CoStar Group, Inc. Q2 FY2025 earnings call

• CoStar achieved strong financial results with revenue up 15% to $781 million and adjusted EBITDA soaring 108% to $85 million, both exceeding consensus estimates. • Net new bookings reached a record $93 million, the highest quarterly net new bookings in CoStar's history. • Apartments.com had an excellent quarter with revenue up 11% to $292 million, $45 million in net new bookings, and a strong EBITDA margin. • Homes.com showed solid sales growth with residential annualized net new bookings of $12 million, an expanding sales force, and increasing NPS. • CoStar product saw revenue grow 7% year-over-year, with net new bookings accelerating. • LoopNet had 8% revenue growth in Q2, with net new bookings in the first half of 2025 surging 345% compared to the same period in 2024, and plans to expand globally. • Matterport's integration with CoStar Group is being pursued to enhance value, with plans to expand Matterport's sales force. • The company realized $40 million in cost savings in Europe by streamlining its cost structure.

CoStar Group reported revenue of $781 million in Q2 2025, a 15% increase year-over-year. Adjusted EBITDA was $85 million, a 108% jump from Q2 2024. Net new bookings hit a record $93 million, a 65% increase from the previous quarter. Apartments.com had revenue of $292 million, up 11% year-over-year, with $45 million in net new bookings. Homes.com saw residential annualized net new bookings of $12 million. CoStar product generated $271 million in revenue, a 7% year-over-year increase. LoopNet had 8% revenue growth in Q2, with net new bookings surging 345% in the first half of 2025. BizBuySell had revenue of $8.8 million, a 9% year-over-year rise. Matterport contributed $44 million to revenue in Q2. Apartments.com accounted for approximately 37.4% of total revenue ($292 million / $781 million), CoStar product made up about 34.7% ($271 million / $781 million), and other segments like Homes.com, LoopNet, etc., had respective contributions.

• Full year revenue growth guidance was increased to 7%, with Q3 expected to also have 7% growth. • Residential revenue growth for 2025 was revised to over 20%, with Q3 residential revenue projected to increase $3 - $4 million sequentially. • LoopNet's 2025 revenue growth expectation was raised to 8% - 9%, with Q3 revenue growth expected to be between 10% - 11%. • Information Services revenue growth guidance was updated to 16% - 18%, with Q3 revenue growth anticipated to be approximately 20%. • Other revenue guidance was revised to between $270 million and $275 million. • Adjusted EBITDA guidance for the year was increased to $370 million - $390 million, with Q3 adjusted EBITDA expected to be in the range of $75 million - $85 million.

• The commercial real estate market, especially the office segment, faces challenges such as persistently high vacancy rates and negative net absorption rates. • Zillow's aggressive tactics, like forcing agents to market listings on its platform within 24 hours or risk permanent ban, raise antitrust concerns. • Matterport's business has not achieved profitability yet and its growth rate has slowed.

Q: Regarding competitive dynamics in Apartments.com, have you noticed signs of wallet share loss or pressure on pricing?

A: We haven't seen any loss of share or issues with capturing price value at Apartments.com. The product is very strong with high NPS, renewal rates, and growing bookings. Competitor's properties have a significantly lower ASP compared to Apartments.com.

Q: What is driving the improving NPS scores at Homes.com?

A: Homes.com is a new product. The sales force is building up, and effectively communicating the value proposition is key. The compelling offering for marketing real estate on the Internet and winning more listings due to a better marketing solution are driving the NPS improvement.

Q: Can you elaborate on pricing in different parts of the business suite and the new homes model?

A: On CoStar, ASP is stable. For Homes.com, pricing is based on the member's portfolio, with a focus on initial penetration. For the new homes model, 200 agreements with leading builders have been secured.

Q: How is net new member growth factored into the guidance for the rest of the year?

A: We haven't provided detailed breakdown of net new member growth at that granular level beyond the general guidance given in earnings comments.

Q: What's the context behind the EBITDA guidance for the third quarter?

A: It's primarily due to timing shifts, with the strong second quarter performance and the timing of certain growth initiatives affecting the third quarter guidance.

Q: Is there seasonality in commercial bookings excluding Apartments.com?

A: Bookings in CoStar are relatively stable throughout the year, though there might be a slight lift in the fourth quarter. LoopNet has eliminated negative seasonality in the fourth quarter.

Q: How is the 750 Homes.com headcount figure and the addressable market considered?

A: The headcount of 750 is being maintained, with resources potentially redirected for selling Matterport. The addressable market for agents is very large, with a significant potential client base to target and build relationships with.