UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM
CURRENT REPORT
Pursuant to Section 13 or 15(d)
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Emerging Growth Company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
| Item 2.02 | Results of Operations and Financial Condition. |
On October 24, 2023, CoStar Group, Inc. (“CoStar” or the “Company”) announced its financial and operating results for the quarter ended September 30, 2023. The full text of the press release (the “Press Release”) issued in connection with the announcement is furnished herewith as Exhibit 99.1.
The information contained in this Item 2.02 and the Press Release shall be considered “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended (the “Securities Act”), nor shall it be deemed incorporated by reference into any reports or filings with the Securities and Exchange Commission (“SEC”), whether made before or after the date hereof, except as expressly set forth by specific reference in such a filing.
| Item 7.01 | Regulation FD Disclosure. |
CoStar hereby furnishes the presentation (the “Investor Presentation”) that the Company intends to use from time to time on or after October 24, 2023. CoStar may use the Investor Presentation with investors, analysts, lenders, insurers, vendors, clients, employees and others. The Investor Presentation is furnished herewith as Exhibit 99.2 and also will be made available on the Company’s website at costargroup.com.
The information contained in the Investor Presentation is summary information that should be considered in the context of the Company’s filings with the SEC and other public announcements that the Company may make, by press release or otherwise, from time to time. The Investor Presentation is current as of October 24, 2023. To the extent that estimates, targets or other forward-looking statements are included in the Investor Presentation, the Company specifically disclaims any duty or obligation to publicly update or revise such information.
The information contained in this Item 7.01 and the Investor Presentation shall be considered “furnished” and shall not be deemed “filed” for purposes of Section 18 of the Exchange Act or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act, nor shall it be deemed incorporated by reference into any reports or filings with the SEC, whether made before or after the date hereof, except as expressly set forth by specific reference in such a filing.
| Item 9.01 | Financial Statements and Exhibits. |
| (d) | Exhibits. |
| Exhibit No. |
Description | |
| 99.1 | CoStar Group, Inc. Press Release Dated October 24, 2023. | |
| 99.2 | CoStar Group, Inc. Investor Presentation Dated October 24, 2023. | |
| 104 | Cover Page Interactive Data File (formatted as inline XBRL and contained in Exhibit 101). | |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| COSTAR GROUP, INC. | ||||||
| Date: October 24, 2023 | By: | /s/ Scott T. Wheeler | ||||
| Name: | Scott T. Wheeler | |||||
| Title: | Chief Financial Officer | |||||
Exhibit 99.1
CoStar Group Third Quarter 2023 Revenue
Increased 12% Year-over-Year Marking 50 Straight Quarters of
Double-Digit Revenue Growth
WASHINGTON – October 24, 2023 - CoStar Group, Inc. (NASDAQ: CSGP), a leading provider of online real estate marketplaces, information and analytics in the property markets, announced today that revenue for the quarter ended September 30, 2023 was $625 million, up 12% over revenue of $557 million for the quarter ended September 30, 2022. Net income was $91 million in the third quarter, an increase of 25% over the prior year.
“CoStar Group delivered strong results this quarter on our two principal fronts,” said Andy Florance, Founder and CEO of CoStar Group. “First, our commercial information and marketplace businesses are fortress strong in a turbulent market with revenue growing 14% year-over-year and margins approaching 40%. As we move into the fourth quarter, our adjusted EBITDA, for our commercial information and marketplace businesses, is approaching $1,000,000,000 annualized. We continue to generate strong net new bookings with $65 million of net new bookings in the third quarter. On the second front, we are investing aggressively, but prudently, in Homes.com with the goal of unlocking the enormous potential of becoming the leading, successful U.S. residential real estate portal. In September we celebrated a major milestone on that road to success with 100 million unique visitors to Homes.com.”
“Unique visitors to Homes.com in September grew 1,290% year over year, significantly outperforming our competitors’ traffic, the largest of which were relatively flat or declining. We believe that the competitive balance in the industry is shifting in our favor,” continued Florance. “Our key competitors’ sites combine rentals and resale homes, so when we likewise combine our Homes.com and Apartments networks we had 140 million unique visitors in September, according to Google Analytics. In the past year we have quickly grown to become the second most heavily trafficked residential network by a wide margin, with monthly unique visitors 35% higher than Realtor.com and 90% higher than Redfin in September, according to ComScore. We continue to build out the full potential of Homes.com and are focused on continuing to grow traffic and beginning monetization in second quarter of 2024.”
“Last week, we announced our offer to acquire OnTheMarket, one of the top three residential property portals in the United Kingdom. Having operated successfully in the United Kingdom for two decades, we believe that we can grow competitive traffic share in the U.K. just as we have done so many times before in the U.S. and that our significant software investments into Homes.com will give us technology scale advantage in the U.K.”
Year 2022-2023 Quarterly Results - Unaudited
(in millions, except per share data)
| 2022 | 2023 | |||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||||||||
| Revenues |
$ | 516 | $ | 536 | $ | 557 | $ | 573 | $ | 584 | $ | 606 | $ | 625 | ||||||||||||||
| Net income |
89 | 83 | 72 | 124 | 87 | 101 | 91 | |||||||||||||||||||||
| Net income per share - diluted |
0.23 | 0.21 | 0.18 | 0.31 | 0.21 | 0.25 | 0.22 | |||||||||||||||||||||
| Weighted average outstanding shares - diluted |
394 | 394 | 396 | 406 | 406 | 407 | 407 | |||||||||||||||||||||
| EBITDA |
158 | 140 | 129 | 155 | 98 | 105 | 89 | |||||||||||||||||||||
| Adjusted EBITDA |
178 | 159 | 153 | 182 | 123 | 127 | 112 | |||||||||||||||||||||
| Non-GAAP net income |
123 | 112 | 118 | 153 | 118 | 127 | 120 | |||||||||||||||||||||
| Non-GAAP net income per share - diluted |
0.31 | 0.28 | 0.30 | 0.38 | 0.29 | 0.31 | 0.30 | |||||||||||||||||||||
2023 Outlook
The Company expects revenue in the range of $2.445 billion to $2.450 billion for the full year of 2023, representing year-over-year growth of approximately 12% at the midpoint of the range. The Company expects revenue for the fourth quarter of 2023 in the range of $630 million to $635 million, representing revenue growth of approximately 10% year-over-year at the midpoint of the range.
“Against one of the worst property markets in decades, we continue to demonstrate that our commercial information and marketplace businesses can deliver strong, double-digit revenue growth regardless of market cycles,” said Scott Wheeler, CFO of CoStar Group. “Our commercial information and marketplace business is expected to deliver 12% year-over-year revenue growth in the fourth quarter of 2023, and 14% revenue growth for the full year of 2023. Our Homes.com strategy is proving to be very successful and has moved us into second place in the U.S. We are wisely accelerating our investment in our residential marketplace in the second half of 2023. We now expect adjusted EBITDA for the full year of 2023 in the range of $485 million to $490 million. For the fourth quarter of 2023, we expect adjusted EBITDA in the range of $123 million to $128 million.”
The Company expects full year 2023 non-GAAP net income per diluted share in a range of $1.21 to $1.22 based on 407 million shares. For the fourth quarter of 2023, the Company expects non-GAAP net income per diluted share in a range of $0.31 to $0.32 based on 407 million shares. These ranges include an estimated non-GAAP tax rate of 26% for the full year and the fourth quarter of 2023.
The preceding forward-looking statements reflect CoStar Group’s expectations as of October 24, 2023, including forward-looking non-GAAP financial measures on a consolidated basis, based on current estimates, expectations, observations, and trends. Given the risk factors, rapidly evolving economic environment, and uncertainties and assumptions discussed in this release and in our quarterly reports on Form 10-Q and annual reports on Form 10-K, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.
Reconciliations of EBITDA, adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share to the most directly comparable GAAP measures are shown in detail below, along with definitions for those terms. A reconciliation of forward-looking non-GAAP guidance to the most directly comparable GAAP measure, net income, can be found within the tables included in this release.
