Andy Florance, CEO, CoStar Group.
Illustration by Lanette Behiry/Real Estate News

CoStar to accelerate investment in, posts revenue gains 

The company reported $625M in Q3 revenue and touted the growth of its residential portal, which it says is well-positioned should commission practices change.

October 24, 2023
3 minutes

CoStar Group is doubling down on its investment in as the company sees even more opportunity for growth, Founder and CEO Andy Florance said during the third-quarter earnings call on Oct. 24.

The acceleration is being spurred by the Sitzer/Burnett lawsuit, Florence noted, as the outcome of the case and similar pending litigation could prompt significant changes to buyer agent commission practices., which has been rapidly increasing its user base, is well positioned for that scenario because it doesn't rely on monetizing buyer agent leads, Florence said.

Looking at CoStar's business as a whole, the commercial real estate giant once again met investors' expectations, reporting revenue of $625 million in Q3, a 12% increase compared to a year ago, and the 50th straight quarter of double-digit annual gains, CoStar noted.

In the first hour of after-hours trading, CoStar Group's stock dropped 8%, falling to $68 a share.

Key numbers

Revenue: $625 million in the third quarter, up 12% from a year ago.

Cash and cash equivalents: $5.23 billion at the end of September, up from $4.97 billion at the end of 2022.

Gross profit: $501 million, up from $448.6 million a year ago.

Net income: $91 million in Q3, up 25% compared to the same period in 2022, but down from the previous quarter's $101 million.

EBITDA (earnings before interest, taxes, depreciation and amortization): $88.7 million in the third quarter, down from $129.1 million a year ago.

Non-GAAP net income per share: 30 cents in the third quarter, unchanged from a year ago

What CoStar had to say

"Now that is one of the most heavily trafficked portals, there is a strong and viable alternative for lead generation available to agents that does not require you to have serious commission splits," Florance said during the call with investors. "Unlike the first-generation portals,'s business model is not negatively impacted [by potential changes to buyer agent commission practices]."

Florance added that these potential cracks in other business models — such as Zillow and, which earn revenue from buyer agent advertising — have prompted CoStar "to be as prepared as we possibly can with the [] site if changes happen in the industry."

CoStar has been investing in "aggressively, but prudently" this year, said Florance, which may have contributed to the company's higher operating expenses this quarter. He added that CoStar is focused on continuing to grow traffic to the search portal and expects to start earning money from it by the middle of next year.

Notable moves

In early October, CoStar announced that hit a key milestone, capturing more than 100 million unique visitors in the month of September and making it the second-most visited home search portal after Zillow — a claim some competitors have questioned.

In addition to growing its U.S. businesses, the company is pursuing global opportunities, announcing earlier this month that it has offered to buy OnTheMarket, the third-largest residential home search portal in the United Kingdom. In a news release, the company pointed to its "track record of acquiring strong-performing property portals that are not the number one players and investing and building them into the most successful portals serving their market," citing and as examples.

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