Financial Data and Key Metrics Changes - Q1 2025 revenue was $732 million, a 12% increase year over year, marking the 56th consecutive quarter of double-digit revenue growth [4][5] - Adjusted EBITDA for Q1 2025 was $66 million, representing a 429% increase over Q1 2024, with a profit margin of 43% in commercial real estate and information marketplace businesses [5][63] - Company net new bookings were $56 million in Q1 2025, up 6% sequentially from Q4 2024 [5][70] - The company reported a net loss of $15 million primarily due to one-time costs from the Matterport acquisition [69] Business Line Data and Key Metrics Changes - CoStar revenue grew 6% year over year, with net new bookings at their highest level since Q3 2023 [6][64] - Apartments.com revenue increased by 11% year over year, with a significant rise in quality interactions and new community additions [18][65] - LoopNet revenue grew 5% in Q1 2025, with expectations for revenue growth to accelerate throughout the year [66] - STR's integration into CoStar contributed to its best quarter ever for net new bookings, up 17% year over year [6] Market Data and Key Metrics Changes - The commercial real estate environment remains challenging, with historic high vacancy rates around 16% and real asking rents at a 30-year low [8][9] - In retail, real asking rents are at ten-year lows, but signs of improvement are emerging as vacancy rates begin to fall [10] - The international business achieved over $5 million in annual recurring revenue (ARR) in Q1 2025, representing 56% year-over-year growth [5] Company Strategy and Development Direction - The company is focused on enhancing its product offerings and integrating various brands to create a comprehensive solution for clients [13][14] - A new marketing strategy for LoopNet aims to increase the number of paid properties on the platform, enhancing consumer choice [12] - The company plans to expand its sales force by 23% in 2025 to capitalize on market opportunities, particularly in the multifamily sector [19][20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to double-digit growth as market conditions improve over the next few years [11] - The company anticipates slight headwinds from government contract cancellations but expects revenue growth to remain stable [64][72] - The integration of Matterport is expected to enhance the company's offerings and drive future growth [63][68] Other Important Information - The company repurchased 240,000 shares for $18.5 million and plans to repurchase a total of $150 million in shares in 2025 [71] - The company is in the process of acquiring Domain Group, which could significantly enhance its market position in Australia [71][54] Q&A Session Summary Question: Comments on the delayed market listing exemption and Zillow's reaction - Management noted overwhelmingly negative feedback from agents regarding Zillow's actions, indicating a potential opportunity for the company [76][77] Question: Nonresidential EBITDA margin in Q1 and outlook for residential spending - The commercial margin was reported at 43% for Q1, with no changes to the residential spending outlook [78][79] Question: Integration and monetization of Matterport - Management discussed plans for integrating Matterport into the CoStar platform and its potential for monetization [82]

Core Insights - CoStar Group reported revenue of $732.2 million for the quarter ended March 2025, reflecting an 11.6% increase year-over-year and exceeding the Zacks Consensus Estimate of $719.37 million by 1.78% [1] - The company's EPS was $0.14, up from $0.10 in the same quarter last year, representing a surprise of 27.27% compared to the consensus estimate of $0.11 [1] Revenue Breakdown - CoStar's revenue from its core business was $265.10 million, slightly above the average estimate of $264.81 million, marking a year-over-year increase of 5.9% [4] - Information Services generated $39.80 million, exceeding the estimated $36.30 million, with a year-over-year growth of 20.6% [4] - Other Marketplaces reported $44.80 million, significantly higher than the estimated $29.55 million, showing a year-over-year increase of 46.4% [4] - LoopNet's revenue was $72.80 million, slightly below the estimate of $73.38 million, with a year-over-year growth of 5.4% [4] - Residential revenue reached $27.20 million, below the estimate of $28.70 million, but still reflecting a substantial year-over-year increase of 46.2% [4] - Multifamily revenue was $282.50 million, close to the estimate of $283.47 million, with a year-over-year growth of 10.9% [4] Stock Performance - CoStar's shares have returned 3.2% over the past month, outperforming the Zacks S&P 500 composite, which declined by 0.8% [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Group 1: Earnings Performance - CoStar Group reported quarterly earnings of $0.14 per share, exceeding the Zacks Consensus Estimate of $0.11 per share, and up from $0.10 per share a year ago [1] - The earnings surprise for the quarter was 27.27%, following a previous quarter where actual earnings of $0.26 per share surpassed expectations of $0.22 per share by 18.18% [2] - Over the last four quarters, CoStar has consistently surpassed consensus EPS estimates [2] Group 2: Revenue Performance - CoStar's revenues for the quarter ended March 2025 were $732.2 million, surpassing the Zacks Consensus Estimate by 1.78% and up from $656.4 million year-over-year [3] - The company has exceeded consensus revenue estimates three times in the last four quarters [3] Group 3: Stock Performance and Outlook - CoStar shares have increased approximately 14.2% since the beginning of the year, contrasting with a -6% decline in the S&P 500 [4] - The current consensus EPS estimate for the upcoming quarter is $0.16 on revenues of $747.83 million, and for the current fiscal year, it is $0.93 on revenues of $3.04 billion [8] Group 4: Industry Context - The Computers - IT Services industry, to which CoStar belongs, is currently ranked in the bottom 44% of over 250 Zacks industries, indicating potential challenges ahead [9] - The performance of CoStar's stock may be influenced by the overall outlook for the industry [9]

