CoStar Group ((CSGP)) has held its Q1 earnings call. Read on for the main highlights of the call.
The recent earnings call of CoStar Group highlighted a robust performance amidst a challenging commercial real estate market. The company demonstrated strong revenue and adjusted EBITDA growth, successfully integrating acquisitions and expanding its brand presence, notably with Homes.com. Despite these successes, the commercial real estate environment remains difficult, affecting certain sectors adversely.
Record Q1 Revenue and Growth
CoStar Group reported a record Q1 2025 revenue of $732 million, marking a 12% increase year-over-year. This achievement signifies the 56th consecutive quarter of double-digit revenue growth, showcasing the company’s consistent financial performance.
Strong Adjusted EBITDA Increase
The company reported an adjusted EBITDA of $66 million for Q1, a remarkable 429% increase compared to Q1 2024. This figure exceeded consensus expectations and was at the top end of the guidance range, reflecting effective cost management and operational efficiency.
International Growth and Net New Bookings
CoStar’s international businesses achieved $5 million in annual recurring revenue (ARR) in Q1 2025, representing a 56% year-over-year growth. Additionally, net new bookings were $56 million, up 6% sequentially from Q4 2024, indicating strong demand and successful market penetration.
Apartments.com Expansion
Apartments.com reported Q1 revenue of $282 million, an 11% increase over Q1 2024. The platform added 4,300 new communities in Q1, marking the most properties added in a single quarter in nearly a decade, highlighting its expanding footprint in the market.
Homes.com Brand Awareness Growth
Homes.com saw a significant increase in unaided brand awareness, which grew 9x to 36% since February 2024. It is now the second most visited U.S. residential portal, with 104 million average monthly unique visitors, underscoring its growing influence in the residential real estate sector.
Successful Integration and Expansion Initiatives
The integration of STR contributed to its best quarter for net new bookings, up 17% year-over-year. Additionally, CoStar for lenders achieved its best quarter of net new bookings, up 116% year-over-year, demonstrating successful expansion initiatives.
Challenging Commercial Real Estate Environment
CoStar is operating in one of the most challenging commercial real estate environments in decades, with high office vacancy rates at 16% and real asking rents at a 30-year low. This situation presents ongoing challenges for the sector.
Decline in Industrial and Retail Sectors
The industrial sector experienced record lows for absorption, and there was a 6% year-over-year decline in real asking rents. Retail asking rents are also at 10-year lows, reflecting broader market difficulties.
Net Loss Due to Matterport Acquisition Costs
CoStar posted a $15 million net loss in Q1, primarily due to one-time costs associated with the Matterport acquisition. This acquisition impacted the financial results but is expected to provide long-term strategic benefits.
Matterport’s Initial Financial Impact
Matterport contributed an adjusted EBITDA loss of $2.7 million for the first-quarter stub period. Despite this initial loss, the acquisition is part of CoStar’s strategic growth initiatives.
Forward-Looking Guidance
CoStar Group provided guidance for both the upcoming quarter and the full fiscal year during the earnings call. The company expects Q2 2025 revenue to range between $770 million and $775 million, representing a 14% year-over-year growth at the midpoint. For the full year, revenue is anticipated to be between $3.115 billion and $3.155 billion, indicating an annual growth rate of 14% to 15%. The adjusted EBITDA for 2025 is projected to be between $355 million and $385 million, with an adjusted EBITDA margin of approximately 12%. This guidance reflects continued investment in Homes.com, with expected revenue growth for the residential segment in the mid-teens to low 20s percent for 2025, with acceleration anticipated in the second half of the year.
In conclusion, CoStar Group’s earnings call reflected a strong performance in the face of a challenging commercial real estate market. The company’s consistent revenue growth, strategic acquisitions, and expanding brand presence, particularly with Homes.com, were key highlights. Despite the difficult environment, CoStar’s forward-looking guidance suggests continued growth and investment in strategic areas, positioning the company for future success.