Financial Performance - CoStar Group reported Q1 2025 revenue of $732 million, a 12% increase from $656 million in Q1 2024[1] - The company experienced a net loss of $15 million in Q1 2025, with a diluted loss per share of $0.04, impacted by a $31 million cost related to the Matterport acquisition[1] - Adjusted EBITDA for Q1 2025 was $66 million, reflecting a 429% increase compared to $12 million in Q1 2024[1] - CoStar Group reported a net loss of $14.8 million for Q1 2025, compared to a net income of $6.7 million in Q1 2024, representing a significant decline[20] - Total revenues for Q1 2025 reached $732.2 million, up 11.5% from $656.4 million in Q1 2024[22] - EBITDA for Q1 2025 was $(0.8) million, a decrease from $12.4 million in Q1 2024, indicating operational challenges[26] - CoStar Group expects full-year 2025 revenue between $3.115 billion and $3.155 billion, indicating approximately 15% year-over-year growth at the midpoint[5] - For Q2 2025, revenue is projected to be between $770 million and $775 million, representing about 14% year-over-year growth at the midpoint[5] - Adjusted EBITDA for the full year 2025 is anticipated to be in the range of $355 million to $385 million, with a margin of 12% at the midpoint[6] Business Growth and Engagement - CoStar's commercial real estate businesses saw a 68% year-over-year increase in net new bookings, while LoopNet achieved a remarkable 200% increase year-over-year[2] - Apartments.com added 4,300 properties in Q1 2025, marking the highest quarterly addition since Q1 2016[2] - Homes.com has grown its salesforce to 370 representatives, with plans to reach 500 by the end of June 2025[2] - The Homes.com Network has become the second largest in the U.S. with 104 million average monthly unique visitors, and unaided consumer awareness rose to 36% from 4% prior to its February 2024 launch[2] - CoStar's websites attracted over 130 million average monthly unique visitors in Q1 2025, highlighting strong user engagement[31] Financial Position and Investments - CoStar Group's cash, cash equivalents, and restricted cash decreased to $3.78 billion at the end of Q1 2025, down from $4.95 billion at the end of Q1 2024[20] - The company reported significant investments in acquisitions, with net cash used in investing activities totaling $910.6 million in Q1 2025[20] - Stock-based compensation expense increased to $30.4 million in Q1 2025, compared to $22.8 million in Q1 2024, reflecting higher employee incentives[26] Forward-Looking Statements and Guidance - CoStar Group's forward-looking statements are based on information available as of the date of the report[33] - The company assumes no obligation to update or revise any forward-looking statements unless required by applicable law[33] - The company does not provide specific numerical guidance in this document[33] - Investors are encouraged to monitor the SEC website for the latest updates on CoStar Group[33] Regulatory and Compliance - CoStar Group's filings with the SEC include Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q[33] - The "Risk Factors" section in these filings outlines potential risks to the company's performance[33] - Current Reports on Form 8-K are also available for further insights into the company's operations[33] - The company emphasizes the importance of reviewing its SEC filings for comprehensive financial data[33] - CoStar Group's performance metrics and future outlook are subject to change based on new information and future events[33] - The company remains committed to transparency in its financial reporting and disclosures[33]

