It has been about a month since the last earnings report for CoStar Group (CSGP) . Shares have added about 0.2% in that time frame, outperforming the S&P 500.Will the recent positive trend continue leading up to its next earnings release, or is CoStar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.How Have Estimates Been Moving Since Then?It turns o ...

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," ...

CoStar Group, Inc. (NASDAQ:CSGP) Q4 2024 Earnings Conference Call February 18, 2025 5:00 PM ET Company Participants Richard Simonelli - Head of IR Andrew Florance - Founder & CEO Christian Lown - CFO Conference Call Participants John Campbell - Stephens Peter Christiansen - Citi Ryan Tomasello - KBW Alexei Gogolev - JPMorgan Stephen Sheldon - William Blair Jeff Meuler - Baird Operator Good day, and thank you for standing by. Welcome to the Q4 2024 CoStar Group Earnings Conference Call. At this time, all par ...

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]

Core Insights - CoStar Group reported mixed Q4 2024 results, with revenue exceeding expectations but earnings per share falling short [2][3] Financial Performance - Q4 2024 revenue reached $709 million, surpassing the analyst estimate of $701 million and the company's guidance range of $693 million to $703 million, reflecting a year-over-year increase of 10.8% from $640 million in Q4 2023 [2][3][6] - Earnings per share (EPS) for Q4 2024 was $0.15, below the expected $0.22 and down 37.5% from $0.24 in Q4 2023 [3][6] - Net income decreased by 37.8% year-over-year to $60 million, while adjusted EBITDA was $111.9 million, indicating a 14% decline from the previous year but exceeding management's expectations [3][7] Business Overview - CoStar Group specializes in online real estate marketplaces, data, and analytics services, with a focus on maintaining a comprehensive proprietary database that includes property, leasing, sales, and tenant information [4][5] - The company is expanding its market presence in the residential real estate segment, particularly through platforms like Apartments.com and Homes.com [4][5] Segment Performance - Apartments.com experienced a 17% revenue increase, contributing to a total of $1.07 billion for 2024 [6] - Homes.com has become the second-largest residential real estate marketplace in the U.S., attracting 110 million unique visitors monthly [7] Future Outlook - Management projects 2025 revenue between $2.985 billion and $3.015 billion, with Q1 2025 revenue expected to be between $711 million and $716 million, representing approximately 9% year-over-year growth [8] - The adjusted EBITDA forecast for 2025 is set between $375 million and $405 million, with a focus on ongoing advancements in strategic segments like Homes.com [8]