Non-GAAP Financial Measures
For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the Company’s financial condition and results of operations, please refer to the Company’s latest periodic report.
EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before interest income or expense, net and other income or expense, net; loss on debt extinguishment; income taxes; depreciation and amortization.
Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, and settlements and impairments incurred outside the Company’s ordinary course of business. Adjusted EBITDA margin represents adjusted EBITDA divided by revenues for the period.
Non-GAAP net income is a non-GAAP financial measure determined by adjusting GAAP net income attributable to CoStar Group for stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, settlement and impairment costs incurred outside the Company’s ordinary course of business and loss on debt extinguishment, as well as amortization of acquired intangible assets and other related costs, and then subtracting an assumed provision for income taxes. In 2023, the Company is assuming a 26% tax rate in order to approximate its statutory corporate tax rate excluding the impact of discrete items.
Non-GAAP net income per diluted share is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period used in the calculation of GAAP net income per diluted share. For periods with GAAP net losses and non-GAAP net income, the weighted average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.
Operating Metrics
Net new bookings is calculated based on the annualized amount of change in the Company’s sales bookings resulting from new subscription-based contracts, changes to existing subscription-based contracts and cancellations of subscription-based contracts for the period reported. Information regarding net new bookings is not comparable to, nor should it be substituted for, an analysis of the Company’s revenues over time.
Earnings Conference Call
Management will conduct a conference call to discuss the third quarter 2023 results and the Company’s outlook at 5:00 PM ET on Tuesday, October 24, 2023. A live audio webcast of the conference will be available in listen-only mode through the Investors section of the CoStar Group website: https://investors.costargroup.com. A replay of the webcast audio will also be available in the Investors section of our website for a period of time following the call.
CoStar Group, Inc.
Condensed Consolidated Statements of Operations - Unaudited
(in thousands, except per share data)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Revenues |
$ | 624,669 | $ | 556,921 | $ | 1,814,941 | $ | 1,609,054 | ||||||||
| Cost of revenues |
123,666 | 108,364 | 355,224 | 304,814 | ||||||||||||
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| Gross profit |
501,003 | 448,557 | 1,459,717 | 1,304,240 | ||||||||||||
| Operating expenses: |
||||||||||||||||
| Selling and marketing (excluding customer base amortization) |
266,893 | 185,395 | 743,153 | 510,736 | ||||||||||||
| Software development |
67,891 | 56,912 | 197,850 | 162,520 | ||||||||||||
| General and administrative |
94,371 | 91,270 | 274,442 | 246,576 | ||||||||||||
| Customer base amortization |
10,254 | 29,651 | 31,311 | 60,621 | ||||||||||||
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| 439,409 | 363,228 | 1,246,756 | 980,453 | |||||||||||||
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| Income from operations |
61,594 | 85,329 | 212,961 | 323,787 | ||||||||||||
| Interest income (expense), net |
58,422 | 10,656 | 153,881 | (461 | ) | |||||||||||
| Other income, net |
465 | 1,389 | 1,655 | 3,596 | ||||||||||||
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| Income before income taxes |
120,481 | 97,374 | 368,497 | 326,922 | ||||||||||||
| Income tax expense |
29,907 | 25,084 | 90,272 | 81,841 | ||||||||||||
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| Net income |
$ | 90,574 | $ | 72,290 | $ | 278,225 | $ | 245,081 | ||||||||
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| Net income per share - basic |
$ | 0.22 | $ | 0.18 | $ | 0.69 | $ | 0.62 | ||||||||
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| Net income per share - diluted |
$ | 0.22 | $ | 0.18 | $ | 0.68 | $ | 0.62 | ||||||||
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|||||||||
| Weighted-average outstanding shares - basic |
405,649 | 394,712 | 405,190 | 393,650 | ||||||||||||
| Weighted-average outstanding shares - diluted |
407,229 | 396,209 | 406,713 | 394,973 | ||||||||||||
CoStar Group, Inc.
Reconciliation of Non-GAAP Financial Measures - Unaudited
(in thousands, except per share data)
Reconciliation of Net Income to Non-GAAP Net Income
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net income |
$ | 90,574 | $ | 72,290 | $ | 278,225 | $ | 245,081 | ||||||||
| Income tax expense |
29,907 | 25,084 | 90,272 | 81,841 | ||||||||||||
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| Income before income taxes |
120,481 | 97,374 | 368,497 | 326,922 | ||||||||||||
| Amortization of acquired intangible assets |
18,707 | 36,596 | 54,364 | 82,601 | ||||||||||||
| Stock-based compensation expense |
21,899 | 18,138 | 63,770 | 54,097 | ||||||||||||
| Acquisition and integration related costs |
796 | 1,095 | 2,272 | 3,238 | ||||||||||||
| Restructuring and related costs |
509 | 191 | 3,880 | 191 | ||||||||||||
| Settlements and impairments |
— | 4,100 | (107 | ) | 4,100 | |||||||||||
| Other expense, net |
— | 2,063 | — | 6,162 | ||||||||||||
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| Non-GAAP income before income taxes |
162,392 | 159,557 | 492,676 | 477,311 | ||||||||||||
| Assumed rate for income tax expense(1) |
26 | % | 26 | % | 26 | % | 26 | % | ||||||||
| Assumed provision for income tax expense |
(42,222 | ) | (41,485 | ) | (128,096 | ) | (124,101 | ) | ||||||||
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| Non-GAAP net income |
$ | 120,170 | $ | 118,072 | $ | 364,580 | $ | 353,210 | ||||||||
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| Net income per share - diluted |
$ | 0.22 | $ | 0.18 | $ | 0.68 | $ | 0.62 | ||||||||
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| Non-GAAP net income per share - diluted |
$ | 0.30 | $ | 0.30 | $ | 0.90 | $ | 0.89 | ||||||||
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| Weighted average outstanding shares - basic |
405,649 | 394,712 | 405,190 | 393,650 | ||||||||||||
| Weighted average outstanding shares - diluted |
407,229 | 396,209 | 406,713 | 394,973 | ||||||||||||
| (1) | The assumed tax rate approximates our statutory federal and state corporate tax rate for the applicable period. |
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
| Three Months Ended September 30, |
Nine Months Ended September 30, |
|||||||||||||||
| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| Net income |
$ | 90,574 | $ | 72,290 | $ | 278,225 | $ | 245,081 | ||||||||
| Amortization of acquired intangible assets in cost of revenues |
8,453 | 6,945 | 23,053 | 21,980 | ||||||||||||
| Amortization of acquired intangible assets in operating expenses |
10,254 | 29,651 | 31,311 | 60,621 | ||||||||||||
| Depreciation and other amortization |
8,418 | 7,224 | 24,451 | 21,199 | ||||||||||||
| Interest (income) expense, net |
(58,422 | ) | (10,656 | ) | (153,881 | ) | 461 | |||||||||
| Other income, net |
(465 | ) | (1,389 | ) | (1,655 | ) | (3,596 | ) | ||||||||
| Income tax expense |
29,907 | 25,084 | 90,272 | 81,841 | ||||||||||||
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| EBITDA |
$ | 88,719 | $ | 129,149 | $ | 291,776 | $ | 427,587 | ||||||||
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| Stock-based compensation expense |
21,899 | 18,138 | 63,770 | 54,097 | ||||||||||||
| Acquisition and integration related costs |
796 | 1,095 | 2,272 | 3,238 | ||||||||||||
| Restructuring and related costs |
509 | 191 | 3,880 | 191 | ||||||||||||
| Settlements and impairments |
— | 4,100 | (107 | ) | 4,100 | |||||||||||
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| Adjusted EBITDA |
$ | 111,923 | $ | 152,673 | $ | 361,591 | $ | 489,213 | ||||||||
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CoStar Group, Inc.
