CoStar's first quarter results were met with a marked negative market reaction, as concerns emerged regarding the company’s forward outlook despite solid operational performance. Management pointed to ongoing double-digit revenue growth, with CEO Andy Florance highlighting strong momentum in the core commercial real estate data and marketplace businesses and the integration of recent acquisitions such as Matterport. However, Florance acknowledged continued headwinds in the broader commercial real estate environment, describing conditions as “one of the worst commercial real estate environments in decades,” with high office vacancies and weak transaction volumes. The company also experienced significant cost reductions, particularly in the Homes.com business, and noted a sharp improvement in customer retention metrics following product repositioning.
Is now the time to buy CSGP? Find out in our full research report (it’s free).
CoStar (CSGP) Q1 CY2025 Highlights:
- Revenue: $732.2 million vs analyst estimates of $730 million (11.5% year-on-year growth, in line)
- Adjusted EPS: $0.19 vs analyst estimates of $0.11 (81.7% beat)
- Adjusted EBITDA: $65.6 million vs analyst estimates of $30.51 million (9% margin, significant beat)
- Revenue Guidance for the full year is $3.14 billion at the midpoint, roughly in line with what analysts were expecting
- EBITDA guidance for the full year is $370 million at the midpoint, below analyst estimates of $389.9 million
- Operating Margin: -5.8%, in line with the same quarter last year
- Market Capitalization: $34.17 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 Q1 Earnings Call
- Alexei Gogolev (JPMorgan) asked about the industry’s response to Zillow’s delayed market listing policy. CEO Andy Florance reported “overwhelmingly negative” feedback from agents and positioned this as a competitive opportunity for Homes.com.
- Peter Christiansen (Citi) inquired about Matterport’s integration timeline and monetization. Florance highlighted plans for deep product embedding and R&D expansion, while CFO Christian Lown emphasized expected reductions in customer cancellations as usage increases.
- George Tong (Goldman Sachs) questioned investment levels for Homes.com and the impact of the Board’s capital allocation committee. Lown confirmed investment plans remain unchanged, with cost savings being reallocated to sales force growth.
- Ryan Tomasello (KBW) asked about the deceleration in multifamily growth and the outlook for Apartments.com. Lown explained that seasonal dynamics and new sales hires will drive acceleration in the second half, and the addition of experienced sales staff is expected to improve results.
- Stephen Sheldon (William Blair) queried the potential for more aggressive pricing in the CoStar Suite. Florance suggested that as market conditions improve, the company may pursue higher annual price increases, but will remain cautious if headwinds persist.
Catalysts in Upcoming Quarters
Over the next few quarters, the StockStory team will focus on (1) the pace of Homes.com sales force expansion and its impact on net new bookings, (2) the effectiveness of Matterport’s integration in driving higher engagement and retention across the product suite, and (3) signs of improvement in commercial real estate transaction volumes and office vacancy rates. Execution on cost control and the ability to successfully monetize new product offerings will also be key indicators of progress.
CoStar currently trades at $81, down from $82.61 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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