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CoStar Group(CSGP) - 2024 Q3 - Quarterly Results
2024-10-22 20:12
[Executive Summary & Q3 Highlights](index=1&type=section&id=Executive%20Summary%20%26%20Q3%20Highlights) CoStar Group achieved its 54th consecutive quarter of double-digit revenue growth in Q3 2024, alongside strong profit margins and significant visitor growth [Q3 2024 Financial Performance Overview](index=1&type=section&id=Q3%202024%20Financial%20Performance%20Overview) CoStar Group achieved its 54th consecutive quarter of double-digit revenue growth in Q3 2024, with revenue up 11% year-over-year Q3 2024 Financial Performance (Millions USD) | Metric | Q3 2024 (Millions USD) | YoY Change | QoQ Change (vs Q2 2024) | | :--------------- | :--------------------- | :--------- | :---------------------- | | Revenue | $693 | +11% | +2.2% | | Net Income | $53 | -41.5% | +176% | | Net Income/Diluted Share | $0.13 | -40.9% | +160% | | EBITDA | $51 | -42.9% | +320% | | Adjusted EBITDA | $76 | -32.1% | +86% | - Adjusted EBITDA exceeded the midpoint of the Company's guidance range by **54%** for Q3 2024[1](index=1&type=chunk) [CEO Commentary & Business Highlights](index=1&type=section&id=CEO%20Commentary%20%26%20Business%20Highlights) CEO Andy Florance emphasized sustained double-digit revenue growth from core businesses and significant marketing investments driving visitor growth for Homes.com and OnTheMarket - CoStar Group's two billion-dollar run rate businesses, Apartments.com and CoStar, continue to deliver double-digit revenue growth[2](index=2&type=chunk) - Commercial information and marketplace businesses achieved **43% profit margins** in Q3 2024[2](index=2&type=chunk) - Average monthly unique visitors increased **28% year-over-year to 163 million** in Q3 2024[2](index=2&type=chunk) - Homes.com network in the U.S. reached **130 million average monthly unique visitors**, with unaided awareness increasing to **33%** in September 2024 from **4%** in February 2024[2](index=2&type=chunk) - OnTheMarket (U.K.) saw year-over-year traffic grow by **212%**, unique visitors by **348%**, listing agents by **27%**, sales leads by **76%**, and total stock by **45%** within 10 months of acquisition[2](index=2&type=chunk) [Financial Results & Outlook](index=2&type=section&id=Financial%20Results%20%26%20Outlook) This section details CoStar Group's historical quarterly financial performance and updated 2024 financial guidance, reflecting strong Q3 results [Quarterly Financial Performance (Historical)](index=2&type=section&id=Quarterly%20Financial%20Performance%20%28Historical%29) This section provides a detailed quarterly breakdown of key financial metrics from Q1 2023 to Q3 2024, illustrating performance trends Year 2023-2024 Quarterly Results (Unaudited, in millions USD, except per share) | Metric (in millions USD, except per share) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | | :----------------------------------- | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Revenues | $584 | $606 | $625 | $640 | $656 | $678 | $693 | | Net income | 87 | 101 | 91 | 96 | 7 | 19 | 53 | | Net income per share - diluted | 0.21 | 0.25 | 0.22 | 0.24 | 0.02 | 0.05 | 0.13 | | EBITDA | 98 | 105 | 89 | 98 | (13) | 12 | 51 | | Adjusted EBITDA | 123 | 127 | 112 | 130 | 12 | 41 | 76 | | Non-GAAP net income | 118 | 127 | 120 | 133 | 42 | 61 | 88 | | Non-GAAP net income per share - diluted | 0.29 | 0.31 | 0.30 | 0.33 | 0.10 | 0.15 | 0.22 | [2024 Financial Outlook](index=2&type=section&id=2024%20Financial%20Outlook) CoStar Group updated its full-year 2024 financial guidance and provided Q4 expectations, reflecting strong Q3 performance and an increased Adjusted EBITDA outlook 2024 Financial Outlook | Metric | Full Year 2024 Guidance | Q4 2024 Guidance | | :------------------------------------ | :---------------------- | :--------------- | | Revenue | $2.72B - $2.73B | $693M - $703M | | Revenue Growth (YoY at midpoint) | ~11% | ~9% | | Adjusted EBITDA | $205M - $215M | $76M - $86M | | Adjusted EBITDA Increase (vs previous guidance) | +5% (at midpoint) | N/A | | Non-GAAP Net Income per Diluted Share | $0.67 - $0.69 | $0.21 - $0.23 | | Assumed Non-GAAP Tax Rate | 26% | 26% | - The updated full-year Adjusted EBITDA guidance represents a **5% increase** at the midpoint from previous guidance[4](index=4&type=chunk) [Non-GAAP Measures & Operating Metrics](index=2&type=section&id=Non-GAAP%20Measures%20%26%20Operating%20Metrics) This section defines CoStar Group's key non-GAAP financial measures and operating metrics, clarifying their calculation and purpose [Non-GAAP Financial Measures Definitions](index=2&type=section&id=Non-GAAP%20Financial%20Measures%20Definitions) This section defines key non-GAAP financial measures, including EBITDA, Adjusted EBITDA, and Non-GAAP net income, explaining their derivation from GAAP - EBITDA is GAAP net income before interest, other income/expense, loss on debt extinguishment, income taxes, and depreciation/amortization[7](index=7&type=chunk) - Adjusted EBITDA further adjusts EBITDA for stock-based compensation, acquisition/integration costs, restructuring costs, and certain settlements/impairments[8](index=8&type=chunk) - Non-GAAP net income adjusts GAAP net income for various non-cash and non-recurring items, including stock-based compensation and amortization of acquired intangibles, and applies an assumed **26% tax rate**[8](index=8&type=chunk) - Non-GAAP net income per diluted share divides non-GAAP net income by diluted shares, including potentially dilutive securities even in GAAP net loss periods if they become anti-dilutive[9](index=9&type=chunk) [Operating Metrics Definitions](index=3&type=section&id=Operating%20Metrics%20Definitions) This section defines 'Net new bookings' as a key operating metric, clarifying its calculation and purpose - Net new bookings are calculated based on the annualized change in sales bookings from new, changed, or canceled subscription-based contracts[10](index=10&type=chunk) - Net new bookings information is not comparable to, nor a substitute for, revenue analysis[10](index=10&type=chunk) [Condensed Consolidated Financial Statements](index=4&type=section&id=Condensed%20Consolidated%20Financial%20Statements) This section presents CoStar Group's condensed consolidated statements of operations, balance sheets, and cash flows for the reported periods [Statements of Operations](index=4&type=section&id=Statements%20of%20Operations) The condensed consolidated statements of operations detail the company's financial performance for the three and nine months ended September 30, 2024 and 2023 Condensed Consolidated Statements of Operations (Unaudited, in millions USD, except per share) | Metric (in millions USD, except per share) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :----------------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Revenues | $692.6 | $624.7 | $2,026.8 | $1,814.9 | | Gross profit | $552.0 | $501.0 | $1,609.2 | $1,459.7 | | (Loss) income from operations | $23.7 | $61.6 | $(35.3) | $213.0 | | Net income | $53.0 | $90.6 | $78.9 | $278.2 | | Net income per share - diluted | $0.13 | $0.22 | $0.19 | $0.68 | - Operating income significantly decreased year-over-year for both the three-month and nine-month periods, turning into a loss for the nine months ended September 30, 2024[12](index=12&type=chunk) [Balance Sheets](index=6&type=section&id=Balance%20Sheets) The condensed consolidated balance sheets present CoStar Group's financial position as of September 30, 2024, compared to December 31, 2023 Condensed Consolidated Balance Sheets (Unaudited, in millions USD) | Metric (in millions USD) | Sep 30, 2024 | Dec 31, 2023 | | :------------------------------- | :----------- | :----------- | | Total current assets | $5,195.1 | $5,476.1 | | Total assets | $9,138.7 | $8,919.7 | | Total current liabilities | $539.4 | $455.8 | | Total liabilities | $1,647.6 | $1,581.1 | | Total stockholders' equity | $7,491.1 | $7,338.6 | - Cash and cash equivalents decreased from **$5,215.9 million** at Dec 31, 2023, to **$4,937.6 million** at Sep 30, 2024[15](index=15&type=chunk) - Property and equipment, net, significantly increased from **$472.2 million** to **$937.8 million**, indicating substantial capital investments[15](index=15&type=chunk) [Statements of Cash Flows](index=7&type=section&id=Statements%20of%20Cash%20Flows) The condensed consolidated statements of cash flows detail cash generated and used by operating, investing, and financing activities for the nine months ended September 30, 2024 and 2023 Condensed Consolidated Statements of Cash Flows (Unaudited, in millions USD) | Metric (in millions USD) | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------------------ | :-------------------------- | :-------------------------- | | Net cash provided by operating activities | $298.0 | $341.0 | | Net cash used in investing activities | $(562.8) | $(76.0) | | Net cash used in financing activities | $(13.8) | $(3.0) | | Net (decrease) increase in cash and cash equivalents | $(278.3) | $261.9 | - A significant increase in cash used in investing activities, primarily due to purchases of property, equipment, and other assets for new campuses (**$509.6 million** in 2024 vs **$61.8 million** in 2023), led to a net decrease in cash and cash equivalents[16](index=16&type=chunk) [Non-GAAP Reconciliations](index=5&type=section&id=Non-GAAP%20Reconciliations) This section provides detailed reconciliations of GAAP financial measures to their non-GAAP counterparts for various periods, including forward-looking guidance [Net Income to Non-GAAP Net Income](index=5&type=section&id=Net%20Income%20to%20Non-GAAP%20Net%20Income) This section reconciles GAAP net income to Non-GAAP net income for the three and nine months ended September 30, 2024 and 2023, detailing specific adjustments Reconciliation of Net Income to Non-GAAP Net Income (Unaudited, in millions USD) | Metric (in millions USD) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income | $53.0 | $90.6 | $78.9 | $278.2 | | Amortization of acquired intangible assets | 16.5 | 18.7 | 54.4 | 54.3 | | Stock-based compensation expense | 21.8 | 21.9 | 67.3 | 63.8 | | Acquisition and integration related costs | 4.4 | 0.8 | 12.7 | 2.3 | | Non-GAAP net income | $88.3 | $120.2 | $191.2 | $364.6 | [Net Income to EBITDA and Adjusted EBITDA](index=5&type=section&id=Net%20Income%20to%20EBITDA%20and%20Adjusted%20EBITDA) This reconciliation details adjustments from GAAP net income to EBITDA and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 Reconciliation of Net Income to EBITDA and Adjusted EBITDA (Unaudited, in millions USD) | Metric (in millions USD) | 3 Months Ended Sep 30, 2024 | 3 Months Ended Sep 30, 2023 | 9 Months Ended Sep 30, 2024 | 9 Months Ended Sep 30, 2023 | | :------------------------------------ | :-------------------------- | :-------------------------- | :-------------------------- | :-------------------------- | | Net income | $53.0 | $90.6 | $78.9 | $278.2 | | Depreciation and other amortization | 10.6 | 8.4 | 31.0 | 24.5 | | EBITDA | $50.8 | $88.7 | $50.1 | $291.8 | | Stock-based compensation expense | 21.8 | 21.9 | 67.3 | 63.8 | | Acquisition and integration related costs | 4.4 | 0.8 | 12.7 | 2.3 | | Adjusted EBITDA | $75.9 | $111.9 | $129.0 | $361.7 | [Quarterly Non-GAAP Reconciliations](index=9&type=section&id=Quarterly%20Non-GAAP%20Reconciliations) This section provides detailed quarterly reconciliations of GAAP net income to Non-GAAP net