Why Is CoStar (CSGP) Down 3.8% Since Last Earnings Report?

Core Viewpoint - CoStar Group reported strong Q3 earnings, surpassing estimates, but faces a downward trend in estimates leading to a Zacks Rank of 4 (Sell) [2][13][15] Financial Performance - Non-GAAP earnings for Q3 2025 were 23 cents per share, exceeding the Zacks Consensus Estimate by 27.78% and up 4.5% year over year [2] - Revenues reached $833.6 million, beating estimates by 0.91% and increasing 20.4% year over year, marking the 58th consecutive quarter of double-digit revenue growth [3] Segment Performance - CoStar's revenues from its core segments included: - CoStar: $277 million (33.2% of total revenues), up 7.8% year over year [4] - Information Services: $41.3 million (5% of total revenues), up 25.2% year over year [4] - Multifamily: $303 million (36.3% of total revenues), up 11.5% year over year [4] - LoopNet: $79.3 million (9.5% of total revenues), up 11.8% year over year [5] - Residential: $54.9 million (6.6% of total revenues), up 98.2% year over year [5] - Other marketplace revenues: $78.1 million (9.4% of total revenues), up 141.8% year over year [5] Operational Metrics - Net New Bookings for Q3 reached $84 million, a 92% increase year over year [6] - Average monthly unique visitors for CoStar's sites were 143 million, while Homes.com Network had 115 million [6] Expense Overview - Selling and marketing expenses rose 26.3% year over year to $418.3 million, constituting 50.2% of revenues [7] - Operating expenses increased 34.9% year over year to $712.5 million, representing 85.5% of revenues [8] Profitability Metrics - Adjusted EBITDA was $114.6 million, up from $75.9 million year over year, with an adjusted EBITDA margin of 13.7% [9] Balance Sheet and Cash Flow - Cash and cash equivalents were $1.93 billion as of September 30, 2025, down from $3.62 billion as of June 30 [10] - Long-term debt stood at $992.9 million as of September 30, 2025 [10] - Cash generated by operating activities was $267.9 million in the reported quarter, compared to $199.7 million in the previous quarter [10] Future Guidance - For Q4 2025, revenues are expected between $885 million and $895 million, indicating 25% year-over-year growth at the midpoint [11] - For the full year 2025, revenues are projected between $3.23 billion and $3.24 billion, reflecting 18% year-over-year growth at the midpoint [12] Estimate Trends - Consensus estimates have trended downward, with a shift of -12.59% over the past month [13] VGM Scores - CoStar has a poor Growth Score of F, a Momentum Score of B, and a Value Score of F, resulting in an aggregate VGM Score of F [14]