Financial Data and Key Metrics Changes - Q1 2025 revenue reached $732 million, a 12% year-over-year increase, marking the 56th consecutive quarter of double-digit revenue growth [5][63] - Adjusted EBITDA for Q1 2025 was $66 million, representing a 429% increase compared to Q1 2024, with a profit margin of 9% [5][63] - Company net new bookings were $56 million in Q1 2025, up 6% sequentially from Q4 2024 [6][71] Business Line Data and Key Metrics Changes - CoStar revenue grew 6% year-over-year to $265 million in Q1 2025, with annualized net new bookings increasing by 68% year-over-year [7][64] - Apartments.com revenue increased by 11% year-over-year to $282 million, with significant growth in quality interactions and new community additions [19][65] - LoopNet revenue grew 5% in Q1 2025, with expectations for revenue growth to accelerate throughout the year [67] Market Data and Key Metrics Changes - The commercial real estate environment remains challenging, with a historic high vacancy rate of about 16% and real asking rents at a 30-year low [9][10] - In retail, vacancy rates are beginning to fall, indicating signs of improvement in the market [11] - The international business achieved over $5 million in annual recurring revenue (ARR) in Q1 2025, representing 56% year-over-year growth [6] Company Strategy and Development Direction - The company is focused on integrating its various brands and enhancing product offerings to create a comprehensive solution for clients [15][16] - A new marketing strategy for LoopNet aims to increase the number of paid properties on the platform, enhancing consumer choice [13] - The company plans to expand its sales force by 23% in 2025 to capitalize on market opportunities [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to double-digit growth as market conditions improve over the next few years [12] - The company anticipates slight headwinds from government contract cancellations but maintains a revenue growth outlook of 6% to 7% for the full year [64][73] - The integration of Matterport is expected to enhance the company's offerings and contribute to future growth [55][69] Other Important Information - The company repurchased 240,000 shares for $18.5 million in Q1 2025 and plans to repurchase a total of $150 million in shares throughout the year [72] - The company has made a nonbinding offer to acquire Domain Group, which could significantly enhance its market position in Australia [72][54] Q&A Session Summary Question: Comments on the delayed market listing exemption and Zillow's reaction - Management noted overwhelmingly negative feedback from agents regarding Zillow's new rules, indicating a potential opportunity for the company [76][77] Question: Nonresidential EBITDA margin in Q1 and outlook for residential spending - The commercial margin was reported at 43% for Q1, with no changes to the residential spending outlook [78][80]

Financial Data and Key Metrics Changes - Q1 2025 revenue reached $732 million, a 12% year-over-year increase, marking the 56th consecutive quarter of double-digit revenue growth [5][63] - Adjusted EBITDA for Q1 2025 was $66 million, representing a 429% increase compared to Q1 2024, with a profit margin of 9% [6][63] - Company net new bookings were $56 million in Q1 2025, up 6% sequentially from Q4 2024 [6][71] - The company reported a net loss of $15 million primarily due to one-time costs from the Matterport acquisition [70] Business Line Data and Key Metrics Changes - CoStar revenue grew 6% year-over-year in Q1 2025, with net new bookings at their highest level since Q3 2023 [7][64] - Apartments.com revenue increased by 11% year-over-year, with significant growth in the number of listed properties [19][65] - LoopNet revenue grew 5% in Q1 2025, with expectations for revenue growth to accelerate throughout the year [67] - STR's integration into CoStar contributed to its best quarter ever for net new bookings, up 17% year-over-year [7] Market Data and Key Metrics Changes - The commercial real estate environment remains challenging, with historic high vacancy rates around 16% and real asking rents at a 30-year low [9][10] - In retail, real asking rents are at ten-year lows, but signs of improvement are emerging as vacancy rates begin to fall [11] - The company expects market conditions to improve over the next few years, shifting from headwinds to tailwinds [12] Company Strategy and Development Direction - The company is focused on integrating its various brands and enhancing product offerings to create a comprehensive solution for clients [15][16] - A new marketing strategy for LoopNet aims to increase the number of paid properties on the platform, enhancing consumer choice [13] - The company is expanding its sales force to capitalize on growth opportunities, particularly in the Apartments.com segment [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted that the current commercial real estate environment is one of the worst in decades, but they anticipate a return to double-digit growth as conditions improve [9][12] - The company is maintaining its revenue growth guidance of 6% to 7% for the full year 2025, despite some expected headwinds from government contract cancellations [64][73] - Management expressed confidence in the Homes.com brand, which has seen significant growth in unaided brand awareness and traffic [70][31] Other Important Information - The company repurchased 240,000 shares for $18.5 million in Q1 2025 and plans to repurchase a total of $150 million in shares throughout the year [72] - The company made a nonbinding offer to acquire Domain Group, a significant player in the Australian real estate market [72][54] Q&A Session Summary Question: Comments on the delayed market listing exemption discussed by the NAR and Zillow's reaction - Management reported overwhelmingly negative feedback from agents regarding Zillow's new rules, indicating a potential opportunity for the company [76][77] Question: Nonresidential EBITDA margin in Q1 and outlook for residential spending in 2025 - The commercial margin was reported at 43% for Q1, with no changes to the budget for Homes.com [78][80]

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," ...