Core Viewpoint - CoStar Group is expected to report first-quarter 2025 earnings on April 29, with projected revenues between $711 million and $716 million, indicating a year-over-year growth of 9% at the midpoint of the range [1]. Revenue Estimates - The Zacks Consensus Estimate for CoStar's revenues is currently at $719.37 million, suggesting a growth of 9.59% compared to the same quarter last year [2]. - The consensus estimate for earnings remains at 11 cents per share, indicating a 10% growth from the previous year's figure [2]. Historical Performance - CoStar Group has consistently beaten the Zacks Consensus Estimate in the last four quarters, with an average surprise of 47.26% [3]. Factors Influencing Performance - The first-quarter performance is likely to benefit from a strong portfolio of marketplaces, including Apartments.com, LoopNet, and Homes.com [4]. - Apartments.com is expected to see an 11% revenue growth in Q1 2025, driven by increased traffic and higher advertising spending [4]. - Homes.com reached 110 million average monthly unique visitors in Q4 2024, up 11% year over year, contributing to overall traffic growth [5]. - CoStar's total site traffic reached 134 million average monthly unique visitors in Q4 2024, reflecting a 17% year-over-year increase [5]. - The international segment and positive outlook for real estate marketplaces are anticipated to enhance LoopNet's performance [5]. Acquisition Impact - CoStar's growth is supported by a consistent acquisition strategy, including the acquisition of Matterport, which integrates 3D capture technology into its real estate marketplaces [6]. - The acquisition of Visual Lease strengthens CoStar's Real Estate Manager business line, providing comprehensive lease management solutions [7]. - The STR product, a benchmarking tool for the hospitality industry, is expected to show strong revenue growth in the upcoming quarter [7]. Earnings Model Insights - According to the Zacks model, CoStar Group has an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold), indicating that the odds of an earnings beat are not favorable [8].

Core Insights - CoStar Group has entered into support agreements with D.E. Shaw and Third Point for board refreshment and corporate governance enhancements [3][6] - The agreements include the addition of three new directors and the retirement of three long-tenured directors, indicating a significant board refreshment [6][8] - CoStar's core business generates approximately 95% of its revenue, primarily from CoStar Suite and Apartments.com, which have strong competitive advantages [4][5] Company Overview - CoStar Group operates online real estate marketplaces and analytics, managing brands like CoStar Suite, LoopNet, Apartments.com, and Homes.com [4] - The company has historically traded at a premium to its peers but is currently valued in line with them due to aggressive investments in its Homes.com business [4][5] Financial Dynamics - CoStar is diverting about 75% of its $1.3 billion EBITDA to fund $900 million in losses from Homes.com, leading to a significant increase in capital expenditures [5][8] - Capital expenditures are projected to rise by 878% from 2021 to 2024, with a 347% increase expected in 2024 alone [5] Governance Changes - The newly formed capital allocation committee will focus on funding the Homes.com business without relying on core business cash flow and will assess international expansion opportunities [7][8] - The committee's goal is to enhance the valuation of CoStar's core business, potentially increasing its enterprise value from around $30 billion to approximately $45 billion [8] Activist Investor Involvement - Third Point holds a 2.04% position in CoStar, while D.E. Shaw's position remains undisclosed but is expected to be significant given its size as a $70 billion hedge fund [9]

Core Viewpoint - CoStar Group (CSGP) has seen a slight increase in share price of approximately 0.2% since its last earnings report, outperforming the S&P 500, but estimates have trended downward significantly, indicating potential challenges ahead [1][2]. Group 1: Earnings and Estimates - The consensus estimate for CoStar has shifted downward by 41.46% over the past month, reflecting a negative trend in earnings expectations [2]. - CoStar's most recent earnings report is crucial for understanding the key drivers affecting its stock performance [1]. Group 2: VGM Scores - CoStar currently holds a poor Growth Score of F, a Momentum Score of F, and a Value Score of F, placing it in the lowest quintile for investment strategies [3]. - The aggregate VGM Score for CoStar is F, indicating a lack of attractiveness across multiple investment strategies [3]. Group 3: Outlook - The overall trend of downward revisions in estimates suggests a negative outlook for CoStar, with a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [4]. Group 4: Industry Comparison - CoStar is part of the Zacks Computers - IT Services industry, where Jack Henry (JKHY) has performed better, gaining 5.9% over the past month [5]. - Jack Henry reported revenues of $573.85 million for the last quarter, reflecting a year-over-year increase of 5.2%, with EPS rising from $1.22 to $1.34 [5]. - For the current quarter, Jack Henry is expected to post earnings of $1.35 per share, indicating a year-over-year change of 13.5% [6].

