• Full-Year Revenue: $2.74 billion, an increase of 11% over 2023.
• Q4 Revenue: $709 million, an 11% increase year over year.
• Full-Year Profit Margin: 43% for commercial information and marketplace businesses.
• Q4 Net Income: $60 million, up from $7 million in Q1 2024.
• Q4 EBITDA: $73 million, up from negative $13 million in Q1 2024.
• Q4 Adjusted EBITDA: $112 million, exceeding guidance range of $76 million to $86 million.
• CoStar Product Revenue: $1.02 billion in 2024, with a growth rate of 10% year over year.
• Apartments.com Q4 Revenue: $276 million.
• Residential Revenue: $28 million in Q4 and $101 million for the full year 2024.
• Net New Bookings: $53 million in Q4 2024, up 21% sequentially from Q3 2024.
• Average Monthly Unique Visitors: 134 million in Q4 2024, a 17% increase year over year.
• Contract Renewal Rate: 89% in Q4 2024.
• Sales Force Expansion: Plan to grow from 1,390 to 1,890 by December 2025.
• Share Buyback Program: $500 million announced for 2025.
• 2025 Revenue Guidance: $2.985 billion to $3.015 billion, implying 9% to 10% growth.
• 2025 Adjusted EBITDA Guidance: $375 million to $405 million, reflecting a 13% margin.

• Warning! GuruFocus has detected 4 Warning Sign with CSGP.

Release Date: February 18, 2025

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

• CoStar Group Inc (NASDAQ:CSGP) achieved a strong financial performance in 2024, with full-year revenue of $2.74 billion, marking an 11% increase over 2023.
• The company reported its 55th consecutive quarter of double-digit revenue growth, showcasing consistent performance.
• CoStar's commercial information and marketplace businesses achieved a robust 43% profit margin for the full year.
• The Homes.com sales force expanded significantly, growing nearly sixfold to 277 salespeople, with plans to reach 500 by the end of 2025.
• Apartments.com delivered strong results, with a 17% revenue growth in 2024 and a high NPS score of 94, indicating strong customer satisfaction.

Negative Points

• The commercial real estate market has faced strong headwinds over the past four years, impacting CoStar's performance.
• Despite growth, the company is still navigating a challenging high-interest rate environment and cautious lending landscape.
• CoStar's international expansion efforts have not yet significantly impacted the P&L, indicating room for improvement.
• The Homes.com segment is still in its early stages, with the sales team being relatively inexperienced, which may affect short-term performance.
• The company is facing competition in the residential real estate market, with challenges in educating agents on its unique value proposition.

Q & A Highlights

Q: Andy, how long do you think it will take for international expansion to become a significant contributor to CoStar's growth? A: Andrew Florance, CEO, explained that CoStar is making steady progress in Europe, with plans to launch in France this year and Spain soon after. They are rationalizing operations to avoid duplicative costs and focusing on a consistent CoStar LoopNet platform. While no significant P&L impact is expected in 2025, they are optimistic about international growth opportunities.

Q: Can you elaborate on the growth expectations for Apartments.com in 2025, considering the mix of property growth versus pricing? A: Christian Lown, CFO, noted that while there will be more unit growth in 2025, there is still a significant opportunity for price increases. The focus will be on expanding unit size and pricing, particularly in the 50 to 100 and 20 to 50 unit markets, with the largest opportunity in the 1 to 19 property market.

Q: How are you managing margins and the timeline for Homes.com to reach breakeven? A: Christian Lown, CFO, highlighted that CoStar's commercial businesses have fixed costs, allowing for margin improvements of 1-2% annually. For Homes.com, 2025 is seen as a full launch year with a ramped-up sales team and a clear value proposition. They expect momentum to build throughout the year, reducing cancellations and increasing productivity.

Q: What are the expectations for LoopNet's revenue growth as you shift to asset-based pricing? A: Andrew Florance, CEO, mentioned that the shift to asset-based pricing is already showing positive results, with 71% of January's net new sales being silver ads. While it will take time to reflect in year-over-year growth rates, they expect momentum to build each quarter, setting up for a strong 2026.

Q: How are you monitoring Apartments.com's new logo win rates versus competitors? A: Christian Lown, CFO, emphasized that Apartments.com produced $153 million in additional revenue in 2024, significantly more than its competitors. Despite some sales force distractions, they see a massive opportunity ahead, with plans to expand the sales force and penetrate untapped markets.

For the complete transcript of the earnings call, please refer to the full earnings call transcript.