Core Viewpoint - CoStar Group (CSGP) has seen a slight increase of 0.1% in its share price over the past month, underperforming the S&P 500, raising questions about its future performance leading up to the next earnings release [1]. Group 1: Earnings and Estimates - The consensus estimate for CoStar has shifted downward by 55.88% over the past month, indicating a negative trend in earnings expectations [2]. - The stock has received a Zacks Rank of 3 (Hold), suggesting an expectation of in-line returns in the coming months [4]. Group 2: VGM Scores - CoStar has an average Growth Score of C, but it is significantly lagging in Momentum Score with an F, and also received an F for Value, placing it in the lowest quintile for this investment strategy [3]. - The overall aggregate VGM Score for CoStar is F, which is critical for investors not focused on a single strategy [3]. Group 3: Industry Performance - CoStar is part of the Zacks Computers - IT Services industry, where Infosys (INFY) has gained 4.3% over the past month, reporting revenues of $4.73 billion, a year-over-year increase of 3.6% [5]. - Infosys is expected to post earnings of $0.19 per share for the current quarter, reflecting a year-over-year change of 5.6%, with its Zacks Consensus Estimate remaining unchanged [6].

Core Viewpoint - CoStar Group (CSGP) is expected to experience growth acceleration back to high teens, indicating a positive outlook for the company's performance in the near future [1]. Company Analysis - The investment thesis for CoStar Group is based on the belief that its growth trajectory remains strong and is on track to improve significantly [1]. - The investment strategy focuses on identifying undervalued companies with long-term growth potential, emphasizing the importance of buying quality companies at a discount to their intrinsic value [1].

Revenue Performance - CoStar Group's subscription-based services generated approximately 96% of total revenues for both the three months ended March 31, 2025 and 2024 [180]. - Total revenues increased by $76 million, or 12%, to $732 million for the three months ended March 31, 2025, compared to the same period in 2024 [192]. - North America revenues increased by $74 million, or 12%, to $697 million, while International revenues saw a slight increase of $2 million, or 5% [199]. - Homes.com revenues increased for the three months ended March 31, 2025, driven by an increase in the number of memberships [176]. - Other revenues increased for the three months ended March 31, 2025, primarily due to the Matterport Acquisition [178]. Subscription Services - Annualized net new bookings of subscription-based services decreased from $86 million for the three months ended March 31, 2024 to $56 million for the same period in 2025 [180]. - Contract renewal rates for existing subscription-based services remained stable at approximately 89% for both the trailing 12 months ended March 31, 2025 and 2024 [181]. Growth Rates - CoStar's revenue growth rate for the three months ended March 31, 2025 decelerated compared to the same period in 2024 due to a lack of benefit from converting legacy STR customers [172]. - Information Services revenue growth rate accelerated for the three months ended March 31, 2025, primarily due to the Visual Lease Acquisition [173]. - Multifamily revenue growth rate moderated for the three months ended March 31, 2025, impacted by the pivot of the Apartments.com sales force to support Homes.com [174]. - LoopNet's revenue growth rate decelerated for the three months ended March 31, 2025, primarily due to lower inflation-based price increases [175]. Profitability and Expenses - Gross profit increased by $64 million, or 12%, to $579 million, with the gross profit margin improving from 78% to 79% [193]. - Selling and marketing expenses (excluding customer base amortization) increased by $3 million, or 1%, to $369 million, while as a percentage of revenues, it decreased from 56% to 50% [193]. - General and administrative expenses rose by $43 million, or 43%, to $141 million, with customer base amortization expense increasing by $6 million, or 56% [193]. - Interest income, net decreased by $18 million, or 31%, to $39 million, primarily due to a decrease in cash and cash equivalents [194]. - Income tax expense increased by $3 million, or 69%, to $8 million, with an effective tax rate of (120.9)% of loss before income taxes [195]. Cash Flow and Investments - Net cash provided by operating activities for Q1 2025 was $53 million, a decrease of $86 million compared to $140 million in Q1 2024, primarily due to a decrease in working capital [211]. - Net cash used in investing activities for Q1 2025 was $911 million, compared to $380 million in Q1 2024, driven by the Matterport Acquisition [212]. - The company repurchased 240,000 shares for $18.5 million in Q1 2025 and anticipates repurchasing at least $150 million in total for 2025 [208]. - As of March 31, 2025, the balance of cash, cash equivalents, and restricted cash was $3.8 billion, down from $4.7 billion as of December 31, 2024, primarily due to $911 million used in investing activities [210]. Future Plans and Acquisitions - CoStar Group plans to continue investing in Homes.com and integrating Matterport's technology to enhance user experience and operational efficiency [183]. - The company expects to spend an additional $360 million on the Richmond campus expansion, with $266 million anticipated to be paid in 2025 [202]. - The company acquired approximately 17% of Domain's ordinary shares for $452 million AUD ($285 million) and plans to spend $2.4 billion AUD ($1.5 billion) to acquire the remaining shares [204]. - The estimated value of tax incentives related to the campus expansion is between $275 million and $285 million, contingent on meeting job creation and capital expenditure targets [203]. Market and Economic Factors - Approximately 5% of revenues for Q1 2025 were denominated in foreign currencies, with a potential revenue impact of $4 million from a 10% fluctuation in the U.S. dollar exchange rate [222]. - The investment in Domain is subject to market price volatility, with a potential $28 million increase or decrease in value from a 10% change in share price [223]. - The company believes its intangible assets will be recoverable, but economic changes could affect this assessment [226]. Goodwill and Intangible Assets - Goodwill and intangible assets amounted to approximately $4.6 billion as of March 31, 2025 [226].

