Douglas Elliman Inc.DOUG
Douglas Elliman Inc. Fair Value Disclosure
FAIR VALUE MEASUREMENTS
The Company’s financial assets and liabilities subject to fair value measurements were as follows:
| Fair Value Measurements as of December 31, 2025 | ||||||||||||||||||||||||||||||||
| Description | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Gains (Losses) | |||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
Money market funds (1) | $ | 108,372 | $ | 108,372 | $ | — | $ | — | ||||||||||||||||||||||||
Certificates of deposit (2) | 162 | — | 162 | — | ||||||||||||||||||||||||||||
| Long-term investments | ||||||||||||||||||||||||||||||||
| PropTech convertible trading debt securities | 1,229 | — | — | 1,229 | ||||||||||||||||||||||||||||
Long-term investment securities at fair value (3) | 3,170 | — | — | — | ||||||||||||||||||||||||||||
| Total long-term investments | 4,399 | — | — | 1,229 | ||||||||||||||||||||||||||||
| Total assets | $ | 112,933 | $ | 108,372 | $ | 162 | $ | 1,229 | ||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Fair value of the derivative embedded within convertible debt | $ | — | $ | — | $ | — | $ | — | $ | (28,482) | ||||||||||||||||||||||
| Total liabilities | $ | — | $ | — | $ | — | $ | — | $ | (28,482) | ||||||||||||||||||||||
_____________________________
(1)Amounts included in Cash and cash equivalents on the consolidated balance sheets, except for $4,716 that is in current restricted cash and cash equivalents and $2,483 that is included in non-current restricted assets.
(2)$162 included in other assets on the consolidated balance sheets.
(3)In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.
Fair Value Measurements as of December 31, 2024 | ||||||||||||||||||||||||||||||||
| Description | Total | Quoted Prices in Active Markets for Identical Assets (Level 1) | Significant Other Observable Inputs (Level 2) | Significant Unobservable Inputs (Level 3) | Total Gains (Losses) | |||||||||||||||||||||||||||
| Assets: | ||||||||||||||||||||||||||||||||
Money market funds (1) | $ | 85,535 | $ | 85,535 | $ | — | $ | — | ||||||||||||||||||||||||
U. S. treasury bills (2) | 52,744 | 52,744 | — | — | ||||||||||||||||||||||||||||
Certificates of deposit (3) | 507 | — | 507 | — | ||||||||||||||||||||||||||||
| PropTech convertible trading debt securities | 1,254 | — | — | 1,254 | ||||||||||||||||||||||||||||
| Long-term investments | ||||||||||||||||||||||||||||||||
Long-term investment securities at fair value (4) | 3,127 | — | — | — | ||||||||||||||||||||||||||||
| Total long-term investments | 3,127 | — | — | — | ||||||||||||||||||||||||||||
| Total assets | $ | 143,167 | $ | 138,279 | $ | 507 | $ | 1,254 | ||||||||||||||||||||||||
| Liabilities: | ||||||||||||||||||||||||||||||||
| Fair value of the derivative embedded within convertible debt | $ | 30,253 | $ | — | $ | — | $ | 30,253 | $ | (14,978) | ||||||||||||||||||||||
| Total liabilities | $ | 30,253 | $ | — | $ | — | $ | 30,253 | $ | (14,978) | ||||||||||||||||||||||
| Nonrecurring fair value measurements | ||||||||||||||||||||||||||||||||
Long-term investments (5) | $ | — | $ | — | $ | (489) | ||||||||||||||||||||||||||
| $ | — | $ | — | $ | (489) | |||||||||||||||||||||||||||
_____________________________
(1)Amounts included in Cash and cash equivalents on the consolidated balance sheets, except for $4,081 that is in current restricted assets and $2,483 that is included in non-current restricted assets.
(2)$42,940 included in Cash and cash equivalents and $9,804 included in investment securities at fair value.
(3)$345 included in other current assets and $162 included in other assets on the consolidated balance sheets.
(4)In accordance with Subtopic 820-10, investments that are measured at fair value using the NAV practical expedient are not classified in the fair value hierarchy.
(5)Long-term investments with a carrying amount of $489 were recorded at their fair value of $0, resulting in an impairment charge of $489 as a part of investment and other gains for the year ended December 31, 2024.
The fair value of the Level 2 certificates of deposit is based on the discounted value of contractual cash flows. The discount rate is the rate offered by the financial institution.
The fair values of the Level 3 PropTech convertible trading debt securities were derived using a discounted cash flow model utilizing a probability-weighted expected return method based on the probabilities of different potential outcomes for the convertible trading debt securities.
The long-term investments are based on NAV per share provided by the partnerships based on the indicated market value of the underlying assets or investment portfolio. In accordance with Subtopic 820-10, these investments are not classified under the fair value hierarchy disclosed above because they are measured at fair value using the NAV practical expedient.
