CoStar Group(US:CSGP)2025-07-23 20:00PART I — FINANCIAL INFORMATION Financial Statements Presents unaudited condensed consolidated financial statements, detailing a 15% revenue increase, net income decline, and asset growth from acquisitions Condensed Consolidated Statements of Operations Highlights (Q2 & H1 2025 vs 2024) | Metric | Q2 2025 (in millions) | Q2 2024 (in millions) | H1 2025 (in millions) | H1 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Revenues | $781.3 | $677.8 | $1,513.5 | $1,334.2 | | Gross Profit | $613.5 | $542.0 | $1,192.4 | $1,057.2 | | Loss from Operations | $(27.2) | $(16.1) | $(70.0) | $(58.9) | | Net Income (Loss) | $6.2 | $19.2 | $(8.6) | $25.9 | | Net Income (Loss) per Share - Diluted | $0.01 | $0.05 | $(0.02) | $0.06 | Condensed Consolidated Balance Sheet Highlights (as of June 30, 2025) | Account | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $3,628.6 | $4,681.0 | | Goodwill | $3,689.6 | $2,527.6 | | Intangible assets, net | $915.6 | $433.2 | | Total Assets | $10,507.1 | $9,256.8 | | Total Liabilities | $1,905.7 | $1,703.3 | | Total Stockholders' Equity | $8,601.4 | $7,553.5 | Condensed Consolidated Statements of Cash Flows Highlights (Six Months Ended June 30) | Cash Flow Activity | 2025 (in millions) | 2024 (in millions) | | :--- | :--- | :--- | | Net cash provided by operating activities | $199.7 | $197.7 | | Net cash used in investing activities | $(1,061.4) | $(477.6) | | Net cash used in financing activities | $(98.4) | $(15.3) | | Net decrease in cash | $(954.0) | $(296.4) | Notes to Condensed Consolidated Financial Statements Details operating segments, subscription services, Matterport and Visual Lease acquisitions, litigation, and stock repurchases - The company operates in two segments: North America (U.S. and Canada) and International (Europe, Asia-Pacific, Latin America), with most services being subscription-based for at least one year, and recent significant events including the Visual Lease acquisition in November 2024 and the Matterport acquisition in February 20252223 Disaggregated Revenue by Service (Six Months Ended June 30) | Service Line | 2025 Revenue (in millions) | 2024 Revenue (in millions) | | :--- | :--- | :--- | | CoStar | $536.0 | $503.3 | | Information Services | $79.1 | $66.4 | | Multifamily | $574.8 | $519.0 | | LoopNet | $148.5 | $138.9 | | Residential | $55.6 | $44.8 | | Other Revenues | $119.5 | $61.8 | | Total Revenues | $1,513.5 | $1,334.2 | - The Matterport acquisition was completed on February 28, 2025, for a total purchase consideration of $1.9 billion, resulting in $1.1 billion of goodwill, while the Visual Lease acquisition in November 2024 for $276.0 million added $149.5 million in goodwill97101105 - A litigation accrual of $96.7 million was recorded related to the Matterport acquisition concerning a stockholder lawsuit, considering a damages award and estimated interest135 - In February 2025, the Board approved a stock repurchase program authorizing up to $500 million, and during the first six months of 2025, the company repurchased 825,000 shares for $63.8 million143144 Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses 15% Q2 revenue growth, driven by acquisitions, outlining strategic priorities, increased operating expenses, and strong liquidity - Key strategic priorities for the remainder of 2025 include continuing to invest in Homes.com, integrating Matterport's AI and 3D digital twin technology, expanding CoStar and LoopNet internationally, and leveraging data from CoStar Real Estate Manager and Visual Lease to create new information products181186 Q2 2025 vs Q2 2024 Revenue Performance by Service | Service | Q2 2025 Revenue (in millions) | Q2 2024 Revenue (in millions) | YoY Growth (%) | | :--- | :--- | :--- | :--- | | CoStar | $270.9 | $253.0 | 7% | | Information Services | $39.3 | $33.4 | 18% | | Multifamily | $292.3 | $264.2 | 11% | | LoopNet | $75.7 | $69.8 | 8% | | Residential | $28.4 | $26.2 | 8% | | Other Revenues | $74.7 | $31.2 | 139% | | Total Revenues | $781.3 | $677.8 | 15% | - The company's liquidity position remains strong with $3.7 billion in cash, cash equivalents, and restricted cash as of June 30, 2025, despite major cash uses for the Matterport acquisition, the pending Domain transaction (expected to cost ~$1.5 billion), the Richmond campus expansion (additional $260 