CoStar Group(US:CSGP)2025-04-30 22:06Revenue 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].