income, EBITDA, and Adjusted EBITDA from Q1 2023 to Q3 2024 Quarterly Reconciliation of Net Income to Non-GAAP Net Income (Unaudited, in millions USD, except per share) | Metric (in millions USD, except per share) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Net income | $87.1 | $100.5 | $90.6 | $96.4 | $6.7 | $19.2 | $53.0 | | Non-GAAP net income | $117.7 | $126.7 | $120.2 | $133.4 | $41.7 | $61.2 | $88.3 | | Non-GAAP net income per share - diluted | $0.29 | $0.31 | $0.30 | $0.33 | $0.10 | $0.15 | $0.22 | Quarterly Reconciliation of Net Income to EBITDA and Adjusted EBITDA (Unaudited, in millions USD) | Metric (in millions USD) | Q1 2023 | Q2 2023 | Q3 2023 | Q4 2023 | Q1 2024 | Q2 2024 | Q3 2024 | | :------------------------------------ | :------ | :------ | :------ | :------ | :------ | :------ | :------ | | Net income | $87.1 | $100.5 | $90.6 | $96.4 | $6.7 | $19.2 | $53.0 | | EBITDA | $97.8 | $105.2 | $88.7 | $98.0 | $(12.7) | $12.1 | $50.8 | | Adjusted EBITDA | $122.9 | $126.8 | $111.9 | $130.1 | $12.4 | $40.8 | $75.9 | [Forward-Looking Guidance Reconciliations](index=10&type=section&id=Forward-Looking%20Guidance%20Reconciliations) This section reconciles forward-looking guidance for Q4 2024 and full-year 2024, converting projected GAAP net income to Non-GAAP net income and Adjusted EBITDA Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income (Unaudited, in millions USD, except per share) | Metric (in millions USD, except per share) | Q4 2024 Guidance (Low) | Q4 2024 Guidance (High) | Full Year 2024 Guidance (Low) | Full Year 2024 Guidance (High) | | :------------------------------------ | :--------------------- | :---------------------- | :---------------------------- | :----------------------------- | | Net income | $43 | $49 | $122 | N/A | | Non-GAAP net income | $84 | $92 | $275 | N/A | | Non-GAAP net income per share - diluted | $0.21 | $0.23 | $0.67 | $0.69 | Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA (Unaudited, in millions USD) | Metric (in millions USD) | Q4 2024 Guidance (Low) | Q4 2024 Guidance (High) | Full Year 2024 Guidance (Low) | Full Year 2024 Guidance (High) | | :------------------------------------ | :--------------------- | :---------------------- | :---------------------------- | :----------------------------- | | Net income | $43 | $49 | $122 | N/A | | Adjusted EBITDA | $76 | $86 | $205 | $215 | [Segment Performance](index=8&type=section&id=Segment%20Performance) This section analyzes CoStar Group's revenue and EBITDA performance disaggregated by business segment and geographical region [Disaggregated Revenues by Segment and Geography](index=8&type=section&id=Disaggregated%20Revenues%20by%20Segment%20and%20Geography) This section breaks down revenues by major business segments and geographical regions for the three and nine months ended September 30, 2024 and 2023 Disaggregated Revenues - Q3 2024 (Unaudited, in millions USD) | Segment | North America (Millions USD) | International (Millions USD) | Total (Millions USD) | | :------------------- | :--------------------------- | :--------------------------- | :------------------- | | CoStar | $240.8 | $16.1 | $256.9 | | Information Services | $28.2 | $4.8 | $33.0 | | Multifamily | $271.8 | — | $271.8 | | LoopNet | $68.1 | $2.8 | $70.9 | | Residential | $17.0 | $10.7 | $27.7 | | Other Marketplaces | $32.3 | — | $32.3 | | **Total revenues** | **$658.2** | **$34.4** | **$692.6** | Disaggregated Revenues - YTD Sep 30, 2024 (Unaudited, in millions USD) | Segment | North America (Millions USD) | International (Millions USD) | Total (Millions USD) | | :------------------- | :--------------------------- | :--------------------------- | :------------------- | | CoStar | $713.6 | $46.6 | $760.2 | | Information Services | $83.5 | $15.9 | $99.4 | | Multifamily | $790.8 | — | $790.8 | | LoopNet | $201.7 | $8.1 | $209.8 | | Residential | $41.6 | $30.9 | $72.5 | | Other Marketplaces | $94.1 | — | $94.1 | | **Total revenues** | **$1,925.3** | **$101.5** | **$2,026.8** | - Multifamily and CoStar segments are the largest revenue contributors, with Multifamily showing strong growth year-over-year[17](index=17&type=chunk)[18](index=18&type=chunk) - Residential revenue, including international operations, significantly increased from **$10.3 million** in Q3 2023 to **$27.7 million** in Q3 2024[17](index=17&type=chunk) [Segment EBITDA Results](index=8&type=section&id=Segment%20EBITDA%20Results) This section presents EBITDA results by North America and International segments for the three and nine months ended September 30, 2024 and 2023 Results of Segments - EBITDA (Unaudited, in millions USD) | Segment | 3 Months Ended Sep 30, 2024 (Millions USD) | 3 Months Ended Sep 30, 2023 (Millions USD) | 9 Months Ended Sep 30, 2024 (Millions USD) | 9 Months Ended Sep 30, 2023 (Millions USD) | | :------------ | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | :----------------------------------------- | | North America | $63.5 | $88.9 | $97.4 | $290.2 | | International | $(12.7) | $(0.2) | $(47.3) | $1.6 | | **Total EBITDA** | **$50.8** | **$88.7** | **$50.1** | **$291.8** | - International segment EBITDA showed a significant loss in both the three-month and nine-month periods of 2024, contrasting with positive or near-zero results in 2023, indicating increased investment or operational costs in international markets[19](index=19&type=chunk) [Additional Information](index=11&type=section&id=Additional%20Information) This section provides background on CoStar Group, investor and media contacts, and a disclaimer regarding forward-looking statements [About CoStar Group](index=11&type=section&id=About%20CoStar%20Group) CoStar Group is a leading provider of online real estate marketplaces, information, and analytics, operating a global portfolio of brands - CoStar Group (NASDAQ: CSGP) is a leading provider of online real estate marketplaces, information, and analytics[24](index=24&type=chunk) - Key brands include CoStar (commercial real estate), Apartments.com (multifamily rentals), LoopNet (commercial marketplace), STR (hospitality data), Ten-X (online auctions), Homes.com (residential marketplace), and OnTheMarket (UK residential portal)[24](index=24&type=chunk) - CoStar Group's websites attracted over **163 million average monthly unique visitors** in Q3 2024[24](index=24&type=chunk) [Investor & Media Contacts](index=11&type=section&id=Investor%20%26%20Media%20Contacts) Contact information for CoStar Group's Investor Relations and News Media departments is provided for inquiries - Investor Relations contact: Rich Simonelli, Head of Investor Relations, getrich@costar.com[24](index=24&type=chunk) - News Media contact: Matthew Blocher, VP Corporate Marketing & Communications, mblocher@costar.com[24](index=24&type=chunk) [Forward-Looking Statements](index=11&type=section&id=Forward-Looking%20Statements) This section contains a standard disclaimer regarding forward-looking statements, outlining inherent risks and advising reliance on SEC filings for more information - Statements in the release and conference call are 'forward-looking statements' subject to risks and uncertainties[25](index=25&type=chunk) - Actual results may differ materially due to factors such as acquisition integration, ability to sustain growth trends, and economic conditions affecting the real estate industry[25](index=25&type=chunk) - More information on potential factors is available in CoStar Group's SEC filings, including Form 10-K and 10-Q[25](index=25&type=chunk)
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CoStar Group(CSGP) - 2024 Q2 - Quarterly Report
2024-07-24 21:31
