CoStar’s second quarter saw solid execution, with revenue and non-GAAP earnings both surpassing Wall Street expectations, prompting a positive reaction from the market. Management attributed this performance to strong growth across its core platforms—including Apartments.com, Homes.com, and LoopNet—driven by substantial investment in expanding sales capacity and ongoing product enhancements. CEO Andrew Florance highlighted the company’s ability to deliver “57 consecutive quarters of double-digit revenue growth,” pointing to record net new bookings and high customer renewal rates as evidence of sustained demand, despite ongoing challenges in some segments of the commercial real estate market.
Is now the time to buy CSGP? Find out in our full research report (it’s free).
CoStar (CSGP) Q2 CY2025 Highlights:
- Revenue: $781.3 million vs analyst estimates of $772.2 million (15.3% year-on-year growth, 1.2% beat)
- Adjusted EPS: $0.17 vs analyst estimates of $0.14 (23.4% beat)
- Adjusted EBITDA: $85 million vs analyst estimates of $59.36 million (10.9% margin, 43.2% beat)
- The company slightly lifted its revenue guidance for the full year to $3.15 billion at the midpoint from $3.14 billion
- Adjusted EPS guidance for the full year is $0.78 at the midpoint, missing analyst estimates by 5%
- EBITDA guidance for the full year is $380 million at the midpoint, below analyst estimates of $383.5 million
- Operating Margin: -3.5%, down from -2.4% in the same quarter last year
- Market Capitalization: $39.55 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions CoStar’s Q2 Earnings Call
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Ryan Tomasello (KBW) asked about competitive dynamics for Apartments.com and pricing pressures from rivals like Zillow. CEO Andrew Florance responded that there is no observed wallet share loss or pricing weakness, emphasizing their differentiated business model and strong customer metrics.
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Stephen Sheldon (William Blair) inquired about drivers of improving Net Promoter Scores at Homes.com and areas for further ROI improvement. Florance attributed gains to a maturing sales team, better client education, and product enhancements like Matterport integration, while noting additional room for increased agent value.
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Peter Christiansen (Citi) questioned pricing strategy evolution across business lines, particularly for new offerings. Florance described a focus on driving penetration at lower prices initially, with plans to optimize average selling price as the product matures and market share increases.
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Curtis Nagle (BofA) sought clarity on Homes.com member growth and its role in forward guidance. CFO Christian Lown declined to provide specific member growth forecasts but reiterated that guidance reflects expected expansion and ongoing sales momentum.
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Alexei Gogolev (JPMorgan) asked about seasonality in commercial bookings and whether recent trends were typical. Florance and Lown explained that bookings in CoStar are generally stable year-round, with some segments like Apartments.com and potentially Homes.com exhibiting seasonal peaks.
Catalysts in Upcoming Quarters
Looking forward, our analysts will be monitoring (1) the pace and effectiveness of ongoing salesforce expansion, especially at Homes.com and Apartments.com; (2) traction and user adoption of new AI and 3D imaging features, including Matterport integration; and (3) progress on international growth initiatives, particularly the closing and integration of the Domain acquisition in Australia. Execution on these fronts will be key indicators of CoStar’s ability to sustain growth and improve profitability.
CoStar currently trades at $93.30, up from $85.04 just before the earnings. In the wake of this quarter, is it a buy or sell? The answer lies in our full research report (it’s free).
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