Group 1 - The core thesis for CoStar Group (NASDAQ: CSGP) is that the growth runway remains very positive, with solid execution observed in Apartments.com and Homes.com [1] - CoStar Group has continued to demonstrate strong performance despite ongoing investments [1] Group 2 - The investment approach focuses on identifying undervalued companies with long-term growth potential, blending value investing principles with a long-term growth focus [1] - The strategy involves buying quality companies at a discount to their intrinsic value and holding them for the long term to allow for compounding of earnings and shareholder returns [1]

Business Operations - CoStar Group operates leading online marketplaces for real estate in the U.S. and the U.K., with the largest commercial real estate research department in the industry [22]. - The company has spent over 35 years building a comprehensive database of real estate information, which includes hundreds of data fields related to properties, tenants, and market trends [27]. - CoStar Group's revenue streams are highly diversified, with no dependency on a few customers, and services are typically distributed under subscription-based license agreements [40]. - Recent acquisitions include Business Immo, OnTheMarket, and Visual Lease, which are being integrated into the CoStar network to enhance service offerings [48]. - The company plans to continue investing in its business and services, focusing on strategic growth opportunities and expanding its online marketplace services [47]. - CoStar Group's principal online services include CoStar for commercial real estate intelligence, Apartments.com for apartment rentals, and LoopNet for commercial property marketing [34][35][36]. - The company utilizes a subscription-based model for its services, with contract rates based on various factors including the number of properties advertised and the client's geographic location [39]. - The company operates in two reportable segments: North America (U.S. and Canada) and International (primarily Europe, Asia-Pacific, and Latin America) [50]. Marketing and Client Acquisition - CoStar Group's marketing strategies include digital marketing, social media, and targeted campaigns to attract new clients and retain existing ones [44][45]. - The company emphasizes the importance of developing and introducing new or upgraded online marketplace services to maintain competitiveness [70]. - Brand awareness is crucial for attracting users and subscribers, and failure to enhance brand recognition could adversely affect business performance [83]. Financial Performance - Revenues increased by $281 million, or 11%, to $2.736 billion for the year ended December 31, 2024 [207]. - Net income decreased by $236 million, or 63%, to $138.7 million for the year ended December 31, 2024 [207]. - Subscription revenues represented approximately 96% of total revenues for the year ended December 31, 2024, an increase from 95% in 2023 [192]. - Annualized net new bookings for subscription-based services were approximately $250 million for the year ended December 31, 2024, down from $286 million in 2023 [192]. - Total operating expenses rose by $491.8 million, or 29%, to $2.173 billion [207]. - Selling and marketing expenses rose by $374 million, or 38%, to $1.364 billion, increasing as a percentage of revenues from 40% to 50% [209]. Risks and Challenges - The company faces risks related to attracting and retaining new clients, which could adversely affect revenues and financial position [69]. - The company is exposed to additional business risks from international operations, including volatility in foreign currency exchange rates [67]. - The company faces significant indebtedness, which could decrease flexibility and adversely affect business and financial condition [71]. - The company is vulnerable to cyberattacks and security breaches, which could require substantial resources for monitoring and remediation, although past incidents have not materially affected operations [101]. - The company faces risks related to acquisitions, including integration challenges and potential increases in operating costs [88]. Employee and Operational Structure - As of January 31, 2025, the company employed 6,593 employees, with approximately 88% based in the U.S. and 10% in European, Asia-Pacific, and Latin American countries [59]. - The company has experienced no work stoppages and none of its employees are represented by a labor union [59]. - The ability to hire and retain qualified personnel is critical for revenue growth, and challenges in this area could adversely affect revenues [78]. Technology and Data Management - The company leverages proprietary technology to enhance data quality and research efficiency, integrating sales, research, and customer support information [49]. - The company relies on internet search engines for traffic to its websites, and fluctuations in search result rankings could adversely affect user growth and revenue [84]. - The company measures average monthly unique visitors using Google Analytics, transitioning from Universal Analytics, which may impact comparability of visitor data [84]. - The company faces risks related to maintaining accurate and reliable data, which is critical for client confidence and demand for services [121]. Acquisitions and Investments - The company expects to complete the acquisition of Matterport in the first quarter of 2025, subject to regulatory approvals and other conditions [93]. - The company incurred a termination fee of $52 million related to the unsuccessful acquisition of RentPath in 2021 [88]. - The company is investing in the development of its advertising platform to attract advertisers, which may increase research and development and marketing expenses [74]. Compliance and Regulatory Environment - The company’s services are subject to various governmental regulations, which may differ among jurisdictions [58]. - The company is subject to evolving privacy laws, including GDPR and CCPA, which may increase compliance costs and operational changes [146]. - The company is subject to compliance requirements from MLSs, and failure to comply could restrict access to listings data, adversely affecting business operations [130]. Future Outlook - Revenue growth for CoStar is expected to decelerate in 2025 compared to 2024 due to the lack of benefits from converting legacy STR customers [185]. - Information Services revenue growth is expected to accelerate in 2025 due to the Visual Lease Acquisition [186]. - The company plans to expand CoStar and LoopNet products internationally, including launching LoopNet in France and Spain [195].