Financial Data and Key Metrics Changes - Q1 2025 revenue reached $732 million, a 12% year-over-year increase, marking the 56th consecutive quarter of double-digit revenue growth [5][63] - Adjusted EBITDA for Q1 2025 was $66 million, representing a 429% increase compared to Q1 2024, with a profit margin of 9% [5][63] - Company net new bookings were $56 million in Q1 2025, up 6% sequentially from Q4 2024 [6][71] Business Line Data and Key Metrics Changes - CoStar revenue grew 6% year-over-year to $265 million in Q1 2025, with annualized net new bookings increasing by 68% year-over-year [7][64] - Apartments.com revenue increased by 11% year-over-year to $282 million, with significant growth in quality interactions and new community additions [19][65] - LoopNet revenue grew 5% in Q1 2025, with expectations for revenue growth to accelerate throughout the year [67] Market Data and Key Metrics Changes - The commercial real estate environment remains challenging, with a historic high vacancy rate of about 16% and real asking rents at a 30-year low [9][10] - In retail, vacancy rates are beginning to fall, indicating signs of improvement in the market [11] - The international business achieved over $5 million in annual recurring revenue (ARR) in Q1 2025, representing 56% year-over-year growth [6] Company Strategy and Development Direction - The company is focused on integrating its various brands and enhancing product offerings to create a comprehensive solution for clients [15][16] - A new marketing strategy for LoopNet aims to increase the number of paid properties on the platform, enhancing consumer choice [13] - The company plans to expand its sales force by 23% in 2025 to capitalize on market opportunities [20] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about returning to double-digit growth as market conditions improve over the next few years [12] - The company anticipates slight headwinds from government contract cancellations but maintains a revenue growth outlook of 6% to 7% for the full year [64][73] - The integration of Matterport is expected to enhance the company's offerings and contribute to future growth [55][69] Other Important Information - The company repurchased 240,000 shares for $18.5 million in Q1 2025 and plans to repurchase a total of $150 million in shares throughout the year [72] - The company has made a nonbinding offer to acquire Domain Group, which could significantly enhance its market position in Australia [72][54] Q&A Session Summary Question: Comments on the delayed market listing exemption and Zillow's reaction - Management noted overwhelmingly negative feedback from agents regarding Zillow's new rules, indicating a potential opportunity for the company [76][77] Question: Nonresidential EBITDA margin in Q1 and outlook for residential spending - The commercial margin was reported at 43% for Q1, with no changes to the residential spending outlook [78][80]

Financial Data and Key Metrics Changes - Q1 2025 revenue reached $732 million, a 12% year-over-year increase, marking the 56th consecutive quarter of double-digit revenue growth [5][63] - Adjusted EBITDA for Q1 2025 was $66 million, representing a 429% increase compared to Q1 2024, with a profit margin of 9% [6][63] - Company net new bookings were $56 million in Q1 2025, up 6% sequentially from Q4 2024 [6][71] - The company reported a net loss of $15 million primarily due to one-time costs from the Matterport acquisition [70] Business Line Data and Key Metrics Changes - CoStar revenue grew 6% year-over-year in Q1 2025, with net new bookings at their highest level since Q3 2023 [7][64] - Apartments.com revenue increased by 11% year-over-year, with significant growth in the number of listed properties [19][65] - LoopNet revenue grew 5% in Q1 2025, with expectations for revenue growth to accelerate throughout the year [67] - STR's integration into CoStar contributed to its best quarter ever for net new bookings, up 17% year-over-year [7] Market Data and Key Metrics Changes - The commercial real estate environment remains challenging, with historic high vacancy rates around 16% and real asking rents at a 30-year low [9][10] - In retail, real asking rents are at ten-year lows, but signs of improvement are emerging as vacancy rates begin to fall [11] - The company expects market conditions to improve over the next few years, shifting from headwinds to tailwinds [12] Company Strategy and Development Direction - The company is focused on integrating its various brands and enhancing product offerings to create a comprehensive solution for clients [15][16] - A new marketing strategy for LoopNet aims to increase the number of paid properties on the platform, enhancing consumer choice [13] - The company is expanding its sales force to capitalize on growth opportunities, particularly in the Apartments.com segment [20][21] Management's Comments on Operating Environment and Future Outlook - Management noted that the current commercial real estate environment is one of the worst in decades, but they anticipate a return to double-digit growth as conditions improve [9][12] - The company is maintaining its revenue growth guidance of 6% to 7% for the full year 2025, despite some expected headwinds from government contract cancellations [64][73] - Management expressed confidence in the Homes.com brand, which has seen significant growth in unaided brand awareness and traffic [70][31] Other Important Information - The company repurchased 240,000 shares for $18.5 million in Q1 2025 and plans to repurchase a total of $150 million in shares throughout the year [72] - The company made a nonbinding offer to acquire Domain Group, a significant player in the Australian real estate market [72][54] Q&A Session Summary Question: Comments on the delayed market listing exemption discussed by the NAR and Zillow's reaction - Management reported overwhelmingly negative feedback from agents regarding Zillow's new rules, indicating a potential opportunity for the company [76][77] Question: Nonresidential EBITDA margin in Q1 and outlook for residential spending in 2025 - The commercial margin was reported at 43% for Q1, with no changes to the budget for Homes.com [78][80]

