UPDATED May 11, 11:30 a.m.: Douglas Elliman posted another quarterly loss as high mortgage rates, listing inventory shortages and market volatility continue to affect the residential market, though executives remain optimistic about the year ahead.
Elliman reported a net loss of $17.6 million in the first quarter of 2023, just shy of the $18 million loss in the previous quarter but down significantly from the $6.5 million net income recorded in the first quarter last year.
“While we expect this challenging operating environment to continue and to impact our results in the first half of 2023, we are encouraged by some improvements in trends,” chairman and CEO Howard Lorber said.
Listings are up from the fourth quarter, Lorber added, and will likely help earnings in the second half of this year as buyers adjust to mortgage rates and sellers adapt their pricing.
The firm posted a consolidated operating loss of $23.6 million last quarter, down from a gain of $7.9 million in the same period last year. Elliman’s real estate brokerage posted an operating loss of $14.1 million, down from operating income of $14.5 million in the first quarter of 2022.
Elliman reported a $17.6 million loss in its adjusted EBITDA — a tailored version of earnings before interest, taxes, depreciation and amortization — down from a gain of $12.7 million in the first quarter of 2022. The company’s real estate brokerage segment’s adjusted EBITDA was a loss of $13 million, compared to income of $17.7 million in the same period last year.
The firm is “weathering the current macroeconomic challenges” by implementing cost-reduction strategies, Lorber said.
Elliman reduced its headcount by 35 positions last quarter, according to Lorber, in addition to cutting some sponsorships, streamlining advertising and launching a program to consolidate office space.
The chief executive said in a March earnings call that Elliman could begin to reduce rent expenses this year “and more meaningfully in the second half of 2024.”
The brokerage segment finished the first quarter with $7.3 billion in gross transaction volume, compared with $11.7 billion in the same period last year.
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The company’s marketing business signed and brought to market $6.3 billion in gross transaction value in the year ending March 2023.
Elliman’s stock price was $2.77 following its earnings call, down 50 percent from February.
This article has been updated with corrected figures including the brokerage segment‘s gross transaction volume, the company’s adjusted EBITDA, operating loss and net loss.