Condensed Consolidated Balance Sheets - Unaudited
(in thousands)
| September 30, 2023 |
December 31, 2022 |
|||||||
| ASSETS | ||||||||
| Current assets: |
||||||||
| Cash and cash equivalents |
$ | 5,229,880 | $ | 4,967,970 | ||||
| Accounts receivable |
213,742 | 166,140 | ||||||
| Less: Allowance for credit losses |
(20,911 | ) | (12,195 | ) | ||||
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| Accounts receivable, net |
192,831 | 153,945 | ||||||
| Prepaid expenses and other current assets |
76,013 | 63,952 | ||||||
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| Total current assets |
5,498,724 | 5,185,867 | ||||||
| Deferred income taxes, net |
9,722 | 9,722 | ||||||
| Property and equipment, net |
403,195 | 321,250 | ||||||
| Lease right-of-use assets |
85,758 | 80,392 | ||||||
| Goodwill |
2,315,313 | 2,314,759 | ||||||
| Intangible assets, net |
275,095 | 329,306 | ||||||
| Deferred commission costs, net |
165,846 | 142,482 | ||||||
| Deposits and other assets |
15,997 | 16,687 | ||||||
| Income tax receivable |
2,005 | 2,005 | ||||||
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| Total assets |
$ | 8,771,655 | $ | 8,402,470 | ||||
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| LIABILITIES AND STOCKHOLDERS’ EQUITY | ||||||||
| Current liabilities: |
||||||||
| Accounts payable |
$ | 25,866 | $ | 28,460 | ||||
| Accrued wages and commissions |
91,357 | 104,988 | ||||||
| Accrued expenses |
156,009 | 89,113 | ||||||
| Income taxes payable |
2,061 | 10,438 | ||||||
| Lease liabilities |
40,187 | 36,049 | ||||||
| Deferred revenue |
97,583 | 103,567 | ||||||
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|||||
| Total current liabilities |
413,063 | 372,615 | ||||||
| Long-term debt, net |
990,185 | 989,210 | ||||||
| Deferred income taxes, net |
63,203 | 76,202 | ||||||
| Income taxes payable |
17,542 | 14,001 | ||||||
| Lease and other long-term liabilities |
77,500 | 80,321 | ||||||
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| Total liabilities |
$ | 1,561,493 | $ | 1,532,349 | ||||
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| Total stockholders’ equity |
7,210,162 | 6,870,121 | ||||||
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| Total liabilities and stockholders’ equity |
$ | 8,771,655 | $ | 8,402,470 | ||||
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CoStar Group, Inc.
Condensed Consolidated Statements of Cash Flows - Unaudited
(in thousands)
| Nine Months Ended September 30, |
||||||||
| 2023 | 2022 | |||||||
| Operating activities: |
||||||||
| Net income |
$ | 278,225 | $ | 245,081 | ||||
| Adjustments to reconcile net income to net cash provided by operating activities: |
||||||||
| Depreciation and amortization |
78,815 | 109,983 | ||||||
| Amortization of deferred commissions costs |
69,811 | 55,373 | ||||||
| Amortization of Senior Notes discount and issuance costs |
1,799 | 1,771 | ||||||
| Non-cash lease expense |
22,092 | 23,108 | ||||||
| Stock-based compensation expense |
63,770 | 54,097 | ||||||
| Deferred income taxes, net |
(12,949 | ) | (21,676 | ) | ||||
| Credit loss expense |
25,664 | 13,468 | ||||||
| Other operating activities, net |
324 | (1,774 | ) | |||||
| Changes in operating assets and liabilities, net of acquisitions: |
||||||||
| Accounts receivable |
(64,595 | ) | (36,177 | ) | ||||
| Prepaid expenses and other current assets |
(20,745 | ) | (17,235 | ) | ||||
| Deferred commissions |
(93,147 | ) | (83,875 | ) | ||||
| Accounts payable and other liabilities |
21,067 | 2,131 | ||||||
| Lease liabilities |
(26,807 | ) | (27,615 | ) | ||||
| Income taxes payable, net |
4,444 | (29,051 | ) | |||||
| Deferred revenue |
(6,045 | ) | 4,488 | |||||
| Other assets |
(738 | ) | 1,492 | |||||
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| Net cash provided by operating activities |
340,985 | 293,589 | ||||||
| Investing activities: |
||||||||
| Proceeds from sale of property and equipment and other assets |
— | 5,034 | ||||||
| Purchase of Richmond assets |
(61,811 | ) | (31,530 | ) | ||||
| Purchases of property and equipment and other assets |
(14,141 | ) | (43,659 | ) | ||||
| Cash paid for acquisitions, net of cash acquired |
— | (6,331 | ) | |||||
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| Net cash used in investing activities |
(75,952 | ) | (76,486 | ) | ||||
| Financing activities: |
||||||||
| Repayments of long-term debt assumed in acquisition |
— | (2,155 | ) | |||||
| Repurchase of restricted stock to satisfy tax withholding obligations |
(23,409 | ) | (20,259 | ) | ||||
| Proceeds from equity offering, net of transaction costs |
— | 746,170 | ||||||
| Proceeds from exercise of stock options and employee stock purchase plan |
20,435 | 10,777 | ||||||
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| Net cash (used in) provided by financing activities |
(2,974 | ) | 734,533 | |||||
| Effect of foreign currency exchange rates on cash and cash equivalents |
(149 | ) | (4,297 | ) | ||||
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|||||
| Net increase in cash and cash equivalents |
261,910 | 947,339 | ||||||
| Cash and cash equivalents at the beginning of period |
4,967,970 | 3,827,126 | ||||||
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| Cash and cash equivalents at the end of period |
$ | 5,229,880 | $ | 4,774,465 | ||||
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CoStar Group, Inc.
Disaggregated Revenues - Unaudited
(in thousands)
| Three Months Ended September 30, | ||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||
| North America | International | Total | North America | International | Total | |||||||||||||||||||
| CoStar | $ | 223,348 | $ | 10,012 | $ | 233,360 | $ | 203,657 | $ | 9,033 | $ | 212,690 | ||||||||||||
| Information Services | 35,163 | 9,473 | 44,636 | 32,524 | 8,489 | 41,013 | ||||||||||||||||||
| Multifamily | 235,343 | — | 235,343 | 189,536 | — | 189,536 | ||||||||||||||||||
| LoopNet | 65,041 | 2,440 | 67,481 | 57,126 | 1,775 | 58,901 | ||||||||||||||||||
| Residential | 10,293 | — | 10,293 | 19,351 | — | 19,351 | ||||||||||||||||||
| Other Marketplaces | 33,556 | — | 33,556 | 35,430 | — | 35,430 | ||||||||||||||||||
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| Total revenues | $ | 602,744 | $ | 21,925 | $ | 624,669 | $ | 537,624 | $ | 19,297 | $ | 556,921 | ||||||||||||
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| Nine Months Ended September 30, | ||||||||||||||||||||||||
| 2023 | 2022 | |||||||||||||||||||||||
| North America | International | Total | North America | International | Total | |||||||||||||||||||
| CoStar | $ | 658,734 | $ | 28,808 | $ | 687,542 | $ | 590,141 | $ | 27,764 | $ | 617,905 | ||||||||||||
| Information Services | 99,476 | 28,710 | 128,186 | 93,306 | 23,424 | 116,730 | ||||||||||||||||||
| Multifamily | 670,331 | — | 670,331 | 547,372 | — | 547,372 | ||||||||||||||||||
| LoopNet | 189,488 | 6,793 | 196,281 | 164,417 | 5,228 | 169,645 | ||||||||||||||||||
| Residential | 36,154 | — | 36,154 | 57,565 | — | 57,565 | ||||||||||||||||||
| Other Marketplaces | 96,447 | — | 96,447 | 99,837 | — | 99,837 | ||||||||||||||||||
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| Total revenues | $ | 1,750,630 | $ | 64,311 | $ | 1,814,941 | $ | 1,552,638 | $ | 56,416 | $ | 1,609,054 | ||||||||||||
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CoStar Group, Inc.
Results of Segments - Unaudited
(in thousands)
| Three Months Ended September 30, |
Nine Months Ended September 30, |
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| 2023 | 2022 | 2023 | 2022 | |||||||||||||
| EBITDA |
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| North America | $ | 88,910 | $ | 127,965 | $ | 290,180 | $ | 422,454 | ||||||||
| International | (191 | ) | 1,184 | 1,596 | 5,133 | |||||||||||
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| Total EBITDA |
$ | 88,719 | $ | 129,149 | $ | 291,776 | $ | 427,587 | ||||||||
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CoStar Group, Inc.