Core Insights - CoStar Group (CSGP) reported non-GAAP earnings of 14 cents per share in Q1 2025, exceeding the Zacks Consensus Estimate by 27.27% and showing a 40% increase year over year from 10 cents per share in the same quarter last year [1] - Revenues reached $732.2 million, surpassing the Zacks Consensus Estimate by 1.78% and reflecting an 11.5% year-over-year growth, marking the 56th consecutive quarter of double-digit revenue growth [2] - The Matterport acquisition contributed $15.9 million in revenues during Q1 2025, enhancing overall performance [2] Revenue Breakdown - CoStar's revenues from its primary segment accounted for 36.2% of total revenues, amounting to $265.1 million, which beat the consensus estimate by 0.11% and increased 5.9% year over year [3] - Apartments.com generated $282 million in revenues, an 11% year-over-year increase, with 38 million average monthly unique visitors [4] - Multifamily revenues totaled $282.5 million, a 10.9% year-over-year increase, although it missed the consensus estimate by 0.34% [5] - LoopNet's revenues were $72.8 million, up 5.4% year over year but missed the consensus mark by 0.78% [5] - Other marketplace revenues reached $44.8 million, exceeding the consensus mark by 51.61% and increasing 46.4% year over year [6] Operating Performance - Selling and marketing expenses rose 0.8% year over year to $368.9 million, constituting 50.4% of revenues, down from 55.8% in the previous year [7] - Adjusted EBITDA was reported at $66 million, significantly up from $12 million in the year-ago quarter, with an adjusted EBITDA margin expansion of 710 basis points to 9% [9] Financial Position - As of March 31, 2025, CoStar had cash and cash equivalents of $3.68 billion, down from $4.68 billion as of December 31, 2024 [10] - Long-term debt stood at $992.2 million, slightly up from $991.9 million at the end of the previous year [10] Guidance - For Q2 2025, CoStar expects revenues between $770 million and $775 million, indicating a year-over-year growth of 14% at the mid-point [11] - For the full year 2025, revenues are projected to be between $3.115 billion and $3.155 billion, reflecting a year-over-year growth of 15% at the mid-point [11][12]

