CoStar’s Andy Florance: ‘We are not buying Move’
Florance, founder and CEO, made the announcement during a Q4 earnings conference call Tuesday, which also highlighted the company's revenue gains.
- CoStar Group had been in talks with News Corp. to acquire Move, Inc., parent company of Realtor.com.
- The company reported double-digit revenue growth for 2023, with notable contributions from Apartments.com, CoStar and LoopNet.
- News Corp. will "continue to actively assess" opportunities to "optimize the value of its digital real estate services segment."
In the waning minutes of CoStar Group's fourth-quarter earnings call, CEO and founder Andy Florance declared: "CoStar Group is not acquiring Move," the parent company of Realtor.com.
CoStar had been in talks with News Corp., which purchased Move in 2014 for $1 billion. News Corp. had been seeking to sell the company for a reported $3 billion.
Florance on Tuesday did not elaborate during the earnings call why CoStar Group was not moving forward with the acquisition, after News Corp. had confirmed in January that negotiations were underway.
"We have tremendous respect for Realtor.com," Florance told shareholders, adding that CoStar is "well aligned with NAR members and real estate agents generally."
In response to a question from an investor, Florance said CoStar Group is considering "additional opportunities out there in commercial and residential," noting that "it is a changing landscape and you are making judgments as you go."
News Corp., meanwhile, said via a brief statement Tuesday that it will "continue to actively assess" opportunities to "optimize the value of its digital real estate services segment."
CoStar will continue to scale up the Homes.com platform, which it purchased in 2021, and consider other potential acquisitions in the residential real estate marketplace.
"We've made great progress on our residential strategy in 2022," Florance said. "Given the strong momentum of Homes.com, we plan to increase our residential investments in the year ahead," Florance said.
Traffic to Homes.com has topped 20 million unique monthly visitors and "has doubled in the last few months," Florance said.
Revenue continues to climb
With 12 straight years of revenue growth, Florance lauded the health and growth of CoStar Group. Florance projected revenue increases of up to $2.48 billion for 2023, representing growth of 12% year-over-year, with plans to continue expanding its residential portfolio of real estate platforms.
The company posted double-digit increases, and Florance called 2022 "an outstanding year for CoStar Group."
"We delivered 12% year-over-year revenue growth while setting a record for full year net new sales bookings of $305 million, an increase of 41% over 2021," said Florance.
Florance noted that CoStar and Apartments.com delivered revenue growth of 15% and 16%, respectively, in the fourth quarter, while LoopNet revenue rose 12% to end the year.
CoStar's fourth-quarter performance benefited from expansion. "We substantially increased the size of our sales force for Apartments.com," Florance said, noting that personnel increased by 40%. The company also expanded Apartments.com into Canada in 2022.
"Our focus is on accelerating revenue growth," said CFO Scott Wheeler.
Revenue: $2.18 billion for 2022, an increase of 12% year over year. For Q4, revenue was $573 million, an increase of 13% over the fourth quarter of 2021.
Cash and cash equivalents: $4.96 billion for 2022, up from $3.83 billion from December 2021.
EBITDA (earnings before interest, taxes, depreciation and amortization): $672 million for the full year and $182 million for the fourth quarter of 2022, exceeding expectations, according to the company's CFO.
Net income: Net income for 2022 was $369 million, an increase of 26% compared to net income of $293 million for the full year of 2021. Net income for the fourth quarter of 2022 was $124 million, a 34% increase over the fourth quarter of 2021.
After making a name for itself in the commercial real estate sector, the company has been steadily broadening its presence in the residential marketplace through acquisitions.
CoStar is linking its properties to property investment funds in 2023, the company said. The company also is optimizing data on tenants to better understand their needs for residential properties.
"We are making significant progress with our Homes.com marketplace," Wheeler said. "Growing our sales force across all our [platforms] is another major investment. We expect a great return on every sales person."