Financial Performance - CoStar Group reported Q1 2025 revenue of $732 million, a 12% increase from $656 million in Q1 2024[1] - The company experienced a net loss of $15 million in Q1 2025, with a diluted loss per share of $0.04, impacted by a $31 million cost related to the Matterport acquisition[1] - Adjusted EBITDA for Q1 2025 was $66 million, reflecting a 429% increase compared to $12 million in Q1 2024[1] - CoStar Group reported a net loss of $14.8 million for Q1 2025, compared to a net income of $6.7 million in Q1 2024, representing a significant decline[20] - Total revenues for Q1 2025 reached $732.2 million, up 11.5% from $656.4 million in Q1 2024[22] - EBITDA for Q1 2025 was $(0.8) million, a decrease from $12.4 million in Q1 2024, indicating operational challenges[26] - CoStar Group expects full-year 2025 revenue between $3.115 billion and $3.155 billion, indicating approximately 15% year-over-year growth at the midpoint[5] - For Q2 2025, revenue is projected to be between $770 million and $775 million, representing about 14% year-over-year growth at the midpoint[5] - Adjusted EBITDA for the full year 2025 is anticipated to be in the range of $355 million to $385 million, with a margin of 12% at the midpoint[6] Business Growth and Engagement - CoStar's commercial real estate businesses saw a 68% year-over-year increase in net new bookings, while LoopNet achieved a remarkable 200% increase year-over-year[2] - Apartments.com added 4,300 properties in Q1 2025, marking the highest quarterly addition since Q1 2016[2] - Homes.com has grown its salesforce to 370 representatives, with plans to reach 500 by the end of June 2025[2] - The Homes.com Network has become the second largest in the U.S. with 104 million average monthly unique visitors, and unaided consumer awareness rose to 36% from 4% prior to its February 2024 launch[2] - CoStar's websites attracted over 130 million average monthly unique visitors in Q1 2025, highlighting strong user engagement[31] Financial Position and Investments - CoStar Group's cash, cash equivalents, and restricted cash decreased to $3.78 billion at the end of Q1 2025, down from $4.95 billion at the end of Q1 2024[20] - The company reported significant investments in acquisitions, with net cash used in investing activities totaling $910.6 million in Q1 2025[20] - Stock-based compensation expense increased to $30.4 million in Q1 2025, compared to $22.8 million in Q1 2024, reflecting higher employee incentives[26] Forward-Looking Statements and Guidance - CoStar Group's forward-looking statements are based on information available as of the date of the report[33] - The company assumes no obligation to update or revise any forward-looking statements unless required by applicable law[33] - The company does not provide specific numerical guidance in this document[33] - Investors are encouraged to monitor the SEC website for the latest updates on CoStar Group[33] Regulatory and Compliance - CoStar Group's filings with the SEC include Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q[33] - The "Risk Factors" section in these filings outlines potential risks to the company's performance[33] - Current Reports on Form 8-K are also available for further insights into the company's operations[33] - The company emphasizes the importance of reviewing its SEC filings for comprehensive financial data[33] - CoStar Group's performance metrics and future outlook are subject to change based on new information and future events[33] - The company remains committed to transparency in its financial reporting and disclosures[33]