Reconciliation of Non-GAAP Financial Measures with Quarterly Results - Unaudited
(in millions, except per share data)
Reconciliation of Net Income to Non-GAAP Net Income
| 2022 | 2023 | |||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||||||||
| Net income |
$ | 89.3 | $ | 83.5 | $ | 72.3 | $ | 124.4 | $ | 87.1 | $ | 100.5 | $ | 90.6 | ||||||||||||||
| Income tax expense |
32.1 | 24.7 | 25.1 | 35.2 | 29.2 | 31.1 | 29.9 | |||||||||||||||||||||
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| Income before income taxes |
121.4 | 108.1 | 97.4 | 159.5 | 116.4 | 131.7 | 120.5 | |||||||||||||||||||||
| Amortization of acquired intangible assets |
23.2 | 22.8 | 36.6 | 20.0 | 17.7 | 18.0 | 18.7 | |||||||||||||||||||||
| Stock-based compensation expense |
17.8 | 18.1 | 18.1 | 21.1 | 20.0 | 21.8 | 21.9 | |||||||||||||||||||||
| Acquisition and integration related costs |
1.6 | 0.5 | 1.1 | 2.2 | 1.7 | (0.2 | ) | 0.8 | ||||||||||||||||||||
| Restructuring and related costs |
— | — | 0.2 | 2.0 | 3.4 | (0.1 | ) | 0.5 | ||||||||||||||||||||
| Settlements and impairments |
— | — | 4.1 | 2.0 | (0.1 | ) | — | — | ||||||||||||||||||||
| Other expense, net |
2.0 | 2.1 | 2.1 | — | — | — | — | |||||||||||||||||||||
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| Non-GAAP income before income taxes(1) |
166.1 | 151.6 | 159.6 | 206.7 | 159.1 | 171.2 | 162.4 | |||||||||||||||||||||
| Assumed rate for income tax expense (2) |
26 | % | 26 | % | 26 | % | 26 | % | 26 | % | 26 | % | 26 | % | ||||||||||||||
| Assumed provision for income tax expense |
(43.2 | ) | (39.4 | ) | (41.5 | ) | (53.8 | ) | (41.4 | ) | (44.5 | ) | (42.2 | ) | ||||||||||||||
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| Non-GAAP net income(1) |
$ | 122.9 | $ | 112.2 | $ | 118.1 | $ | 153.0 | $ | 117.7 | $ | 126.7 | $ | 120.2 | ||||||||||||||
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| Non-GAAP net income per share - diluted |
$ | 0.31 | $ | 0.28 | $ | 0.30 | $ | 0.38 | $ | 0.29 | $ | 0.31 | $ | 0.30 | ||||||||||||||
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| Weighted average outstanding shares - basic |
392.9 | 393.3 | 394.7 | 404.2 | 404.5 | 405.4 | 405.6 | |||||||||||||||||||||
| Weighted average outstanding shares - diluted |
394.2 | 394.5 | 396.2 | 406.1 | 406.2 | 406.8 | 407.2 | |||||||||||||||||||||
| (1) | Totals may not foot due to rounding. |
| (2) | The assumed tax rate approximates our statutory federal and state corporate tax rate for the applicable period. |
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
| 2022 | 2023 | |||||||||||||||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||||||||
| Net income |
$ | 89.3 | $ | 83.5 | $ | 72.3 | $ | 124.4 | $ | 87.1 | $ | 100.5 | $ | 90.6 | ||||||||||||||
| Amortization of acquired intangible assets |
23.2 | 22.8 | 36.6 | 20.0 | 17.7 | 18.0 | 18.7 | |||||||||||||||||||||
| Depreciation and other amortization |
7.0 | 7.0 | 7.2 | 7.9 | 7.9 | 8.1 | 8.4 | |||||||||||||||||||||
| Interest expense (income), net |
7.7 | 3.4 | (10.7 | ) | (32.6 | ) | (43.5 | ) | (51.9 | ) | (58.4 | ) | ||||||||||||||||
| Other (income) expense, net |
(0.9 | ) | (1.3 | ) | (1.4 | ) | 0.2 | (0.6 | ) | (0.6 | ) | (0.5 | ) | |||||||||||||||
| Income tax expense |
32.1 | 24.7 | 25.1 | 35.2 | 29.2 | 31.1 | 29.9 | |||||||||||||||||||||
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| EBITDA(1) |
$ | 158.4 | $ | 140.0 | $ | 129.1 | $ | 155.1 | $ | 97.8 | $ | 105.2 | $ | 88.7 | ||||||||||||||
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| Stock-based compensation expense |
17.8 | 18.1 | 18.1 | 21.1 | 20.0 | 21.8 | 21.9 | |||||||||||||||||||||
| Acquisition and integration related costs |
1.6 | 0.5 | 1.1 | 2.2 | 1.7 | (0.2 | ) | 0.8 | ||||||||||||||||||||
| Restructuring and related costs |
— | — | 0.2 | 2.0 | 3.4 | (0.1 | ) | 0.5 | ||||||||||||||||||||
| Settlements and impairments |
— | — | 4.1 | 2.0 | (0.1 | ) | — | — | ||||||||||||||||||||
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| Adjusted EBITDA(1) |
$ | 177.9 | $ | 158.6 | $ | 152.7 | $ | 182.3 | $ | 122.9 | $ | 126.8 | $ | 111.9 | ||||||||||||||
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| (1) | Totals may not foot due to rounding. |
CoStar Group, Inc.
Reconciliation of Forward-Looking Guidance - Unaudited
(in thousands, except per share data)
Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income
| Guidance Range | Guidance Range | |||||||||||||||
| For the Three Months | For the Year Ending | |||||||||||||||
| Ending December 31, 2023 | December 31, 2023 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
| Net income |
$ | 97,000 | $ | 101,000 | $ | 376,000 | $ | 380,000 | ||||||||
| Income tax expense |
33,000 | 34,000 | 123,000 | 124,000 | ||||||||||||
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| Income before income taxes |
130,000 | 135,000 | 499,000 | 504,000 | ||||||||||||
| Amortization of acquired intangible assets |
18,000 | 18,000 | 73,000 | 73,000 | ||||||||||||
| Stock-based compensation expense |
22,000 | 22,000 | 86,000 | 86,000 | ||||||||||||
| Acquisition and integration related costs |
1,000 | 1,000 | 3,000 | 3,000 | ||||||||||||
| Restructuring and related costs |
— | — | 4,000 | 4,000 | ||||||||||||
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| Non-GAAP income before income taxes |
171,000 | 176,000 | 665,000 | 670,000 | ||||||||||||
| Assumed rate for income tax expense(1) |
26 | % | 26 | % | 26 | % | 26 | % | ||||||||
| Assumed provision for income tax expense |
(44,500 | ) | (45,800 | ) | (172,900 | ) | (174,200 | ) | ||||||||
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| Non-GAAP net income |
$ | 126,500 | $ | 130,200 | $ | 492,100 | $ | 495,800 | ||||||||
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| Net income per share - diluted |
$ | 0.24 | $ | 0.25 | $ | 0.92 | $ | 0.93 | ||||||||
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| Non-GAAP net income per share - diluted |
$ | 0.31 | $ | 0.32 | $ | 1.21 | $ | 1.22 | ||||||||
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| Weighted average outstanding shares - diluted |
407,400 | 407,400 | 406,800 | 406,800 | ||||||||||||
| (1) | The assumed tax rate approximates our statutory federal and state corporate tax rate for the applicable period. |
Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA
| Guidance Range | Guidance Range | |||||||||||||||
| For the Three Months | For the Year Ending | |||||||||||||||
| Ending December 31, 2023 | December 31, 2023 | |||||||||||||||
| Low | High | Low | High | |||||||||||||
| Net income |
$ | 97,000 | $ | 101,000 | $ | 376,000 | $ | 380,000 | ||||||||
| Amortization of acquired intangible assets |
18,000 | 18,000 | 73,000 | 73,000 | ||||||||||||
| Depreciation and other amortization |
10,000 | 10,000 | 34,000 | 34,000 | ||||||||||||
| Interest income, net |
(58,000 | ) | (58,000 | ) | (212,000 | ) | (212,000 | ) | ||||||||
| Other income, net |
— | — | (2,000 | ) | (2,000 | ) | ||||||||||
| Income tax expense |
33,000 | 34,000 | 123,000 | 124,000 | ||||||||||||
| Stock-based compensation expense |
22,000 | 22,000 | 86,000 | 86,000 | ||||||||||||
| Acquisition and integration related costs |
1,000 | 1,000 | 3,000 | 3,000 | ||||||||||||
| Restructuring and related costs |
— | — | 4,000 | 4,000 | ||||||||||||
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| Adjusted EBITDA |
$ | 123,000 | $ | 128,000 | $ | 485,000 | $ | 490,000 | ||||||||
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Investor Relations:
Cyndi Eakin
Senior Vice President
CoStar Group Investor Relations
(202) 346-6784
ceakin@costar.com
News Media:
Matthew Blocher
Vice President
CoStar Group Corporate Marketing & Communications
(202) 346-6775
mblocher@costar.com
About CoStar Group
