CoStar (CSGP) Down 7.5% Since Last Earnings Report: Can It Rebound?

Core Insights - CoStar Group reported a strong Q4 2025 earnings performance, with non-GAAP earnings of 31 cents per share, exceeding estimates by 13.76% and showing a 19.2% increase year-over-year [2] - Revenues reached $900 million, surpassing estimates by 1% and reflecting a 26.9% year-over-year growth, marking the 59th consecutive quarter of double-digit revenue growth [3] Financial Performance - The Commercial Real Estate segment generated $471 million, accounting for 52.3% of total revenues, while CoStar's own revenues were $325 million, up 9.4% year-over-year [4] - LoopNet's revenues increased by 16.7% year-over-year to $84 million, and Other Commercial Real Estate revenues surged by 181.8% to $62 million [5] - Residential revenues reached $429 million, a 34.9% increase year-over-year [5] - Net New Bookings for Q4 2025 were $75 million, a 41.5% increase year-over-year, with total Net New Bookings for 2025 at $308 million, up 23.2% [6] Operating Expenses - Selling and marketing expenses rose by 22.3% year-over-year to $378 million, constituting 42% of revenues, down from 43.6% in the previous year [7] - Operating expenses increased by 24.4% year-over-year to $658 million, but as a percentage of revenues, they decreased to 73.1% [8] - Adjusted EBITDA was $177 million, up from $112 million year-over-year, with an adjusted EBITDA margin expansion of 390 basis points to 19.7% [9] Balance Sheet and Cash Flow - Cash and cash equivalents stood at $1.63 billion as of December 31, 2025, down from $1.93 billion as of September 30, 2025 [10] - Long-term debt was reported at $993 million, slightly up from $992.9 million [10] - Cash generated from operating activities was $430 million in the reported quarter, compared to $267.9 million in the previous quarter [10] Share Repurchase and Guidance - The company completed a $500 million share repurchase program initiated in 2025 [11] - For Q1 2026, CoStar expects revenues between $890 million and $900 million, indicating a year-over-year growth of 22% to 23% [12] - For the full year 2026, revenues are projected to be between $3.78 billion and $3.82 billion, reflecting a year-over-year growth of 16% to 18% [13] Market Sentiment and Estimates - There has been a downward trend in estimates, with the consensus estimate shifting down by 42.34% [14] - CoStar currently holds a Zacks Rank 3 (Hold), indicating expectations for an in-line return in the coming months [16] Industry Comparison - CoStar is part of the Zacks Computers - IT Services industry, where Vertiv Holdings Co. reported a year-over-year revenue increase of 22.7% to $2.88 billion [18] - Vertiv's expected earnings for the current quarter indicate a change of +56.3% from the year-ago quarter, with a Zacks Rank 2 (Buy) [19]