry-specific headwinds. During this period, heightened volatility in international financial markets driven by geopolitical uncertainties, including global economic policies, created a sense of caution among buyers and sellers. At the same time, the continuation of elevated mortgage rates further dampened market activity as higher borrowing costs caused many clients to delay selling or purchasing decisions. In retrospect, we also saw the highest first quarter cash receipt since 2022, and we believe that an increase in written contracts after the 2024 U.S. elections accelerated some sales, especially in New York City from the second quarter into the first quarter. It is important to note that we recognize revenue from home sale transactions at the time of closing which typically occurs 30 to 90 days after contract signing, depending on each market's custom. As a result, contracts written in March and April directly affected our reported results for the quarter. Before reviewing the financial performance, we will provide some updates on our trends. First, Douglas Elliman sets the standard in the luxury market and pricing for luxury home sales remains strong. Our industry best price per transaction for the year-to-date period rose to $1.92 million per home sale compared to $1.72 million for home sale in the comparable 2024 period. For the last 12 months, our average price per transaction has been $1.77 million per home sale compared to $1.64 million in the 2024 period. Our agents sold 340 homes worth more than $5 million or 6% of total transactions in the second quarter of 2025 and 683 homes for more than $5 million in the first half of 2025. Year-to-date sales represent a 38% increase compared to the six months ended June 30, 2024. Equally impressive are 100 home sales of more than $10 million in the second quarter and 204 home sales of more than $10 million in the first half of 2025. This was a 32% increase from the first half of 2024. These results demonstrate Douglas Elliman continues to be the definitive name in luxury real estate. And as Michael discussed, our development marketing division remains the preeminent industry player with a pipeline of actively marketed projects of approximately $28.1 billion in gross transaction value, approximately $18.8 billion of gross transaction value is in Florida alone. Within this active pipeline, we have another $5.9 billion of gross transaction value coming to market through September 2026. We believe this foundation of business bodes well for the future as we will recognize commission income from these projects when they close, which is generally between the second half of 2025 and 2031. In addition to a strong fourth quarter of 2024 in development marketing, we are continuing to see the early momentum of this pipeline in the first half of 2025 when development marketing's revenue increased to $35.4 million from $17.7 million in the first half of 2024. Transitioning to our expense structure. We continue to manage investments across our markets with a strict focus on return on investment metrics. For the three and six months ended June 30, 2025, our operating expenses excluding commissions, depreciation and amortization, unusual litigation expense settlement and related expenses, restructuring expenses, and noncash stock compensation expenses increased by $1 million and declined by $1.9 million, respectively, from the 2024 period. Related to the change in the second quarter, although targeted expense areas such as offline advertising continue to decline, our overall expenses increased due to higher compensation and recurring professional fees, partly due to inflationary pressures. The rise in compensation expense was attributable to our continued investment in the development marketing business as well as increased bonus accruals associated with increased revenues from business performance in 2025. Now turning to Douglas Elliman's financial results for the three months ended June 30, 2025. Douglas Elliman maintains ample liquidity with cash and cash equivalents at June 30, 2025, of approximately $136 million. The strength of our balance sheet provides a competitive advantage for Douglas Elliman as we implement expansion plans to scale our operations and strengthen our services platform. Moving to the operating performance of the business in the second quarter. Douglas Elliman reported $271.4 million in revenues compared to $285.8 million in the 2024 second quarter. The decline in revenues was primarily the result of reduced closing transactions in May 2025 as well as early June. The net loss for the second quarter was $22.7 million or $0.27 per diluted share compared to $1.7 million or $0.02 per diluted share in the second quarter of 2024. The net loss in the 2025 period included a noncash charge of $17 million associated with the increase in fair value of derivatives embedded within our convertible debt, primarily driven by an increase in our stock price from $1.72 per share at March 31, 2025, to $2.32 per share at June 30, 2025. Adjusted EBITDA for the second quarter was a loss of $849,000 compared to positive $2.9 million in the 2024 second quarter. Adjusted net loss for the second quarter was $4.7 million or $0.06 per share compared to $532,000 or $0.01 per share in the 2024 second quarter. Moving to the operating performance of the business for the six months ended June 30, 2025. Douglas Elliman reported $524.8 million in revenues, up from $486 million in the 2024 period. The net loss for the six months ended June 30, 2025, was $28.7 million or $0.34 per diluted share compared to $43.1 million or $0.52 per diluted share in the 2024 period. The net loss in the 2025 period included a noncash charge of $17.7 million associated with the increase in fair value of derivatives embedded within our convertible debt and this was primarily driven by an increase in our stock price from $1.67 per share at December 31, 2024, to $2.32 per share at June 30, 2025. The net loss in the 2024 period included a $17.75 million litigation settlement charge. Adjusted EBITDA for the six months ended June 30, 2025, was $259,000 compared to a loss of $14.7 million in the 2024 period. Adjusted net loss for the six months ended June 30, 2025, was $7.1 million or $0.08 per share compared to $23.6 million or $0.28 per share in the 2024 period. Thank you for your attention. And now back to you, Michael.

Thank you, Bryant. Our results in the first half of 2025 are proof that our turnaround is working, and we are well positioned for success in the second half of the year and beyond. I remain deeply confident in the strength and brand power of the Douglas Elliman franchise and I'm energized by the incredible opportunities that lie ahead for us. With that, we will be happy to answer questions.

Those are all the questions that we have for today. Thank you for joining us on Douglas Elliman's quarterly earnings conference call. We hope you have a good day, and this will conclude our call.

Thank you.

Thank you.