Core Viewpoint - CoStar Group is expected to report first-quarter 2025 earnings on April 29, with projected revenues between $711 million and $716 million, indicating a year-over-year growth of 9% at the midpoint of the range [1]. Revenue Estimates - The Zacks Consensus Estimate for CoStar's revenues is currently at $719.37 million, suggesting a growth of 9.59% compared to the same quarter last year [2]. - The consensus estimate for earnings remains at 11 cents per share, indicating a 10% growth from the previous year's figure [2]. Historical Performance - CoStar Group has consistently beaten the Zacks Consensus Estimate in the last four quarters, with an average surprise of 47.26% [3]. Factors Influencing Performance - The first-quarter performance is likely to benefit from a strong portfolio of marketplaces, including Apartments.com, LoopNet, and Homes.com [4]. - Apartments.com is expected to see an 11% revenue growth in Q1 2025, driven by increased traffic and higher advertising spending [4]. - Homes.com reached 110 million average monthly unique visitors in Q4 2024, up 11% year over year, contributing to overall traffic growth [5]. - CoStar's total site traffic reached 134 million average monthly unique visitors in Q4 2024, reflecting a 17% year-over-year increase [5]. - The international segment and positive outlook for real estate marketplaces are anticipated to enhance LoopNet's performance [5]. Acquisition Impact - CoStar's growth is supported by a consistent acquisition strategy, including the acquisition of Matterport, which integrates 3D capture technology into its real estate marketplaces [6]. - The acquisition of Visual Lease strengthens CoStar's Real Estate Manager business line, providing comprehensive lease management solutions [7]. - The STR product, a benchmarking tool for the hospitality industry, is expected to show strong revenue growth in the upcoming quarter [7]. Earnings Model Insights - According to the Zacks model, CoStar Group has an Earnings ESP of 0.00% and a Zacks Rank of 3 (Hold), indicating that the odds of an earnings beat are not favorable [8].

Core Insights - CoStar Group has entered into support agreements with D.E. Shaw and Third Point for board refreshment and corporate governance enhancements [3][6] - The agreements include the addition of three new directors and the retirement of three long-tenured directors, indicating a significant board refreshment [6][8] - CoStar's core business generates approximately 95% of its revenue, primarily from CoStar Suite and Apartments.com, which have strong competitive advantages [4][5] Company Overview - CoStar Group operates online real estate marketplaces and analytics, managing brands like CoStar Suite, LoopNet, Apartments.com, and Homes.com [4] - The company has historically traded at a premium to its peers but is currently valued in line with them due to aggressive investments in its Homes.com business [4][5] Financial Dynamics - CoStar is diverting about 75% of its $1.3 billion EBITDA to fund $900 million in losses from Homes.com, leading to a significant increase in capital expenditures [5][8] - Capital expenditures are projected to rise by 878% from 2021 to 2024, with a 347% increase expected in 2024 alone [5] Governance Changes - The newly formed capital allocation committee will focus on funding the Homes.com business without relying on core business cash flow and will assess international expansion opportunities [7][8] - The committee's goal is to enhance the valuation of CoStar's core business, potentially increasing its enterprise value from around $30 billion to approximately $45 billion [8] Activist Investor Involvement - Third Point holds a 2.04% position in CoStar, while D.E. Shaw's position remains undisclosed but is expected to be significant given its size as a $70 billion hedge fund [9]

Core Viewpoint - CoStar Group (CSGP) has seen a slight increase in share price of approximately 0.2% since its last earnings report, outperforming the S&P 500, but estimates have trended downward significantly, indicating potential challenges ahead [1][2]. Group 1: Earnings and Estimates - The consensus estimate for CoStar has shifted downward by 41.46% over the past month, reflecting a negative trend in earnings expectations [2]. - CoStar's most recent earnings report is crucial for understanding the key drivers affecting its stock performance [1]. Group 2: VGM Scores - CoStar currently holds a poor Growth Score of F, a Momentum Score of F, and a Value Score of F, placing it in the lowest quintile for investment strategies [3]. - The aggregate VGM Score for CoStar is F, indicating a lack of attractiveness across multiple investment strategies [3]. Group 3: Outlook - The overall trend of downward revisions in estimates suggests a negative outlook for CoStar, with a Zacks Rank of 3 (Hold), indicating expectations for an in-line return in the coming months [4]. Group 4: Industry Comparison - CoStar is part of the Zacks Computers - IT Services industry, where Jack Henry (JKHY) has performed better, gaining 5.9% over the past month [5]. - Jack Henry reported revenues of $573.85 million for the last quarter, reflecting a year-over-year increase of 5.2%, with EPS rising from $1.22 to $1.34 [5]. - For the current quarter, Jack Henry is expected to post earnings of $1.35 per share, indicating a year-over-year change of 13.5% [6].

Group 1 - The core thesis for CoStar Group (NASDAQ: CSGP) is that the growth runway remains very positive, with solid execution observed in Apartments.com and Homes.com [1] - CoStar Group has continued to demonstrate strong performance despite ongoing investments [1] Group 2 - The investment approach focuses on identifying undervalued companies with long-term growth potential, blending value investing principles with a long-term growth focus [1] - The strategy involves buying quality companies at a discount to their intrinsic value and holding them for the long term to allow for compounding of earnings and shareholder returns [1]