The fair value of the derivative embedded within the convertible debt and the fair value of the convertible debt itself was derived using a binomial lattice valuation model. The derivative has been classified as Level 3. Change in the fair value of the derivative embedded within the convertible debt is presented in the consolidated statements of operations. The value of the embedded derivative is contingent on changes in interest rates, the Company’s stock price, stock price volatility, and the Company’s dividend yield. The Company’s stock price, volatility, and dividend yield are based on market observable inputs. The interest rate component of the value of the note is computed by calibrating the yield as of the issuance date, such that the value of the convertible note is equal to the principal net of the original issue discount. This yield is adjusted by the change in spreads from the discount curve equivalent to the Company’s implied credit rating.
The changes in the fair value of the Level 3 assets as of December 31, 2025 were as follows:
| 2025 | |||||
| Balance as of January 1 | $ | 1,254 | |||
| (25) | |||||
| Balance as of December 31 | $ | 1,229 | |||
The changes in the fair value of the Level 3 liabilities as of December 31, 2025 were as follows:
| 2025 | |||||
| Balance as of January 1 | $ | 30,253 | |||
| 28,482 | |||||
Repayment and redemption of convertible debt | (58,735) | ||||
| Balance as of December 31 | $ | — | |||
The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at December 31, 2025:
| Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||||||||||||||
| Fair Value at | ||||||||||||||||||||||||||
| December 31, 2025 | Valuation Technique | Unobservable Input | Range (Actual) | |||||||||||||||||||||||
| PropTech convertible trading debt securities | $ | 1,229 | Discounted cash flow | Interest rate | 5% | |||||||||||||||||||||
| Maturity | Feb 2027 | |||||||||||||||||||||||||
| Volatility | 54.10% | |||||||||||||||||||||||||
| Discount rate | 31.97% | |||||||||||||||||||||||||
Fair value of the derivative embedded within convertible debt | $ | — | Binomial Lattice Model | Assumed annual stock dividend | — | % | ||||||||||||||||||||
| Assumed annual cash dividend | — | % | ||||||||||||||||||||||||
| Stock price | $ | 2.72 | ||||||||||||||||||||||||
| Volatility | 50 | % | ||||||||||||||||||||||||
| Risk-free rate | 3.47 | % | ||||||||||||||||||||||||
| Implied credit spread | 9.90 | % | ||||||||||||||||||||||||
The unobservable inputs related to the valuations of the Level 3 assets and liabilities were as follows at December 31, 2024:
| Quantitative Information about Level 3 Fair Value Measurements | ||||||||||||||||||||||||||
| Fair Value at | ||||||||||||||||||||||||||
| December 31, 2024 | Valuation Technique | Unobservable Input | Range (Actual) | |||||||||||||||||||||||
| PropTech convertible trading debt securities | $ | 1,254 | Discounted cash flow | Interest rate | 5% | |||||||||||||||||||||
| Maturity | Feb 2025 | |||||||||||||||||||||||||
| Volatility | 46.82% | |||||||||||||||||||||||||
| Discount rate | 25.65% | |||||||||||||||||||||||||
| Fair value of the derivative embedded within convertible debt | $ | 30,253 | Binomial Lattice Model | Assumed annual stock dividend | — | % | ||||||||||||||||||||
| Assumed annual cash dividend | — | % | ||||||||||||||||||||||||
| Stock price | $ | 1.67 | ||||||||||||||||||||||||
| Volatility | 50 | % | ||||||||||||||||||||||||
| Risk-free rate | 4.36 | % | ||||||||||||||||||||||||
| Implied credit spread | 8.06 | % | ||||||||||||||||||||||||
In addition to assets and liabilities that are recorded at fair value on a recurring basis, the Company is required to record assets and liabilities at fair value on a nonrecurring basis. Generally, assets and liabilities are recorded at fair value on a nonrecurring basis because of impairment charges. As discussed in Note 1(x), the Company recorded an impairment of fixed assets of $2,275 for the year ended December 31, 2025 on the consolidated statements of operations. The Company had no nonrecurring nonfinancial assets subject to fair value measurements as of December 31, 2025 and 2024.
Historical Timeline
| Fiscal Year | Filed | |
|---|---|---|
| 2025 | Mar 16, 2026 | Showing above |
| 2024 | Mar 17, 2025 | |
| 2023 | Mar 8, 2024 | |
| 2022 | Mar 16, 2023 | |
| 2021 | Mar 31, 2022 | |
About Fair Value Disclosures
Fair value disclosures classify all assets and liabilities measured at fair value into a three-level hierarchy: Level 1 (quoted market prices), Level 2 (observable inputs like yield curves), and Level 3 (unobservable inputs requiring management estimates). The proportion of Level 3 assets directly reflects how much of the balance sheet depends on internal models rather than market evidence.
Key signals: a growing Level 3 balance relative to total fair-value assets increases valuation uncertainty and earnings volatility risk. Watch for transfers between levels — assets moving from Level 2 to Level 3 often signal deteriorating market liquidity. Unrealized gains and losses on Level 3 positions flow through earnings or other comprehensive income, so large swings deserve scrutiny. For financial institutions, examine the sensitivity disclosures that show how Level 3 valuations change under alternative assumptions. Compare the fair value of debt against its carrying amount to gauge hidden leverage.