million commitment), and the stock repurchase program211212217 - Net cash used in investing activities increased significantly to $1.1 billion for the first six months of 2025, up from $478 million in the same period of 2024, primarily driven by the Matterport acquisition and the purchase of Domain equity securities222 Quantitative and Qualitative Disclosures About Market Risk Primary market risks include foreign currency fluctuations, equity price volatility, and interest rate changes, with currency hedges for the Domain acquisition - The company is exposed to foreign currency risk, primarily from the British Pound, Canadian Dollar, Australian Dollar, and Euro; for H1 2025, a 10% strengthening of the U.S. dollar would have decreased revenues by approximately $9 million232 - The equity investment in Domain is subject to market price volatility, where a 10% change in Domain's share price would impact the investment's value by approximately $30 million, also exposed to Australian dollar exchange rate risk233 - To manage currency risk for the pending Domain acquisition, the company entered into deal-contingent foreign currency forward contracts with a notional amount of A$2.4 billion ($1.5 billion)234 Controls and Procedures CEO and CFO concluded disclosure controls were effective as of June 30, 2025, with ongoing financial system implementation and acquisition integration - Management, including the CEO and CFO, concluded that the company's disclosure controls and procedures were effective as of June 30, 2025239 - Ongoing projects include a multi-year financial system implementation and the integration of internal controls from recent acquisitions, such as Matterport240241 PART II — OTHER INFORMATION Legal Proceedings The company is involved in routine litigation, with no expected material adverse effect on financial position, referring to Note 12 for details - The company is not a party to any lawsuit that management believes is likely to have a material adverse effect on its financial position or results of operations, with specific details on litigation referred to Note 12 of the financial statements244 Risk Factors Updates risk factors, highlighting new risks from Matterport's supplier reliance, Domain equity investment, and open-source software use - A new risk factor highlights Matterport's reliance on a limited number of suppliers for its camera hardware, which could lead to production delays, increased costs, and an inability to meet customer demand if supply is disrupted246247 - The company's significant equity investment in Domain introduces risk of material variability in reported earnings due to fluctuations in Domain's stock price and currency exchange rates249 - Risks associated with the pending acquisition of Domain include the possibility of non-completion, loss of key employees, higher-than-expected costs, and failure to realize anticipated synergies and growth prospects251253256 - The use of third-party open-source software in products presents a risk, where failure to comply with license terms could force the company to release proprietary source code, re-engineer products, or face litigation257258 Unregistered Sales of Equity Securities and Use of Proceeds Details Q2 2025 stock repurchase activities, with 585,000 shares bought for $45.3 million, leaving $436.2 million available Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Program | Approx. Value Remaining in Program (in millions) | | :--- | :--- | :--- | :--- | :--- | | April 2025 | 4,299 | $79.41 | — | — | | May 2025 | 287,344 | $75.54 | 285,000 | $460.0 | | June 2025 | 307,860 | $79.19 | 300,000 | $436.2 | | Total Q2 | 599,503 | $77.45 | 585,000 | $436.2 | - In February 2025, the Board approved a stock repurchase program for up to $500 million; during Q2 2025, the company repurchased 585,000 shares for $45.3 million under this program263 Exhibits Lists all exhibits filed with the Form 10-Q, including the 2025 Stock Incentive Plan, Domain acquisition deed, and officer certifications - Key exhibits filed with this report include the CoStar Group, Inc. 2025 Stock Incentive Plan, the Scheme Implementation Deed for the acquisition of Domain Holdings Australia Limited, and certifications of the Principal Executive Officer and Principal Financial Officer pursuant to Sections 302 and 906 of the Sarbanes-Oxley Act of 2002268