[Part I - Financial Information](index=7&type=section&id=PART%20I%20FINANCIAL%20INFORMATION) [Financial Statements](index=7&type=section&id=Item%201.%20Financial%20Statements) CoStar Group reported a 12% revenue increase to $677.8 million in Q2 2024, yet net income significantly declined to $19.2 million due to rising operating expenses, with total assets reaching $9.07 billion and operating cash flow decreasing Financial Performance Summary | Financial Metric | Three Months Ended June 30, 2024 | Three Months Ended June 30, 2023 | Six Months Ended June 30, 2024 | Six Months Ended June 30, 2023 | | :--- | :--- | :--- | :--- | :--- | | **Revenues** | $677.8 M | $605.9 M | $1,334.2 M | $1,190.3 M | | **Gross Profit** | $542.0 M | $493.5 M | $1,057.2 M | $958.7 M | | **(Loss) Income from Operations** | $(16.1) M | $79.1 M | $(58.9) M | $151.4 M | | **Net Income** | $19.2 M | $100.5 M | $25.9 M | $187.7 M | | **Diluted EPS** | $0.05 | $0.25 | $0.06 | $0.46 | Balance Sheet Summary | Balance Sheet Item | June 30, 2024 | December 31, 2023 | | :--- | :--- | :--- | | **Total Current Assets** | $5,207.2 M | $5,476.1 M | | **Total Assets** | $9,067.3 M | $8,919.7 M | | **Total Current Liabilities** | $561.7 M | $455.8 M | | **Total Liabilities** | $1,671.6 M | $1,581.1 M | | **Total Stockholders' Equity** | $7,395.7 M | $7,338.6 M | Cash Flow Summary | Cash Flow Activity (Six Months Ended) | June 30, 2024 | June 30, 2023 | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $197.7 M | $298.4 M | | **Net Cash used in Investing Activities** | $(477.6) M | $(54.4) M | | **Net Cash used in Financing Activities** | $(15.3) M | $(6.3) M | | **Net (Decrease) Increase in Cash** | $(296.4) M | $237.3 M | [Revenue Analysis](index=24&type=section&id=3.%20REVENUE%20FROM%20CONTRACTS%20WITH%20CUSTOMERS) Subscription-based services accounted for 96% of Q2 2024 revenue, with North America contributing $643.8 million of the $677.8 million total, and Multifamily being the largest service segment at $264.2 million - Subscription-based contracts accounted for approximately **96% of total revenues** for the three and six months ended June 30, 2024[88](index=88&type=chunk) Revenue by Service (Q2 2024, in millions) | Revenue by Service (Q2 2024, in millions) | North America | International | Total | | :--- | :--- | :--- | :--- | | CoStar | $237.1 | $15.9 | $253.0 | | Information Services | $27.9 | $5.5 | $33.4 | | Multifamily | $264.2 | - | $264.2 | | LoopNet | $67.2 | $2.6 | $69.8 | | Residential | $16.2 | $10.0 | $26.2 | | Other Marketplaces | $31.2 | - | $31.2 | | **Total Revenues** | **$643.8** | **$34.0** | **$677.8** | [Acquisitions](index=28&type=section&id=5.%20ACQUISITIONS) The company expanded through the $120.4 million acquisition of OnTheMarket in December 2023 and plans to acquire Matterport for an estimated $940 million cash consideration, pending regulatory and shareholder approval - In December 2023, CoStar UK acquired OnTheMarket for total consideration of **£96.0 million ($120.4 million)**, adding **$62.8 million in goodwill** to the International operating segment[177](index=177&type=chunk)[152](index=152&type=chunk) - On April 21, 2024, the company agreed to acquire Matterport, Inc. for **$2.75 in cash per share** plus CoStar shares, with an estimated total cash consideration of **$940 million**[127](index=127&type=chunk)[153](index=153&type=chunk) - The Matterport merger is subject to customary conditions, including shareholder approval and HSR Act regulatory clearance, and is expected to close in the **fourth quarter of 2024**[127](index=127&type=chunk)[153](index=153&type=chunk) [Long-Term Debt](index=33&type=section&id=10.