Release Date: April 29, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CoStar Group Inc (CSGP, Financial) reported Q1 2025 revenue of $732 million, marking a 12% increase year over year and exceeding consensus expectations.
• The company achieved a 43% profit margin in its commercial real estate and information marketplace businesses, showcasing strong operational efficiency.
• CoStar's international businesses achieved three consecutive quarters of all-time net new bookings, with a 56% year over year growth in Q1 2025.
• Apartments.com reported a strong quarter with revenue of $282 million, an 11% increase over Q1 2024, and added 4,300 new communities, the most in a single quarter in almost 10 years.
• Homes.com has rapidly increased its unaided brand awareness 9 times to 36% in just 14 months, becoming the second most visited US residential portal.

Negative Points

• The commercial real estate environment remains challenging, with high vacancy rates and low real asking rents impacting market conditions.
• CoStar Group Inc (CSGP) posted a $15 million net loss for the first quarter, primarily due to onetime costs from the Matterport acquisition.
• The company anticipates slight headwinds from government contract cancellations expected throughout 2025.
• Matterport contributed an adjusted EBITDA loss of $2.7 million for the first quarter stub period.
• Homes.com experienced early cancellations and negative Net Promoter Scores initially, although these metrics have improved over time.

Q & A Highlights

Q: Andy, could you provide additional comments on the delayed market listing exemption discussed by the NAR and Zillow's reaction? Have you spoken to brokerage firms about their views on Zillow's actions? A: The feedback I've received is overwhelmingly negative. Many agents see Zillow's requirement for early listing as a way to ensure monetization before listings go to market. This move is perceived as a sign of weakness and has created opportunities for us.

Q: Chris, can you share the non-residential EBITDA margin for Q1 and confirm if the outlook for residential spending in 2025 remains unchanged? A: The commercial margin was 43% for the first quarter. We are focused on managing expenses, particularly around Homes.com, and remain on track with our budget for Homes.com, with no changes to our spending outlook.

Q: Can you elaborate on how Matterport will be integrated into CoStar's platform over the next 12 to 18 months and the monetization strategy? A: Matterport will be integrated into all our platforms, enhancing features and user engagement. We plan to invest in R&D and sales to grow revenue and margins. Matterport's technology will lower cancellations and increase site usage, providing financial tailwinds.

Q: You mentioned $50 million in residential savings this quarter. How does this affect your investment plans for the year, especially with the capital allocation committee's work? A: The $900 million investment plan remains unchanged. The savings were a proactive decision to reallocate costs from Homes.com to expand our sales force, aligning with our growth strategy.

Q: Regarding multifamily, what is driving the growth deceleration in Q2 to 10%, and how confident are you in the acceleration in the second half of the year? A: The second quarter is typically slower due to the timing of industry conferences. We expect acceleration in the third and fourth quarters, driven by our expanded sales force and strategic focus on rooftops and pricing.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.