CoStar Group (NASDAQ: CSGP) is a leading provider of online real estate marketplaces, information, and analytics in the property markets. Founded in 1987, CoStar Group conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of real estate information. CoStar is the global leader in commercial real estate information, analytics, and news, enabling clients to analyze, interpret and gain unmatched insight on property values, market conditions and availabilities. Apartments.com is the leading online marketplace for renters seeking great apartment homes, providing property managers and owners a proven platform for marketing their properties. LoopNet is the most heavily trafficked online commercial real estate marketplace with over twelve million monthly global unique visitors. STR provides premium data benchmarking, analytics, and marketplace insights for the global hospitality industry. Ten-X offers a leading platform for conducting commercial real estate online auctions and negotiated bids. Homes.com is the fastest growing online residential marketplace that connects agents, buyers, and sellers. BureauxLocaux is one of the largest specialized property portals for buying and leasing commercial real estate in France. Business Immo is France’s leading commercial real estate news service. Thomas Daily is Germany’s largest online data pool in the real estate industry. Belbex is the premier source of commercial space available to let and for sale in Spain. CoStar Group’s websites attract over 100 million unique monthly visitors. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S., Europe, Canada, and Asia. From time to time, we plan to utilize our corporate website, CoStarGroup.com, as a channel of distribution for material company information. For more information, visit CoStarGroup.com.
This news release and the Company’s earnings conference call contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group’s plans, objectives, expectations, beliefs and intentions and other statements including words such as “hope,” “anticipate,” “may,” “believe,” “expect,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar Group and are subject to many risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements and the assumptions and estimates used as a basis for the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the risk that the trends stated or implied by this release or in the earnings conference call cannot or will not be sustained at the current pace or may increase or decrease, including trends and expectations related to revenue, revenue growth, net income, non-GAAP net income, EBITDA, adjusted EBITDA, adjusted EBITDA margin, sales, net new bookings, site traffic and visitors, leads, and renewal rates; the risk that the Company is unable to sustain current Company-wide, CoStar, Apartments or LoopNet net new bookings; the risk that revenues for the fourth quarter and full year 2023 will not be as stated in this press release; the risk that net income for the fourth quarter and full year 2023 will not be as stated in this press release; the risk that EBITDA for the fourth quarter and full year 2023 will not be as stated in this press release; the risk that adjusted EBITDA for the fourth quarter and full year 2023 will not be as stated in this press release; the risk that non-GAAP net income and non-GAAP net income per diluted share for the fourth quarter and full year 2023 will not be as stated in this press release; the risk that we may not successfully integrate acquired businesses or assets and may not achieve anticipated benefits of an acquisition, including expected synergies; the risk that the tax rate estimates stated in this press release may change and the risk that we may experience declines in our revenues, revenue growth rates and profitability due to the impact of economic conditions on the real estate industry and our core customer base. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar Group’s filings from time to time with the Securities and Exchange Commission (the “SEC”), including in CoStar Group’s Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Report on Form 10-Q for the quarters ended March 31, June 30, and September 30, 2023, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar Group’s other filings with the SEC (including Current Reports on Form 8-K) available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar Group on the date hereof, and CoStar Group assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Exhibit 99.2 Third Quarter 2023 Investor Presentation
Legal Disclaimer Certain information in this presentation includes “forward-looking statements” within the meaning of federal securities laws, including financial projections of CoStar Group, Inc. (“CoStar Group” or the “Company”), addressable markets, statements about management’s plans, growth strategy, goals and objectives for future operations and similar statements regarding expected future events. These statements are not guarantees of future performance and involve risks and uncertainties that could cause actual results to differ materially. Factors that could cause or contribute to such differences include: general economic conditions; the risk that our projections about revenue, EBITDA, Adjusted EBITDA, net income per share, Non-GAAP net income, Non-GAAP net income per share, site traffic or the number of users on our sites are not as expected; product development and releases; planned sales and marketing activities and investments; the anticipated benefits of completed or proposed acquisitions; trends in customer behavior; effective tax rates; the anticipated benefits of cross-selling efforts; planned service enhancements; legal and regulatory issues; changes in accounting policies or practices and current economic conditions, including the potential impacts of the COVID-19 pandemic, on the commercial real estate industry and our customer base. More information about potential risks that could cause actual results to differ from those contemplated by the forward-looking statements is included in our filings with the Securities Exchange Commission (the “SEC”), including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q. All forward- looking statements are based on information available to us on the date of this presentation, and we assume no obligation to publicly update such statements whether as a result of new information, future events or otherwise. This presentation includes certain non-GAAP financial measures, including Organic Revenues, Acquired Revenues, EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Non-GAAP Net Income and Non-GAAP Net Income per Share, which are used by our management and board of directors to measure operating performance and trends and to prepare our annual budget. You should not consider these measures in isolation or as a substitute for analysis of our results as reported under GAAP. Reconciliation tables and other important information about the Company’s financial results and operating metrics used herein are included in the Appendix to this presentation. This presentation also contains estimates and statistical data made by independent parties and by CoStar Group related to market size, the housing rental market, agent users, site traffic, growth and other data about CoStar Group’s industry and performance. These data involve a number of assumptions and limitations, which may significantly impact their accuracy, and you are cautioned not to give undue weight to such estimates. Projections, assumptions and estimates of future performance are necessarily subject to a high degree of uncertainty and risk. This presentation is not an offer or a solicitation of an offer to purchase any securities.