Financial Performance - CoStar Group's full year 2024 revenue was $2.74 billion, an 11% increase from $2.46 billion in 2023[1] - Q4 2024 revenue reached $709 million, up 11% from $640 million in Q4 2023[1] - Net income for 2024 was $139 million, down from $375 million in 2023, with Q4 2024 net income at $60 million[1] - Total revenues for the year ended December 31, 2024, reached $2,736.2 million, up 15.0% from $2,455.0 million in 2023[23] - Net income for 2024 was $138.7 million, a decrease of 63.0% compared to $374.7 million in 2023[21] - EBITDA for the fourth quarter of 2024 was $72.9 million, down 25.7% from $98.0 million in the fourth quarter of 2023[25] - The company reported a net cash provided by operating activities of $392.6 million in 2024, down 19.7% from $489.5 million in 2023[21] Revenue Sources - Apartments.com generated $1.07 billion in revenue for 2024, a 17% increase year-over-year, while CoStar's revenue was $1.02 billion, growing 10%[3] - CoStar Group's commercial information and marketplace brands achieved 43% profit margins for 2024[3] Visitor Metrics - The Homes.com Network achieved 110 million average monthly unique visitors in Q4 2024, nearly doubling Realtor.com's 62 million[3] - CoStar Group's average monthly unique visitors increased by 17% year-over-year to 134 million in Q4 2024[3] - CoStar Group's websites attracted over 134 million average monthly unique visitors in Q4 2024[33] Future Projections - The company expects 2025 revenue in the range of $2.985 billion to $3.015 billion, representing approximately 10% growth year-over-year[6] - Adjusted EBITDA for 2025 is projected to be between $375 million and $405 million, with a margin of 13% at the midpoint[7] - The company plans to achieve an adjusted EBITDA guidance range of $375 million to $405 million for the year ending December 31, 2025[29] Assets and Liabilities - Total assets increased to $9,256.8 million in 2024 from $8,919.7 million in 2023, representing a growth of 3.8%[19] - Cash and cash equivalents decreased to $4,681.0 million in 2024 from $5,215.9 million in 2023, a decline of 10.3%[21] - Total current liabilities increased to $552.3 million in 2024, up 21.2% from $455.8 million in 2023[19] - Total stockholders' equity increased to $7,553.5 million in 2024 from $7,338.6 million in 2023, reflecting a growth of 2.9%[19] Stock and Acquisitions - The Board approved a stock repurchase program for up to $500 million of the company's common stock[2] - Cash paid for acquisitions in 2024 totaled $276.7 million, significantly higher than $99.6 million in 2023[21] - CoStar Group is in the process of acquiring Matterport, Inc., which may impact its future performance[34] Strategic Initiatives - CoStar Group is a global leader in commercial real estate information, analytics, and online marketplaces, with major brands including CoStar, LoopNet, and Apartments.com[32] - The company is committed to transforming the real estate industry through innovative technology and comprehensive market intelligence[33] - The company is focused on geographic expansion and increasing revenues from current and future plans[34] - The company is investing in building out its campus in Richmond, Virginia, which involves significant costs[34] Risks and Uncertainties - The company faces risks including competition, market cyclicality, and the ability to attract and retain clients and advertisers[34] - CoStar Group's forward-looking statements are subject to many risks and uncertainties that could cause actual results to differ materially[34] - CoStar Group's filings with the SEC provide more information on potential risks and factors affecting its performance[35]

Core Viewpoint - CoStar Group is expected to report fourth-quarter 2024 earnings with projected revenues between $693 million and $703 million, indicating a year-over-year growth of approximately 9% at the midpoint, while earnings per share are anticipated to be between 21 cents and 23 cents [1] Revenue Expectations - The Zacks Consensus Estimate for fourth-quarter revenues is currently pegged at $701 million, suggesting a growth of 9.51% from the year-ago quarter's levels [3] - The Zacks Consensus Estimate for fourth-quarter earnings has remained steady at 22 cents per share, indicating a 33.33% decline from the figure reported in the year-ago quarter [2] Performance Drivers - CoStar Group's fourth-quarter performance is likely to benefit from a robust portfolio of marketplaces, including Apartments.com, LoopNet, and Homes.com [4] - Increased traffic and higher advertising expenditures on Apartments.com are expected to contribute to top-line growth [5] - Homes.com network traffic reached a record of 130 million unique visitors in the third quarter of 2024, a 17% year-over-year increase, which is anticipated to boost user engagement and revenue potential [5] - Unique visitors for Homes.com reached 85 million in the third quarter of 2024, marking a 38% year-over-year increase [6] - The introduction of new features like the Owner module is expected to enhance user engagement and attract more users [7] - The strengthening international segment and positive outlook for real estate marketplaces are expected to bolster LoopNet's performance [7] - CoStar Group's growth trajectory has been supported by a consistent acquisition strategy, including notable acquisitions like Visual Lease and OnTheMarket [8] Challenges - The launch of Homes.com has presented challenges, as sales teams are initially shifting focus away from core products, leading to reduced productivity [9] - Persistent inflation and higher interest rates are weighing on consumer confidence, which is expected to negatively impact CoStar Group's results in the upcoming quarter [9] Earnings Outlook - CoStar Group has an Earnings ESP of 0.00% and currently carries a Zacks Rank 3, indicating that the odds of an earnings beat are not favorable [10][11]