Core Insights - CoStar Group (CSGP) reported non-GAAP earnings of 26 cents per share for Q4 2024, exceeding the Zacks Consensus Estimate by 18.18%, but down 21.2% from 33 cents in the same quarter last year [1] - Revenues reached $709.4 million, surpassing the Zacks Consensus Estimate by 1.20% and reflecting a year-over-year increase of 10.8%, marking the 55th consecutive quarter of double-digit revenue growth [2] - Despite strong performance in digital platforms, CSGP shares fell 4.25% in after-hours trading due to concerns over rising expenses [2][3] Revenue Breakdown - CoStar's revenues from its primary segment amounted to $260.3 million, missing the consensus estimate by 0.15% but increasing 9.5% year over year [4] - Apartments.com saw a revenue increase of 17% year over year, with net new bookings of $53 million, up 21% sequentially [4] - Multifamily revenues totaled $276.5 million, missing estimates by 0.29% but up 13.4% year over year [5] - LoopNet's revenues of $71.9 million exceeded estimates by 0.26% and increased 5% year over year [5] - Residential revenues reached $28.1 million, missing estimates by 1.40% but showing a significant year-over-year increase of 181% [5] - Homes.com became the second-largest residential real estate marketplace in the U.S., attracting 110 million unique monthly visitors, an 11% year-over-year increase [6] Operating Expenses - Selling and marketing expenses rose 25.1% year over year to $308.5 million, accounting for 43.5% of revenues compared to 38.5% in the previous year [7] - General and administrative expenses increased to 16.6% of revenues, up 90 basis points year over year [7] - Total operating expenses increased 21.6% year over year to $528.5 million, representing 74.5% of revenues, an increase of 660 basis points [9] Financial Position - As of December 31, CoStar reported cash and cash equivalents of $4.68 billion, down from $4.93 billion as of September 30 [10] - Long-term debt remained relatively stable at $991.9 million as of December 31 [10] - Cash generated by operating activities was $392.6 million in the reported quarter, up from $298 million in the previous quarter [10] Guidance - For Q1 2025, CoStar expects revenues between $711 million and $716 million, indicating a year-over-year growth of 9% at the mid-point [11] - For the full year 2025, revenues are projected between $2.99 billion and $3.02 billion, reflecting a year-over-year growth of 10% at the mid-point [11] - Adjusted EBITDA for Q1 2025 is anticipated to be between $25 million and $35 million, with a full-year expectation of $375 million to $405 million for 2025 [12]

Fourth Quarter and Full Year 2024 Investor Presentation Legal Disclaimer This presentation of CoStar Group, Inc. ("CoStar Group" or the "Company") contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group's plans, objectives, expectations, beliefs and intentions and other statements including words such as "hope," "anticipate," "may," "likely," "might," "believe," "expect," ...