%20LONG-TERM%20DEBT) As of June 30, 2024, the company's long-term debt includes $1.0 billion in 2.800% Senior Notes due 2030, supplemented by a new undrawn $1.1 billion revolving credit facility established in May 2024 - The company holds **$1.0 billion** in aggregate principal amount of **2.800% Senior Notes due July 15, 2030**[190](index=190&type=chunk) - On May 24, 2024, a new **$1.1 billion revolving credit facility** maturing in May 2029 was established, with **no amounts drawn** as of June 30, 2024[164](index=164&type=chunk)[166](index=166&type=chunk) [Management's Discussion and Analysis (MD&A)](index=37&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management attributes Q2 2024's 12% revenue growth to strong Multifamily and Residential segments, despite a significant 43% increase in selling and marketing expenses leading to an operating loss and reduced net income, while maintaining strong liquidity for strategic investments - Key priorities for the remainder of 2024 include continued investment in residential marketplaces (Homes.com and OnTheMarket), expansion of the Richmond, VA technology center, and build-out of a new headquarters in Arlington, VA[243](index=243&type=chunk)[212](index=212&type=chunk)[213](index=213&type=chunk) - The company's contract renewal rate for subscription-based services with terms of at least one year was approximately **90%** for the trailing 12 months ended June 30, 2024[241](index=241&type=chunk) [Results of Operations](index=43&type=section&id=Results%20of%20Operations) Q2 2024 revenues increased 12% to $677.8 million, driven by Multifamily and Residential growth, but a 43% surge in selling and marketing expenses led to a $16.1 million operating loss and an 81% decline in net income Selected Financial Performance (Q2 2024 vs Q2 2023) | Selected Items (Q2 2024 vs Q2 2023) | Q2 2024 ($M) | Q2 2023 ($M) | Change ($M) | Change (%) | | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | 677.8 | 605.9 | 71.9 | 12% | | Multifamily Revenue | 264.2 | 224.3 | 39.9 | 18% | | Residential Revenue | 26.2 | 12.7 | 13.5 | 106% | | **Selling & Marketing Expense** | 358.4 | 250.0 | 108.4 | 43% | | **(Loss) Income from Operations** | (16.1) | 79.1 | (95.2) | NM | | **Net Income** | 19.2 | 100.5 | (81.3) | (81%) | - The increase in selling and marketing expenses was primarily driven by a **$93 million increase in marketing expenses** for advertising the company's brands and a **$15 million increase in personnel costs**[269](index=269&type=chunk)[258](index=258&type=chunk)[303](index=303&type=chunk) - The effective tax rate for Q2 2024 was **47%**, a significant increase from **24% in Q2 2023**, while income tax expense decreased by **$14 million** due to lower pre-tax income[305](index=305&type=chunk) [Business Segment Results](index=46&type=section&id=Business%20Segment%20Results) In Q2 2024, North America's revenue grew 10% to $644 million, but EBITDA fell 71% to $31 million due to increased costs, while International revenue surged 57% to $34 million, resulting in a $19 million EBITDA loss Segment EBITDA (Q2 2024 vs Q2 2023) | Segment EBITDA (Q2 2024 vs Q2 2023) | Q2 2024 ($M) | Q2 2023 ($M) | Change ($M) | | :--- | :--- | :--- | :--- | | North America | 30.8 | 104.6 | (73.8) | | International | (18.7) | 0.6 | (19.3) | | **Total EBITDA** | **12.1** | **105.2** | **(93.1)** | - The decrease in North America EBITDA was primarily due to increases in **marketing costs, personnel costs, and professional service fees**[307](index=307&type=chunk) - The decrease in International EBITDA was primarily due to the **OnTheMarket Acquisition** and an increase in **personnel costs** associated with the expansion of the international research team[307](index=307&type=chunk) [Liquidity and Capital Resources](index=49&type=section&id=Liquidity%20and%20Capital%20Resources) The company maintained strong liquidity with $4.9 billion in cash as of Q2 2024, despite a $296 million cash decrease driven by $478 million in investing activities and reduced operating cash flow, but believes resources are