Third Quarter 2023 Highlights
Third Quarter 2023 Highlights • Third quarter 2023 revenue increased 12% year-over-year. Commercial information and marketplace businesses grew 14% year-over-year. • 50 consecutive quarters of double-digit revenue growth. • Homes.com traffic reached 100 million unique visitors in September, up 1,290% from September 2022 to become the second most trafficked residential site in the U.S. • Residential network traffic was 141 million unique visitors, more than Realtor and Redfin combined. • Apartments.com revenue growth accelerated to 24% year-over-year. • Strong net new bookings of $65 million in the third quarter. • Offer to acquire OnTheMarket – the third most visited residential property portal in the United Kingdom. Source: In September 2023, Homes.com surpassed 100 million monthly unique visitors, according to Google Analytics, exceeding Realtor.com’s 74 million monthly average unique visitors for its fiscal fourth quarter as reported in its earnings release on August 10, 2023, and Redfin’s 52 million monthly average unique visitors for the quarter ended June 30, 2023 as reported in its Form 10-Q filed August 3, 2023
Homes.com Skyrockets Past 100M Unique Visitors in September Now #2 Most Trafficked U.S. Residential Site 100 90 80 70 60 50 40 30 20 10 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Source: In September 2023, Homes.com surpassed 100 million monthly unique visitors, according to Google Analytics, exceeding Realtor.com’s 74 million monthly average unique visitors for its fiscal fourth quarter as reported in its earnings release on August 10, 2023, and Redfin’s 52 million monthly average unique visitors for the quarter ended June 30, 2023 as reported in its Form 10-Q filed August 3, 2023 Unique Visitors in Millions
Our Websites Reached 160 Million Unique Visitors in September 2023 160 140 120 100 80 60 40 20 - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Google Analytics Unique Visitors – All CoStar Sites Unique Visitors in Millions
th Acquisition Offer Announced October 19 , 2023 • OnTheMarket is the third most visited residential property portal in the 1 United Kingdom with approximately 20 million site visits per month • Founded by agents in 2013 as an agent friendly competitive alternative to the existing UK property portals 2 • Over 13,000 agents advertise with OnTheMarket • Revenue for the twelve-month period ending July 31, 2023, was 3 4 approximately £35 million , with adjusted EBITDA of £8 million • Acquisition represents an attractive and efficient entry point into the £8 trillion United Kingdom residential property market • Transaction multiples for trailing twelve month period are 2.5x revenue and 11x adjusted EBITDA 1 Calculated as 119 million visits over the period of February 2023-July 2023, divided by six months 2 Advertisers are defined as either estate and lettings agent branches or new home developments listed at OnTheMarket.com • Offer price £1.10 per share in cash or approximately £100 million 3 Calculated as the sum of 1H FY2024 revenue of £17mm, per OnTheMarket’s FY2024 interim results announcement, and 2H FY2023 revenue, which is derived from Full Year FY2023 revenue of £35mm, per OnTheMarket’s FY2023 Annual Report, less 1H FY2023 revenue of £17mm, per the FY2024 interim results announcement. 4 Calculated as the sum of 1H FY2024 EBITDA of £3mm, per OnTheMarket’s FY2024 interim results announcement, and 2H FY2023 • Offer subject to shareholder approval and customary closing EBITDA, which is derived from Full Year FY2023 EBITDA of £8mm, per OnTheMarket’s FY2023 Annual Report, less 1H FY2023 EBITDA of £3mm, per the FY2024 interim results announcement. conditions. Transaction is expected to close in fourth quarter 2023
Third Quarter and Year to Date 2023 Results Third Quarter Year-To-Date $625 million $1.8 billion Revenue 12% year-over-year growth 13% year-over-year growth $112 million $362 million Adjusted EBITDA 18% margin 20% margin Net new bookings $65 million $228 million $91 million $278 million Net income $0.22 per diluted share $0.68 per diluted share $120 million $365 million Non-GAAP net income $0.30 per diluted share $0.90 per diluted share
2023 Fourth Quarter and Full Year Outlook Fourth Quarter Full Year $630 million to $635 million $2.445 billion to $2.450 billion Revenue 10% year-over-year growth 12% year-over-year growth $123 million to $128 million $485 million to $490 million Adjusted EBITDA 20% margin 20% margin $97 million to $101 million $376 million to $380 million Net income $0.24 to $0.25 per diluted share $0.92 to $0.93 per diluted share Non-GAAP $127 million to $130 million $492 million to $496 million net income $0.31 to $0.32 per diluted share $1.21 to $1.22 per diluted share
Company Overview
CoStar Group is the Global Leader in Digitizing Real Estate 37 One billion+ $5 billion+ 5,700 years of real estate annual visits investment in research employees experience to our websites and technology member of the 500 Innovator of the Year COMPANY OF THE YEAR Best Integrated Marketing Campaign $5 billion+ 14 ~$30 billion 75 in cash on hand countries market capitalization offices *All numerical data as of September 30, 2023
A Global Leader in the Digital Transformation of the $300+ Trillion Real Estate Industry • Long growth runway: Global addressable market for real estate information and marketplaces estimated at > $100 billion. • Strong competitive position: Massive proprietary dataset built over 37 years with > $5 billion invested in research. • Leading Property Marketplaces: Hundreds of millions shop our online real estate marketplaces. • Successful growth track record: 50 consecutive quarters of double- digit revenue growth, both organic and through acquisitions. • Attractive financial model: Over 95% subscription revenue. 90%+ renewal rates*. Strong margins, high free cash flow and a fortress balance sheet. *All data as of September 30, 2023. Subscription revenue includes all contracts regardless of term. Renewal rate refers to contracts with 12 month or longer terms.
Global Real Estate: A $300 Trillion Asset Class U.S. REAL ESTATE GLOBAL REAL ESTATE $70 TRILLION $300 TRILLION (Year CoStar entered market) Office (1986) Industrial (1994) United States Retail (2004) Rural Land (2011) Apartment (2014) Hotel Single Family (2019) Residential/ Canada New Homes China (2020) France UK CoStar Group Offices India Germany U.S. Real Estate Sources: Apartment – CoStar estimate Global Real Estate Sources: Office – CoStar estimate Hotel – CoStar estimate Global real estate value calculated by scaling Industrial – CoStar estimate Single Family – Federal Reserve Flow of Funds and U.S. real estate value based on the U.S. Retail – CoStar estimate Urban Institute share of global GDP, Global GDP data from Based on 2023 Data Rural Land – U.S. Department of Agriculture New Homes – Federal Reserve Economic Data (FRED) The World Bank
~$40B North American Addressable Market, Global Market > $100B Total North American Addressable Market $4 Billion $9 Billion $5 Billion $6 Billion >$15 Billion 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% TAM Sources: CoStar, Apartments, LoopNet and Ten-X – CoStar estimate Homes.com – extrapolation of Borrell Associates “2019 Real Estate Advertisement Outlook” combined with CoStar estimate
Consistent Double Digit Revenue Growth 5 YEAR CAGR $2.5B 23% 16% $2.2B 20% TOTAL 5 YEAR REVENUE CAGR $1.9B 16% $1.7B $1.4B 18% $1.2B 11% 2018 2019 2020 2021 2022 2023E CoStar Multifamily LoopNet Residential Information Services Other Marketplaces
50 Consecutive Quarters of Double-Digit Revenue Growth Regardless of Commercial Property Transaction Volumes 700 450 High Inflation Quarterly Revenue Transaction Volumes 2022-2023: +12% Growth 400 600 Pandemic 2020-2021: +18% Growth • Sustained double-digit revenue growth 350 • 95% subscription revenue 500 300 1 • 80% annual contracts 400 • Resilient through market cycles 250 • Single, integrated global platform 200 300 150 200 Great Recession 2009 Revenue: -1% 100 100 50 - - 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 1 As of September 30, 2023. Organic revenue excludes revenue from acquired companies at time of acquisition. 2022-2023 revenue growth rate based on full year 2022 and 2023 run rate revenue. Quarterly Revenue (in millions)
More Diversified with More Countercyclical Business Mix Since the Great Recession 2008 REVENUE 2023E REVENUE Other Marketplaces Other 5% Information Residential Revenue 2% Services LoopNet 11% CoStar 38% Information CoStar Marketplaces & Analytics 92% 55% 45% Information Multifamily & Analytics Information 37% Services 100% 7%
Diversified Client Base with Minimal Concentration TOP 1,000 CLIENTS: REVENUE BY CLIENT SEGMENT NONE MORE THAN 2% Lender Investors 4% 7% Owners Other 34% 14% Property Management 19% Brokers 22% *Revenue by client segment and by client extrapolated from September 2023 CoStar billing data.
Successful Acquisition and Integration Track Record 2023 REVENUE COMPOSITION $600 Acquired 22% $500 $400 Organic 78% $300 $200 $100 $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Organic Revenue Acquired Revenue for the year following acquisition Millions
High Growth, High Margin Subscription Business Model ü 23% Revenue CAGR since IPO 24 years ago Double-Digit Revenue and ü Net Income CAGR of 29% over the last 10 years Adjusted EBITDA Growth ü Adjusted EBITDA CAGR of 14% over the last 10 years ü 95% subscription revenue with 82%+ annual contracts Predictable Subscription ü 96% renewal rate for clients > 5 years Services Revenue ü Double-digit revenue growth for 50 straight quarters ü 80%+ gross margin Strong Operating Leverage ü Commercial business approaching 40% margin ü Net cash provided by operating activities of $526M for trailing twelve months Highly Cash Generative with Strong Balance Sheet ü $5.2B cash versus $1B of debt Note: All data as of 9/30/23.
