CoStar Group(US:CSGP)2025-10-29 20:51Revenue Performance - CoStar Group's subscription-based services generated approximately 92% of total revenues for the three months ended September 30, 2025, down from 96% in the same period of 2024[189]. - Total revenues increased by $141 million, or 20%, to $833.6 million for the three months ended September 30, 2025, compared to $692.6 million in the same period of 2024[205]. - Total revenues increased by $320 million, or 16%, to $2.3 billion, driven by a 110% increase in Other Revenues due to the Matterport Acquisition[216]. - North America revenues increased by $285 million, or 15%, to $2.2 billion, with a 35% increase in International revenues attributed to the Domain Acquisition[222]. Subscription Services - Annualized net new bookings of subscription-based services increased to $84 million for the three months ended September 30, 2025, compared to $44 million for the same period in 2024[189]. - Contract renewal rates for existing subscription-based services remained stable at approximately 89% for both the trailing 12 months ended September 30, 2025, and 2024[190]. Revenue Growth Drivers - Information Services revenue growth rate increased for the nine months ended September 30, 2025, primarily due to the Visual Lease Acquisition[183]. - Multifamily revenue growth rate moderated for the nine months ended September 30, 2025, due to the impact of pivoting the Apartments.com sales force to support Homes.com[184]. - LoopNet's revenue growth rate increased for the nine months ended September 30, 2025, driven by higher average revenue per listing and an increase in the number of listings[185]. - Residential revenues increased for the nine months ended September 30, 2025, primarily due to the Domain Acquisition and an increase in Homes.com memberships[186]. - Other revenues increased for the nine months ended September 30, 2025, primarily due to the Matterport Acquisition[187]. Profitability and Expenses - Gross profit increased by $109.4 million, or 20%, to $661.4 million, while the gross profit margin decreased from 80% to 79%[206]. - Selling and marketing expenses rose by $87.1 million, or 26%, to $418.3 million, increasing as a percentage of revenues from 48% to 50%[206]. - General and administrative expenses increased by $51.2 million, or 48%, to $157 million, with the percentage of revenues rising from 15% to 19%[206]. - Customer base amortization expense surged by $21.5 million, or 209%, to $31.8 million, increasing from 1% to 4% of revenues[206]. Net Income and Loss - The company reported a net loss of $30.9 million for the three months ended September 30, 2025, compared to a net income of $53 million in the same period of 2024[205]. - The company reported a net loss of $39.5 million for the nine months ended September 30, 2025, compared to a net income of $78.9 million in the same period of 2024[216]. Cash Flow and Investments - Cash, cash equivalents, and restricted cash totaled $2.0 billion as of September 30, 2025, sufficient to meet cash requirements over the next 12 months[224]. - Cash, cash equivalents, and restricted cash decreased to $2.0 billion as of September 30, 2025, down from $4.7 billion as of December 31, 2024, primarily due to $2.7 billion net cash used in investing activities[231]. - Net cash provided by operating activities for the nine months ended September 30, 2025, was $268 million, a decrease of $30 million compared to the same period in 2024[232]. - Net cash used in investing activities for the nine months ended September 30, 2025, was $2.7 billion, significantly higher than $563 million for the same period in 2024, driven by acquisitions[233]. - Net cash used in financing activities for the nine months ended September 30, 2025, was $162 million, compared to $14 million for the same period in 2024, primarily due to stock repurchases[234]. Future Plans and Investments - CoStar Group plans to continue investing in Homes.com and develop AI-enabled search technology to enhance user experience and attract recurring visitors[192]. - The company is expanding its Richmond, Virginia campus, with an expected cash requirement of $188 million as of September 30, 2025, and plans to spend $73 million of this amount in the remainder of 2025[227]. - The estimated value of tax incentives related to the campus expansion is projected to be between $275 million and $285 million for tax years 2023 to 2032, contingent upon meeting job creation and capital expenditure targets[228]. - The Board of Directors approved a Stock Repurchase Program allowing for the repurchase of up to $500 million of the company's shares, with $385 million remaining available for repurchases as of September 30, 2025[229][230]. Foreign Currency Impact - Approximately 9% of the company's revenues for the three and nine months ended September 30, 2025, were denominated in foreign currencies, with potential revenue impacts of $8 million and $16 million from a 10% change in exchange rates[245]. Goodwill and Intangible Assets - The company had approximately $6.8 billion of goodwill and intangible assets as of September 30, 2025, with ongoing monitoring for potential impairment[248].