CoStar Group Third Quarter 2022 Revenue Increased 12% and Net New Bookings Grew 62% Year-over-Year. Apartments.com Climbs to Double-Digit Revenue Growth

WASHINGTON – October 25, 2022 - CoStar Group, Inc. (NASDAQ: CSGP), a leading provider of online real estate marketplaces, information and analytics in the property markets, announced today that revenue for the quarter ended September 30, 2022 was $557 million, an increase of 12% over revenue of $499 million for the third quarter of 2021.

Net income for the third quarter of 2022 was $72 million, or $0.18 per diluted share. Non-GAAP net income for the third quarter of 2022 (which excludes amortization of acquired intangible assets, stock-based compensation, and other items as described below) was $118 million or $0.30 per diluted share, an increase of 19% compared to the third quarter of 2021. EBITDA for the third quarter of 2022 was $129 million.

“We delivered outstanding results across all of our business lines in the third quarter, with Apartments.com leading the way” said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. “Net new bookings totaled $76 million in the third quarter of 2022, up 62% over the third quarter of 2021. Year-to-date our sales results have already exceeded the net new bookings for the full year 2021, and we still have one quarter left to go. Both revenue and profit in the third quarter of 2022 were at or above the high end of our guidance range and we are raising our forecast for the year.”

“Apartments.com sales continue to accelerate,” continued Florance. “Our Apartments.com sales team delivered record sales in September, bringing our net new bookings to $90 million on a year-to-date basis in 2022, an increase of 192% compared to the same period of 2021. Revenue growth for Apartments.com accelerated to 11% in the third quarter, and we now expect revenue growth of 16% in the fourth quarter of 2022. Revenue growth for CoStar was even stronger with a 17% increase in the third quarter 2022 over third quarter 2021 on a constant currency basis.”

(1) Certain prior period amounts have been retroactively adjusted to reflect the ten-for-one stock split effected in the form of a stock dividend in June 2021.

The Company is raising its revenue guidance to a range of $2.175 billion to $2.180 billion for the full year of 2022, an increase of $5 million at the midpoint of the range compared to the prior outlook. The Company expects revenue for the fourth quarter of 2022 in the range of $565 million to $570 million, representing revenue growth of approximately 12% over the fourth quarter of 2021 at the midpoint of the range.

The Company is raising its adjusted EBITDA guidance to a range of $665 million to $670 million for the full year of 2022, an increase of $48 million at the midpoint of the range compared to the prior outlook. For the fourth quarter of 2022, the Company expects adjusted EBITDA in a range of $176 million to $181 million.

“Our financial results in the third quarter and improved 2022 revenue outlook demonstrate the strength of our products and resilience of our subscription-based business model,” said Scott Wheeler, Chief Financial Officer of CoStar Group. “We are making great progress with our Residential investment strategy while managing investment levels well below our initial estimates. This results in our improved profit outlook for 2022.”

The Company expects full year 2022 non-GAAP net income per diluted share in a range of $1.25 to $1.26 based on 397 million shares, an increase of $0.15 per diluted share compared to the prior outlook. For the fourth quarter of 2022, the Company expects non-GAAP net income per diluted share in a range of $0.35 to $0.36 based on 405 million shares. These ranges include an estimated non-GAAP tax rate of 26% for the full year and the fourth quarter of 2022.

The preceding forward-looking statements reflect CoStar Group’s expectations as of October 25, 2022, including forward-looking non-GAAP financial measures on a consolidated basis, based on current estimates, expectations, observations, and trends. Given the risk factors, rapidly evolving economic environment, and uncertainties and assumptions discussed in this release and in our quarterly reports on Form 10-Q and annual reports on Form 10-K, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.

Reconciliation of EBITDA, adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share to their GAAP basis results are shown in detail below, along with definitions for those terms. A reconciliation of forward-looking non-GAAP guidance to the most directly comparable GAAP measure, net income, can be found within the tables included in this release.

For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the Company’s financial condition and results of operations, please refer to the Company’s latest periodic report.

EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before interest (expense) income and other (expense) income, loss on debt extinguishment, income taxes, depreciation and amortization.

Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, and settlements and impairments incurred outside the Company’s normal course of business. Adjusted EBITDA margin represents adjusted EBITDA divided by revenues for the period.

Non-GAAP net income is a non-GAAP financial measure determined by adjusting GAAP net income attributable to CoStar Group for stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, settlement and impairment costs incurred outside the Company's normal course of business and loss on debt extinguishment, as well as amortization of acquired intangible assets and other related costs, and then subtracting an assumed provision for income taxes. In 2022, the Company is assuming a 26% tax rate in order to approximate its statutory corporate tax rate excluding the impact of discrete items.

Non-GAAP net income per diluted share is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period used in the calculation of GAAP net income per diluted share. For periods with GAAP net losses and non-GAAP net income, the weighted average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.

Net new bookings is calculated based on the annualized amount of change in the Company's sales bookings resulting from new subscription-based contracts and changes to existing subscription-based contracts for the period reported. Information regarding net new bookings is not comparable to, nor should it be substituted for, an analysis of the Company's revenues over time.

Management will conduct a conference call to discuss the third quarter 2022 results and the Company’s outlook at 5:00 PM EST on Tuesday, October 25, 2022. A live audio webcast of the conference will be available in listen-only mode through the Investors section of the CoStar Group website: https://investors.costargroup.com. A replay of the webcast audio will also be available in the Investors section of our website for a period of time following the call.