Financial Data and Key Metrics Changes - Q1 2025 revenue was $732 million, a 12% increase year over year, marking the 56th consecutive quarter of double-digit revenue growth [4][5] - Adjusted EBITDA for Q1 2025 was $66 million, representing a 429% increase over Q1 2024, with a profit margin of 43% in commercial real estate and information marketplace businesses [5][63] - Company net new bookings were $56 million in Q1 2025, up 6% sequentially from Q4 2024 [5][70] - The company reported a net loss of $15 million primarily due to one-time costs from the Matterport acquisition [69] Business Line Data and Key Metrics Changes - CoStar revenue grew 6% year over year, with net new bookings at their highest level since Q3 2023 [6][64] - Apartments.com revenue increased by 11% year over year, with a significant rise in quality interactions and new community additions [18][65] - LoopNet revenue grew 5% in Q1 2025, with expectations for revenue growth to accelerate throughout the year [66] - STR's integration into CoStar contributed to its best quarter ever for net new bookings, up 17% year over year [6] 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 [8][9] - In retail, real asking rents are at ten-year lows, but signs of improvement are emerging as vacancy rates begin to fall [10] - The international business achieved over $5 million in annual recurring revenue (ARR) in Q1 2025, representing 56% year-over-year growth [5] Company Strategy and Development Direction - The company is focused on enhancing its product offerings and integrating various brands to create a comprehensive solution for clients [13][14] - A new marketing strategy for LoopNet aims to increase the number of paid properties on the platform, enhancing consumer choice [12] - The company plans to expand its sales force by 23% in 2025 to capitalize on market opportunities, particularly in the multifamily sector [19][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 [11] - The company anticipates slight headwinds from government contract cancellations but expects revenue growth to remain stable [64][72] - The integration of Matterport is expected to enhance the company's offerings and drive future growth [63][68] Other Important Information - The company repurchased 240,000 shares for $18.5 million and plans to repurchase a total of $150 million in shares in 2025 [71] - The company is in the process of acquiring Domain Group, which could significantly enhance its market position in Australia [71][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 actions, 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][79] Question: Integration and monetization of Matterport - Management discussed plans for integrating Matterport into the CoStar platform and its potential for monetization [82]

Core Insights - CoStar Group reported revenue of $732.2 million for the quarter ended March 2025, reflecting an 11.6% increase year-over-year and exceeding the Zacks Consensus Estimate of $719.37 million by 1.78% [1] - The company's EPS was $0.14, up from $0.10 in the same quarter last year, representing a surprise of 27.27% compared to the consensus estimate of $0.11 [1] Revenue Breakdown - CoStar's revenue from its core business was $265.10 million, slightly above the average estimate of $264.81 million, marking a year-over-year increase of 5.9% [4] - Information Services generated $39.80 million, exceeding the estimated $36.30 million, with a year-over-year growth of 20.6% [4] - Other Marketplaces reported $44.80 million, significantly higher than the estimated $29.55 million, showing a year-over-year increase of 46.4% [4] - LoopNet's revenue was $72.80 million, slightly below the estimate of $73.38 million, with a year-over-year growth of 5.4% [4] - Residential revenue reached $27.20 million, below the estimate of $28.70 million, but still reflecting a substantial year-over-year increase of 46.2% [4] - Multifamily revenue was $282.50 million, close to the estimate of $283.47 million, with a year-over-year growth of 10.9% [4] Stock Performance - CoStar's shares have returned 3.2% over the past month, outperforming the Zacks S&P 500 composite, which declined by 0.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Group 1: Earnings Performance - CoStar Group reported quarterly earnings of $0.14 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, and up from $0.10 per share a year ago [1] - The earnings surprise for the quarter was 27.27%, following a previous quarter where actual earnings of $0.26 per share surpassed expectations of $0.22 per share by 18.18% [2] - Over the last four quarters, CoStar has consistently surpassed consensus EPS estimates [2] Group 2: Revenue Performance - CoStar's revenues for the quarter ended March 2025 were $732.2 million, surpassing the Zacks Consensus Estimate by 1.78% and up from $656.4 million year-over-year [3] - The company has exceeded consensus revenue estimates three times in the last four quarters [3] Group 3: Stock Performance and Outlook - CoStar shares have increased approximately 14.2% since the beginning of the year, contrasting with a -6% decline in the S&P 500 [4] - The current consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $747.83 million, and for the current fiscal year, it is $0.93 on revenues of $3.04 billion [8] Group 4: Industry Context - The Computers - IT Services industry, to which CoStar belongs, is currently ranked in the bottom 44% of over 250 Zacks industries, indicating potential challenges ahead [9] - The performance of CoStar's stock may be influenced by the overall outlook for the industry [9]

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]