ESG Recent Accomplishments • Calculated Greenhouse Gas baseline emissions in 2022 • Completed CDP Questionnaire • Signed Net Zero Commitment with Science Based Target initiative • ISS 50% Score Improvement To read our full 2023 ESG Report visit: https://investors.costargroup.com/ESG
The global leader in commercial real estate information, analytics, and data-driven news
CoStar by the Numbers $930M 180K+ Revenue Run Rate Subscribers 7.1M+ 890K+ Commercial Listings Properties 14.8M+ 5.2M+ Lease Sale Transactions Transactions * Data from CoStar internal database as of September 2023. Run Rate based on Q3 2023 annualized.
CoStar Product Investments Expand the Market Size, Resulting in Long-Term Double-Digit Growth $250 13% Revenue Growth Rate $4B U.S. MARKET SIZE Ten Year CAGR Tenants Hospitality $200 Lenders Owners / $150 Investors Brokers / Appraisers $100 $50 $0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Total addressable market for CoStar – CoStar estimate. CAGR based on trailing twelve-month revenue as of 9/30/23. Quarterly Revenue (in millions)
Unparalleled Research Methodology 1,000+ Drones 70 300 Analysts and In-market Economists canvassers 1 1,500 Cessna capturing Researchers aerial insights Automated data 1,000 extraction Software Developers To facilitate the gathering of data 50 Data feeds and Journalists Across third-party data North America & Europe 1 Based on 8/31/23 Internal Data
Discover your new home. Helping 100 million renters find their perfect fit.
Apartments.com by the Numbers 24% $940M Year-over-Year Revenue Run Rate Revenue Growth 1M+ #1 Rental Rank in Brand Availabilities Awareness 45M 1B Average Monthly Annual Visits Unique Visitors *All data as of September 2023. Revenue Run Rate based on Q3 2023 annualized. Brand awareness from Dynata, a leading market research sampling provider.. Traffic data from Google Analytics.
Apartments.com Beats Competition on the Metrics That Matter to Advertisers 2X 2X 3X more time higher more per visit conversion leases Sources: Traffic from Comscore Media Metrix, YTD 2023; Lease data from Rent Dynamics, April - June 2023
Record Unaided Consumer Brand Awareness 53% 49% 40% 37% 36% 36% 35% 34% 34% 34% 33% 32% 31% 30% '20 Q1 '20 Q2 '20 Q3 '20 Q4 '21 Q1 '21 Q2 '21 Q3 '21 Q4 '22 Q1 '22 Q2 '22 Q3 '22 Q4 '23 Q1 '23 Q2 23 Q3 Source: Dynata a leading market research sampling provider
Success of Apartments.com Growth Since Acquisition 2014 2023 th 5 place in highly fragmented The leading online rental #1 Industry Rank online rental search industry marketplace* Revenue $86 million $940 million revenue run rate 11X Traffic 4 million monthly uniques 45 million average monthly uniques 11X Customers 18,000 communities 69,000 communities 4X * 2023 #1 in Brand Awareness and Revenue. 2023 Revenue Run Rate based on Q3 2023 annualized. 2014 ComScore traffic data. 2023 Google Analytics traffic data. Customer data from internal database.
Tremendous Opportunity Ahead in the Small to Medium Property Space Client Annual Revenue Revenue Unit Range Universe TAM ($M) Properties Run Rate Penetration 1-49 23M 11K $60M 1% $6B $7B opportunity 50-99 68K 11K $108M 11% $1B 100+ 102K 43K $772M 39% $2B Grand Total 23M 65K $940 10% $9B Data as of September 2023
The #1 global commercial real estate marketplace
LoopNet by the Numbers 16% $270M 5 Year Revenue Revenue Run Rate CAGR 14M 93% Monthly Unique #1 Position for CRE Visitors Worldwide Terms in Google 97% 370K+ Fortune 1000 CRE Brokers & Companies Owners Advertising Active on Site *All data as of September 2023. Run Rate based on Q3 2023 annualized. Traffic data from Google Analytics.
Commanding Share of Traffic vs. Marketplace Competitors LoopNet Network vs. Competitors LoopNet Network crexi propertyshark commercialcafe officespace commercialexchange 50x commercialsearch Unique Visitors of the Avg. vts CRE Marketplace Competitor buildout Instantoffices commercialmls 7x reonomy Unique Visitors of the myelisting Nearest Competitor globallistings propertycapsule rcm1 0 1,000,000 2,000,000 3,000,000 4,000,000 5,000,000 6,000,000 7,000,000 8,000,000 Source: SEMRush 7/31/23
LoopNet Revenue Up 5x Since Acquisition Early Stages of a Massive Global Opportunity $70 Domestic International $5 Billion $60 North American TAM $50 $15 Billion $40 Global TAM $30 $20 $10 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Quarterly Revenue in Millions
LoopNet International Expansion Underway LoopNet Canada loopnet.ca LoopNet UK loopnet.co.uk LoopNet Spain LoopNet France loopnet.es loopnet.fr
The fastest growing U.S. residential marketplace
Our Vision Establish Homes.com as the #1 residential real estate marketplace
Homes.com by the Numbers 100M+ Millions Free Leads Monthly Unique per Quarter Visitors 15K+ 2.1M+ Residential For Sale Neighborhood and Rental Listings Content 630K 1M+ Agents with Registered Agents 1+ Listing * Sources: Homes.com surpassed 100 million monthly unique visitors, according to Google Analytics. All other based on Internal data as of September 30, 2023.
A Better Business Model – “Your Listing, Your Lead” • Only Homes.com connects you to the listing agent who knows the home best • No cold calls, robocalls, or spam from random agents • Competitor models monetize buyer agency, taking one third of agent’s commissions • Homes.com is providing millions of free leads to listing agents to help sell the home
“Your Listing, Your Lead” Delivering Real Value to Agents
Our Proprietary Content Sets Us Apart. Consumers Aren’t Just Looking for a Home, They’re Looking for a Community. Homes.com is digitizing rich content for communities across the U.S. 20,000+ Neighborhoods 40,000+ Parks 125,000+ Schools 65,000+ Condo Buildings
Marketing the Property is the Superior Financial Model Contact Agent Companies that Market the Property Companies that Market the Agent 300 300 200 200 ($1.8) Billion Cumulative Net Loss 100 100 0 0 (100) (100) (200) (200) $2.5 Billion Cumulative Net Income (300) (300) (400) (400) (500) (500) (600) (600) 2018 2019 2020 2021 2022 2018 2019 2020 2021 2022 Source: Aggregate of publicly disclosed data for competitors in the industry. Net Income ($ in millions) Net Income ($ in millions)
The global leader in hospitality information, analytics and benchmarking
STR by the Numbers 22% 78K YoY Subscription Hotels Worldwide Revenue Growth 10M 190 Guest Rooms Countries $300M 97% Total Addressable Renewal Rate Market *Based on internal CoStar data as of September 2023.
STR Data Includes 78,000+ Hotels Across 190 Countries
The leading platform for lease accounting and management
Real Estate Manager by the Numbers 17% 97% 5 Year Revenue Customer CAGR Retention Rate $4B Monthly Lease Payments Managed 625K 33K Real Estate System Users Leases CAGR and Retention Rate based on 9/30/23 trailing twelve-month period. All other data from internal database as of August 2023.
Platform for Managing the Tenant’s Entire Lease Lifecycle The Most Comprehensive Portfolio Management Platform with Integrated CoStar Real Estate Data Drive Cost Savings Optimize Real Estate Portfolios Achieve Lease Accounting Compliance
The SMARTER, BETTER, FASTER way to transact commercial real estate
Ten-X by the Numbers 90% $31B Properties Sold in Assets Sold 90 Days or Less 63% Trade Rate Since 2020 84% 93% Non-Distressed Close Rate Assets Assets sold since inception in 2009. Trade rate since acquisition in 2020. Close rate, time to close and non-distressed assets sold are YTD 2023.