CoStar Group, Inc.
Reconciliation of Forward-Looking Guidance - Unaudited
(in thousands, except per share data)
Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income
			Guidance Range												Guidance Range
			For the Three Months												For the Year Ending
			Ending December 31, 2022												December 31, 2022
			Low						High						Low						High
Net income			$	113,000					$	117,000					$	359,000					$	363,000
Income tax expense			40,000						41,000						122,000						123,000
Income before income taxes			153,000						158,000						481,000						486,000
Amortization of acquired intangible assets			20,000						20,000						102,000						102,000
Stock-based compensation expense			19,000						19,000						73,000						73,000
Acquisition and integration related costs			—						—						3,000						3,000
Settlements and impairments			—						—						4,000						4,000
Other expense			—						—						6,000						6,000
Non-GAAP income before income taxes			192,000						197,000						669,000						674,000
Assumed rate for income tax expense(1)			26		%				26		%				26		%				26		%
Assumed provision for income tax expense			(49,900)						(51,200)						(173,900)						(175,200)
Non-GAAP net income			$	142,100					$	145,800					$	495,100					$	498,800
Net income per share - diluted			$	0.28					$	0.29					$	0.90					$	0.91
Non-GAAP net income per share - diluted			$	0.35					$	0.36					$	1.25					$	1.26
Weighted average outstanding shares - diluted			405,300						405,300						397,300						397,300
__________________________
(1) The assumed tax rate approximates our statutory federal and state corporate tax rate for the applicable period.
Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA
			Guidance Range												Guidance Range
			For the Three Months												For the Year Ending
			Ending December 31, 2022												December 31, 2022
			Low						High						Low						High
Net income			$	113,000					$	117,000					$	359,000					$	363,000
Amortization of acquired intangible assets			20,000						20,000						102,000						102,000
Depreciation and other amortization			9,000						9,000						30,000						30,000
Interest income, net			(25,000)						(25,000)						(24,000)						(24,000)
Other (income) expense, net			—						—						(4,000)						(4,000)
Income tax expense			40,000						41,000						122,000						123,000
Stock-based compensation expense			19,000						19,000						73,000						73,000
Acquisition and integration related costs			—						—						3,000						3,000
Settlements and impairments			—						—						4,000						4,000
Adjusted EBITDA			$	176,000					$	181,000					$	665,000					$	670,000

    

Cyndi Eakin
Senior Vice President
CoStar Group Investor Relations
(202) 346-6784

ceakin@costar.com

Matthew Blocher

Vice President

CoStar Group Corporate Marketing & Communications

(202) 346-6775

mblocher@costar.com

CoStar Group, Inc. (NASDAQ: CSGP) is a leading provider of online real estate marketplaces, information and analytics. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality industry. Ten-X provides a leading platform for conducting commercial real estate online auctions and negotiated bids. LoopNet is the most heavily trafficked commercial real estate marketplace online. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. Homesnap is an industry-leading online and mobile software platform that provides user-friendly applications to optimize residential real estate agent workflow and reinforce the agent-client relationship. Homes.com offers real estate professionals advertising and marketing services for residential properties. Realla is the UK’s most comprehensive commercial property digital marketplace. BureauxLocaux is one of the largest specialized property portals for buying and leasing commercial real estate in France. CoStar Group’s websites attract tens of millions of unique monthly visitors. Headquartered in Washington, DC, CoStar Group maintains offices throughout the U.S., Europe, Canada and Asia. From time to time we plan to utilize our corporate website, www.costargroup.com, as a channel of distribution for material company information.

This news release and the Company’s earnings conference call contain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group's plans, objectives, expectations, beliefs and intentions and other statements including words such as “hope,” “anticipate,” “may,” “believe,” “expect,” “intend,” “will,” “should,” “plan,” “estimate,” “predict,” “continue” and “potential” or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar Group and are subject to many risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements and the assumptions and estimates used as a basis for the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the risk that the trends stated or implied by this release or in the earnings conference call cannot or will not be sustained at the current pace or may increase or decrease, including trends and expectations related to revenue, revenue growth, net income, non-GAAP net income, EBITDA, adjusted EBITDA, adjusted EBITDA margin, sales, net new bookings, site traffic and visitors, leads, and renewal rates; the risk that the Company is unable to sustain current Company-wide, CoStar, Apartments or LoopNet net new bookings; the risk that revenues for the fourth quarter and full year 2022 will not be as stated in this press release; the risk that net income for the fourth quarter and full year 2022 will not be as stated in this press release; the risk that EBITDA for the fourth quarter and full year 2022 will not be as stated in this press release; the risk that adjusted EBITDA for the fourth quarter and full year 2022 will not be as stated in this press release; the risk that non-GAAP net income and non-GAAP net income per diluted share for the fourth quarter and full year 2022 will not be as stated in this press release; the risk that we may not successfully integrate acquired businesses or assets and may not achieve anticipated benefits of an acquisition, including expected synergies; the risk that the tax rate estimates stated in this press release may change and the risk that we may experience declines in our revenues, revenue growth rates and profitability due to the impact of the COVID-19 pandemic on the commercial real estate industry and economic conditions on the real estate industry and our core customer base. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar Group’s filings from time to time with the Securities and Exchange Commission, including in CoStar Group’s Annual Report on Form 10-K for the year ended December 31, 2021 and Quarterly Report on Forms 10-Q for the quarters ended March 31, 2022 and June 30, 2022, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar Group’s other filings with the SEC (including Current Reports on Form 8-K) available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar Group on the date hereof, and CoStar Group assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.