CoStar Group, Inc. Q3 FY2025 earnings call

• Achieved 58th consecutive quarter of double-digit revenue growth. - Adjusted EBITDA up 51% Y/Y. - Residential portals showing strong growth, with Homes.com as the fastest-growing revenue product ever launched. - 50% of software development costs allocated to AI features on Homes.com. - Zillow facing multiple lawsuits, impacting its business. - Domain acquisition contributing to revenue, with strong audience growth in Australia. - Matterport's revenue and net bookings growth. - CoStar products like LoopNet and CoStar Lender showing growth.

Third quarter 2025 revenue for CoStar Group was $834 million, a 20% year-over-year increase. Adjusted EBITDA rose to $115 million, up 51% over Q3 '24. Commercial Information and Marketplace businesses had a 47% profit margin. Residential portals (including Apartments.com, Homes.com, etc.) saw residential portals revenue of $411 million in Q3, annualizing to $1.644 billion, with 22.7% Q/Q and 31.3% Y/Y growth. Apartments.com had $303 million in Q3 revenue, 11% Y/Y growth, with over $1.2 billion annual run rate. LoopNet achieved 10% revenue growth in Q3. Matterport Q3 revenue was $44 million, up 12% from expectations. CoStar products saw 8% revenue growth in Q3.

Full year 2025 revenue expected to be $3.23 billion to $3.24 billion, excluding Domain. CoStar product expected to grow 7% full year. Residential revenue expected to more than double to $210 million to $215 million. LoopNet expected to grow 10% to 11% full year. Adjusted EBITDA for Q3 was $115 million, exceeding guidance. Fourth quarter revenue expectations for various segments, including CoStar product expected to grow 8%-9%, residential revenue expected $100M-$105M in Q4.

Zillow facing unprecedented wave of lawsuits including antitrust, copyright theft, and consumer deception. These lawsuits could impact Zillow's reputation and business, posing industry risk.

Q: Pete Christiansen from Citi asked about sequential booking trends and seasonality.

A: Andrew Florance discussed Apartments.com seasonality and smooth sales progression at Homes.com.

Q: Stephen Sheldon from William Blair asked about core business booking trends.

A: Christian Lown and Andrew Florance talked about sequential trends and seasonally important fourth quarter.

Q: Ryan Tomasello from KBW asked about Apartments.com bookings and demand trends.

A: Christian Lown discussed rooftop expansion and growth trends.

Q: Curtis Nagle from Bank of America asked about AI investment redirecting expenses.

A: Andrew Florance said 50% AI investment is allocation of existing resources, no increase in total spend.

Q: Brett Huff from Stephens asked about Homes.com booking details and rep productivity.

A: Andrew Florance and Christian Lown discussed sales force growth and productivity adjustments.

Q: Faiza Alwy from Deutsche Bank asked about residential business profitability time frame.

A: Andrew Florance talked about progression towards 40% adjusted EBITDA margins.