CoStar beats expectations, increases revenue by 13%
The company cited increased traffic to its portal websites, including Homes.com, as one reason for its growth.
CoStar Group reported better-than-expected numbers in the first quarter as the company continues to grow its residential real estate business through Homes.com.
Revenue came in at $584 million, a 13% increase compared to the first quarter of 2022. Prior to the release of the first quarter report, Zacks Equity Research predicted revenue would be in the $575 million to $580 million range, noting some negative trends taking place in the multifamily market.
CoStar, which is based in Washington, D.C., has long been active in commercial real estate, research and data analytics. On the residential side, the company also owns consumer search portals Homes.com and Apartments.com. Both sites have made tremendous gains in traffic, said Andy Florance, founder and CEO of CoStar Group.
The company has focused on growing Homes.com after deciding against buying Move, the parent company of Realtor.com, earlier this year. According to Florance, Homes.com topped 27 million unique monthly visitors in March, up from six million when the company acquired it nearly two years ago.
"We believe that by focusing on building a great user experience, combined with the lower friction of our 'your listing, your lead' business model, many home buyers are coming to prefer Homes.com," Florance said in comments based on the first-quarter report.
In an earnings call following the release of the earnings report, Florance said he's very optimistic about where Homes.com is going, adding that it is ahead of schedule in terms of meeting its next set of traffic goals.
Revenue: $584 million in the first quarter, a 13% increase compared to a year ago.
Cash and cash equivalents: $5.06 billion at the end of March 2023, up from $4.96 billion at the end of March 2022.
EBITDA (earnings before interest, taxes, depreciation and amortization): $98 million for the first quarter of 2023, down nearly 38% from a year ago.
Net income: Net income for the first quarter was $87 million, down slightly from the $89 million in the first quarter of 2022.
What CoStar had to say
"CoStar Group delivered exceptional revenue, sales and marketplace traffic results in the first quarter against a backdrop of rising interest rates and continued disruption in the commercial and residential property markets," Florence said.
The company expects revenue for the year to be in the range of $2.47 billion to $2.48 billion, which would be about a 13% increase over 2022. It also expects revenue for the second quarter of 2023 in the range of $603 million to $608 million, also about 13% higher than a year ago.
In March, the company reached a new high of 94 million monthly unique visitors in total across all its portals, including Homes.com, Apartments.com and LoopNet.