Ten-X Platform Closes Deals 2-3x Faster than Offline Transactions Asset Marketing & Bidder Qualification Asset Evaluation Contracts & Closing + - 10 Days Onboarding & Due Diligence Online Auction
Ten-X Revenue Opportunity is >$3 Billion at Current Transaction Levels Market Penetration % Revenue Opportunity ($1M - $10M Property Size) Current 1% $50 Million 5% $155 Million $310 Million 10% $775 Million 25% 33% $1 Billion 100% $3.1 Billion 0 500 1,000 1,500 2,000 2,500 3,000 Annual Revenue (in Millions) Revenue opportunity based on CoStar estimates.
The largest rural real estate marketplace in the country
Land.com by the Numbers 16% 10M 5 Year Revenue Average Monthly CAGR Visitors 8K+ Paid Clients 430K+ 50K+ Land Sale Comps Paid Listings in Database *CAGR and leads based on 9/30/23 trailing twelve-month period. Traffic data from Google Analytics for Q3 23 Paid listing and client data from internal database as of 8/31/23.
Land.com Leads All Competitors in Traffic Share LandSearch LandFlip Network 7.6M visits per month AcreValue Homes And Land 2.6X Land Broker MLS our largest competitor Farm And Ranch LandHub Source: SimilarWeb, Monthly Visits, August 2023
The largest business-for-sale marketplace in the U.S.
BizBuySell by the Numbers 10% 35M 5 Year Revenue Annual Visits CAGR 2.5M Annual Leads Delivered 120K 150K Annual Sold Business Comps in Database Paid Listings *CAGR based on trailing twelve-month revenue from 9/30/23. Run Rate based on Q3 2023 annualized. Traffic data from Google Analytics. Listing, Lead and Comp data from internal database as of 8/31/23.
Our Network Has More Traffic Than All Competitors Combined BizBuySell Network BusinessesForSale.com FranchiseGator 4M FranchiseDirect visits per month BusinessBroker.net 14x our largest competitor BizBen BusinessMart GlobalBX * BizBuySell Network traffic vs similar sites; SimilarWeb, August 2023
Appendix
Non-GAAP Measures For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the CoStar Group Inc.’s (the “Company” of “CoStar Group”) financial condition and results of operations, please refer to the Company’s latest periodic report filed with the Securities and Exchange Commission at www.sec.gov. EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before interest income or expense, net and other income or expense, net; loss on debt extinguishment; income taxes; depreciation and amortization. Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, and settlements and impairments incurred outside the Company’s ordinary course of business. Adjusted EBITDA margin represents adjusted EBITDA divided by revenues for the period. Non-GAAP net income is a non-GAAP financial measure determined by adjusting GAAP net income attributable to CoStar Group for stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, settlement and impairment costs incurred outside the Company's ordinary course of business and loss on debt extinguishment, as well as amortization of acquired intangible assets and other related costs, and then subtracting an assumed provision for income taxes. In 2023, the Company is assuming a 26% tax rate in order to approximate its statutory corporate tax rate excluding the impact of discrete items. Non-GAAP net income per diluted share is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period used in the calculation of GAAP net income per diluted share. For periods with GAAP net losses and non-GAAP net income, the weighted average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive. Organic revenues and acquired revenues are non-GAAP measures for reporting financial performance of the business. Organic revenues represent total company revenues excluding net revenues from acquired companies for the first four full quarters since the entities’ acquisition date. Acquired revenues represents revenues from acquired companies for the first four full quarters since the entities' acquisition date. After the completion of four full fiscal quarters, changes in revenues of acquired is treated as organic for future periods. For products discontinued after an acquisition, the lesser of the reported revenues or the actual revenues reported is included in acquired revenues.
Reconciliation of Net Income to Non-GAAP Net Income The following table presents a reconciliation of CoStar Group’s, Non-GAAP Net Income, including forward-looking guidance Non-GAAP Net Income, to the most directly comparable GAAP financial measure, net income. For the Nine Months Ended For the Year Ended December 31, For the Three Months Ended December 31, December 31, September 30, September 30, (in thousands) except per share amounts (1) (1) (1) (1) Low 2023 High 2023 2023 - Low 2023 - High 2023 2023 Net income $ 376,000 $ 380,000 $ 97,000 $ 101,000 $ 90,574 $ 278,225 Income tax expense 123,000 124,000 33,000 34,000 29,907 90,272 Income before income taxes 499,000 504,000 130,000 135,000 120,481 368,497 Amortization of acquired intangible assets 73,000 73,000 18,000 18,000 18,707 54,364 Stock-based compensation expense 86,000 86,000 22,000 22,000 21,899 63,770 Acquisition and integration related costs 3,000 3,000 1,000 1,000 796 2,272 Restructuring and related costs 4,000 4,000 - - 509 3,880 Settlements and impairments - - - - - (107) Non-GAAP income before income taxes 665,000 670,000 171,000 176,000 162,392 492,676 (2) 26% 26% 26% 26% 26% 26% Asssumed rate for income tax expense Assumed provision for income tax expesne (172,900) (174,200) (44,500) (45,800) (42,222) (128,096) Non-GAAP net income $ 492,100 $ 495,800 $ 126,500 $ 130,200 $ 120,170 $ 364,580 $ 0.92 $ 0.93 $ 0.24 $ 0.25 $ 0.22 $ 0.68 Net income per share - diluted $ 1.21 $ 1.22 $ 0.31 $ 0.32 $ 0.30 $ 0.90 Non-GAAP net income per share - diluted Weighted average outstanding shares - diluted 406,800 406,800 407,400 407,400 407,229 406,713 (1) Represents forward-looking guidance. (2) The assumed tax rate approximates our statutory federal and state corporate tax rate for the applicable period.
Reconciliation of Net Income to Adjusted EBITDA The following table presents a reconciliation of CoStar Group’s Adjusted EBITDA, including forward-looking guidance range Adjusted EBITDA for the full year ending December 31, 2023, to the most directly comparable GAAP financial measure, net income. For the Three For the Three For the Three For the Year Ending December 31, Months Ended Months Ended Months Ended December 31, December 31, September 30, (in thousands) (1) (1) (1) (1) 2012 2022 Low 2023 High 2023 2023 - Low 2023 - High 2023 Net income $ 9,915 $ 369,453 $ 376,000 $ 380,000 $ 97,000 $ 101,000 $ 90,574 Amortization of acquired intangible assets 22,241 102,579 73,000 73,000 18,000 18,000 18,707 Depreciation and other amortization 10,511 29,127 34,000 34,000 10,000 10,000 8,418 Interest income, net (526) (32,125) (212,000) (212,000) (58,000) (58,000) (58,422) Other (income) expense, net 4,832 (3,383) (2,000) (2,000) - - (465) Income tax expense 13,219 117,004 123,000 124,000 33,000 34,000 29,907 EBITDA 60,192 582,655 392,000 397,000 100,000 105,000 88,719 Stock-based compensation expense 12,282 75,207 86,000 86,000 22,000 22,000 21,899 Acquisition and integration related costs 13,924 5,405 3,000 3,000 1,000 1,000 796 Restructuring and related costs - 2,175 4,000 4,000 - - 509 Settlements and impairments - 6,069 - - - - - Adjusted EBITDA $ 86,398 $ 671,511 $ 485,000 $ 490,000 $ 123,000 $ 128,000 $ 111,923 (1) Represents forward-looking guidance.
Use of Operating Metrics CoStar Group reviews a number of operating metrics to evaluate its business, measure performance, identify trends, formulate business plans and make strategic decisions. This presentation includes Net New Bookings. Going forward, CoStar Group expects to use these operating metrics on a periodic basis to evaluate and provide investors with insight into the performance of the Company’s subscription-based services. Net New Bookings are calculated based on the annualized amount of change in the Company's sales bookings, resulting from new subscription-based contracts, changes to existing subscription-based contracts and cancellations of subscription-based contracts for the period reported. Information regarding net new bookings is not comparable to, nor should it be substituted for, an analysis of the Company's revenues over time.