Financial Data and Key Metrics Changes - Full year 2024 revenue was $2.74 billion, an increase of 11% over 2023, marking the 55th consecutive quarter of double-digit revenue growth [7] - Fourth quarter 2024 revenue was $709 million, also an 11% increase year-over-year [7] - Net income grew from $7 million in Q1 2024 to $60 million in Q4 2024 [9] - Adjusted EBITDA increased from $12 million in Q1 to $112 million in Q4, exceeding guidance [9][79] - Full year adjusted EBITDA was $241 million, reflecting a 9% margin [79] Business Line Data and Key Metrics Changes - CoStar product revenue reached $1.02 billion in 2024, with a growth rate of 10% year-over-year [13] - Apartments.com revenue for Q4 2024 was $276 million, with a 99% monthly renewal rate and an NPS score of 94 [37] - LoopNet revenue grew by 5% in Q4 and 6% for the full year 2024 [83] - Revenue from information services was $37 million in Q4 and $136 million for the full year 2024, with expected growth of 18% to 20% in 2025 [83][84] Market Data and Key Metrics Changes - Average monthly unique visitors to global websites increased 17% year-over-year to 134 million in Q4 2024 [10] - The CoStar subscriber base grew to over 240,000, with a renewal rate of 92% [15] - The number of paying apartment communities on Apartments.com increased by 7% year-over-year to over 75,000 [43] Company Strategy and Development Direction - The company plans to grow its sales force from 1,390 at the end of 2024 to 1,890 by December 2025, aiming for significant revenue growth [78] - Focus on expanding the Homes.com sales team to 500 by the end of 2025, enhancing service and sales effectiveness [12][56] - The company is optimistic about capturing a large share of the total addressable market (TAM) in commercial and residential real estate [94][97] Management's Comments on Operating Environment and Future Outlook - Management believes the commercial real estate market is moving towards recovery, with positive demand and absorption for office space [20][23] - The company anticipates strong rent growth and capital appreciation in the coming years [22][24] - Management expressed confidence in achieving double-digit growth again once the current market malaise passes [93] Other Important Information - The company announced a $500 million share buyback program, expecting to execute $150 million of share repurchase annually [89] - Capital expenditures are projected to range from $400 million to $450 million in 2025, primarily for the Richmond campus [91] Q&A Session Summary Question: International Expansion and Investment - Management is implementing financial discipline in European operations and rationalizing costs, with no significant P&L hit expected in 2025 [104][105] Question: Apartments.com Growth Guidance - Revenue growth for Apartments.com is expected to be 11% to 12% for 2025, with a focus on increasing unit size and pricing [81][112] Question: Margin Management - Management expects continued margin increases in core commercial businesses, with a focus on managing fixed costs [124]

Core Insights - CoStar Group reported revenue of $709.4 million for the quarter ended December 2024, reflecting a year-over-year increase of 10.8% and a surprise of +1.20% over the Zacks Consensus Estimate of $701 million [1] - The earnings per share (EPS) for the quarter was $0.26, down from $0.33 in the same quarter last year, but exceeded the consensus estimate of $0.22 by +18.18% [1] Revenue Breakdown - CoStar's revenue from its core services was $260.30 million, slightly below the estimated $260.69 million, representing a year-over-year increase of +9.5% [4] - Information Services revenue was reported at $36.50 million, exceeding the estimate of $31.19 million, but showing a decline of -14.5% year-over-year [4] - Other Marketplaces generated $36.10 million, surpassing the average estimate of $32.10 million, with a year-over-year change of -3.5% [4] - LoopNet revenue was $71.90 million, slightly above the estimate of $71.72 million, marking a +5% increase year-over-year [4] - Residential revenue surged to $28.10 million, compared to the estimate of $28.50 million, reflecting a significant year-over-year increase of +181% [4] - Multifamily revenue was reported at $276.50 million, just below the estimate of $277.32 million, with a year-over-year increase of +13.4% [4] Stock Performance - CoStar's shares have returned +0.3% over the past month, while the Zacks S&P 500 composite has increased by +4.7% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]