sufficient for future commitments including the Matterport acquisition - Cash and cash equivalents were **$4.9 billion** as of June 30, 2024, down from **$5.2 billion** at December 31, 2023[352](index=352&type=chunk)[356](index=356&type=chunk) - Net cash provided by operating activities decreased by **$101 million** to **$198 million** for the first six months of 2024 compared to the same period in 2023, primarily due to lower net income[330](index=330&type=chunk) - Significant cash outlays include the pending Matterport acquisition (estimated **$940 million cash consideration**) and the Richmond campus expansion (expected total cost of **$450 million - $600 million**)[353](index=353&type=chunk)[355](index=355&type=chunk)[326](index=326&type=chunk) [Market Risk Disclosures](index=53&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from foreign currency fluctuations, impacting approximately 5% of revenues, and interest rate changes related to its undrawn $1.1 billion variable-rate credit facility, alongside potential impairment of $2.7 billion in goodwill and intangible assets - Approximately **5% of revenues** for the first six months of 2024 were denominated in foreign currencies, with a hypothetical **10% strengthening of the U.S. dollar** decreasing these revenues by approximately **$3.3 million**[363](index=363&type=chunk) - Interest rate risk is tied to the **$1.1 billion revolving credit facility** with a variable interest rate, which had **no outstanding balance** as of June 30, 2024[364](index=364&type=chunk) - The company held approximately **$2.7 billion of goodwill and intangible assets** as of June 30, 2024, which are subject to impairment risk based on economic and industry conditions[340](index=340&type=chunk) [Controls and Procedures](index=54&type=section&id=Item%204.%20Controls%20and%20Procedures) As of June 30, 2024, the CEO and CFO concluded the company's disclosure controls and procedures are effective, with ongoing implementation of a new financial system expected to further enhance internal controls - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were **effective** as of June 30, 2024[342](index=342&type=chunk) - The company is engaged in a multi-year implementation of a new financial system intended to enhance operational and financial accounting processes[367](index=367&type=chunk) [Part II - Other Information](index=55&type=section&id=PART%20II%20OTHER%20INFORMATION) [Legal Proceedings](index=55&type=section&id=Item%201.%20Legal%20Proceedings) The company is involved in routine litigation, but management believes no current legal matters will have a material adverse effect on its financial position or results of operations - The company is not currently a party to any lawsuit or proceeding that management believes is likely to have a material adverse effect on its financial position or results of operations[345](index=345&type=chunk) [Risk Factors](index=55&type=section&id=Item%201A.%20Risk%20Factors) No material changes have occurred to the risk factors previously disclosed in the 2023 Form 10-K and the Q1 2024 Form 10-Q - No material changes have been made to the risk factors disclosed in the 2023 Form 10-K and the Q1 2024 Form 10-Q[346](index=346&type=chunk)
CoStar Group (CSGP) Q2 Earnings Beat Estimates, Revenues Up Y/Y
ZACKS· 2024-07-24 16:15
CoStar Group (CSGP) reported non-GAAP earnings of 15 cents per share in second-quarter 2024, surpassing the Zacks Consensus Estimate by 66.67% but plunging 51.6% year over year. Revenues of $678 million beat the Zacks Consensus Estimate by 0.14% and increased 12% year over year. The upside was driven by robust performance in key segments. Top-Line Details CoStar revenues (37.3% of revenues) of $253 million beat the consensus estimate by 0.61% and increased 10.4% year over year. Apartments.com revenues incre ...