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CoStar Group maintained a strong performance in the third quarter, according to the Virginia-based portal’s earnings call Tuesday.
CoStar Group’s Q3 revenue grew 11 percent year over year to $693 million, representing the 54th consecutive quarter of double-digit revenue growth. CoStar remained profitable, although its net income dropped from $91 million in Q3 2023 to $53 million in Q3 2024.
Andy Florance | Photo credit: CoStar
“We achieved another strong quarter of results with our 54th-consecutive quarter of double-digit revenue growth,” CoStar Group founder and CEO Andy Florance said in a statement. “CoStar Group revenue grew 11 percent year-over-year, as our two billion-dollar run rate businesses, Apartments.com and CoStar, continue to deliver double-digit revenue growth.”
The company’s adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) also increased during the quarter, growing 86 percent year over year to $76 million.
“Net income, EBITDA and Adjusted EBITDA increased significantly versus each of the first and second quarters of 2024,” he added. “Our commercial information and marketplace businesses continue to perform very well and delivered 43 percent profit margins in the third quarter of 2024.”
CoStar’s residential portal Homes.com also notched a solid third quarter, with revenue reaching $17 million.
Traffic to the Homes.com Network (i.e., Homes Network, the Apartments Network and the Land Network) reached 130 million average monthly unique visitors in Q3, according to the results. Meanwhile, Homes.com’s sole traffic reached 85 million average monthly unique visitors.
Both metrics represent a decline from the previous quarter; however, both traffic metrics are still up 17 percent and 38 percent from the previous year, respectively.
Despite the quarterly traffic decline, Homes.com’s unaided awareness reached 33 percent — a 725 percent increase since CoStar launched its billion-dollar campaign for Homes.com in February.
Homes.com’s annualized net new bookings reached $56 million during Q3. In CoStar’s previous earnings call, the company said Homes.com had reached $55 million in net new bookings during the first two quarters of the year ($39 million in Q1 and $16 million in Q2) — signaling a potential slowdown in net new bookings during the most recent quarter.
“Our marketing investment continues to deliver strong results as we lay the groundwork for sustained long-term growth as interest rates move down, transaction volume increases and our brands gain even more traction,” Florance said. “… For Homes.com, we delivered 15 billion impressions year-to-date and nearly 5 billion impressions in Q3.”
In the company’s earnings call, Florance said Homes.com is “in the bottom of the first inning” as CoStar continues to invest heavily in marketing and building a dedicated sales team for the site. Although membership growth is relatively flat for the quarter, the company is bullish about its prospects as recent buyer-broker commission and written agreement changes heighten Homes.com’s “Your Listing, Your Lead” value proposition.
“We continue to hear directly from agents and focus groups, brokerage and industry leaders that they definitely prefer our business model of ‘Your Listing, Your Lead,'” he said. “Agents and brokerage firms are becoming more frustrated that they’re forced to put their listings into the [multiple listing service] and have their listings sold off into the lead diversion model such as Zillow and Realtor.com, which means the seller’s agent loses control over the listing and loses potential business from those diverted leads, those non-permissioned diverted leads.”
Florance said the average Homes.com member’s listings are viewed 120,000 times per month, which is 46 times more views than the average non-member listing (2,600). Member listings also get more shares (+343 percent) and favorites (+600 percent) than non-member listings, all of which contribute to Homes.com members winning 50 percent more listings than non-members.
“Buyers want to see who the listing agent is so that they can reach out for a quick question without getting the hard sell from half a dozen buyer brokers,” Florance said. “Sellers want the agent they hired and worked hard to find to work the leads for their homes’ effective sale. I believe that our business model is clearly superior to our competitors and that it will be the future model.”
As for Homes.com’s future, Florance said the portal will continue to “get better and better” as agents continue to acclimate to the “Your Listing, Your Lead” model, as the portal hires more experienced sales staff, and as the company leverages its Q2 acquisition of Matterport to boost listing and lead quality.
“CoStar has always invested back into the business to help us grow and gain the synergies that occur from building out more products that reach more real estate customer segments across more geography,” he said. “So we’re a company that’s always reinvested into growth.”
As for the company’s other segments, Florance said his team is charging ahead on growth, merger and acquisition plans, as evidenced by the company’s recent acquisition of lease administration and accounting platform Visual Lease. Visual Lease, he said, will boost the CoStar Real Estate Manager platform for commercial customers.
“By combining CoStar Group’s resources with Visual Lease’s diverse customer base, best-in-class customer retention, deep lease portfolio management expertise and a user-centric design, we’re well positioned to offer a more comprehensive service offering and continue growing both nationally and internationally in this segment,” he said.
CoStar Group Chief Financial Officer Chris Lown said the company is ahead of the forward-looking guidance it provided during the previous quarter. The company, he said, now expects to end 2024 with a full-year revenue between $2.72 billion to $2.73 billion.
“This quarter, we delivered strong revenue growth and adjusted EBITDA growth well ahead of our guidance,” Lown said in a written statement. “The Company now expects revenue in the range of $2.72 billion to $2.73 billion for the full year of 2024, representing revenue growth of approximately 11 percent year-over-year at the midpoint of the range.”
“The Company expects revenue for the fourth quarter of 2024 in the range of $693 million to $703 million, representing revenue growth of approximately 9 percent year-over-year at the midpoint of the range,” he added.
CoStar Group’s stock (NASDAQ: CSGP) has been on the downslope over the past month, with the price per share decreasing 0.65 percent to $76.87 per share. The company’s stock has remained steady in after-hours trading and could experience a post-earnings pop.
The company’s market cap stands at $31.50 billion.
English (US) · 