CoStar beats revenue forecast, eyes ‘new value opportunities’  

Revenue continued to exceed expectations at CoStar, but earnings took a hit in the third quarter as the company continued investing in technology, marketing and in its sales teams.

Overall revenue hit $834 million in the third quarter — 20% higher than a year ago, and the 58th consecutive quarter of double-digit year-over-year increases. CoStar also posted a net income loss of $31 million for the quarter, a big difference from the $53 million gain a year ago.

What CoStar had to say

Expanding sales teams: During an Oct. 28 earnings call, CEO Andy Florance touted the 92% year-over-year rise in net new bookings, which reached $84 million. He attributed part of that surge to an expanded sales team at Homes.com, which is leading to "steadily accelerating revenue growth from an increasing number of revenue streams."

With those results in mind, the company continues to add to Homes.com's sales team, which currently has 500 people and another 150 in pre-production. The company is also boosting its sales team for its recently acquired Matterport products, Florance said, with plans to expand from about 30 sales representatives to 200 by the end of 2026.

"We believe that the highest and best function of a portal is to market real estate — and that is the future of the industry," Florance said. "I do not believe that future revenue models for successful real estate portals will be based on either iBuying or lead diversion to buyer agents."

Investing in AI: Meanwhile, the company is ramping up its investment in artificial intelligence, with 50% of Homes.com's software efforts focused on building a range of AI-empowered features. That should "open up huge new value opportunities, which we plan to exploit," Florance said.

Battling with Zillow: Florance also took aim at Zillow during the call, telling investors that CoStar's competitor "is under siege, facing an unprecedented wave of lawsuits."

"I'm not sure that the market grasps the sheer magnitude of the risks bearing down on Zillow from all sides," Florance said. He listed the lawsuits Zillow is currently facing, including the copyright infringement case filed by CoStar in late July. 

Key numbers

Revenue: $834 million in Q3, up 20% year-over-year.

Cash and cash equivalents: $1.94 billion in Q3, down significantly from the $4.68 billion at the end of 2024. The company has been involved in acquisitions and a stock repurchasing program, impacting cash equivalents.

Gross profit: $661.4 million in Q3, up from $613.5 million in Q2.

Net income: A loss of $31 million in Q3, down from a $53 million gain a year ago.

Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization): A $114.6 million gain in Q3, up from a $76 million gain a year ago.

Website traffic: The Homes.com network — which includes Apartments.com — had 115 million average monthly unique visitors in the third quarter of 2025, up from 111 million in the second quarter. 

Q4 outlook: The company is boosting its adjusted EBITDA guidance for the full year of 2025 to $415 million to $425 million, an increase of $40 million at the midpoint of the range from its previous guidance. For Q4, CoStar expects adjusted EBITDA in the $150 million range.

Notable moves

CoStar has been busy on the litigation front. In addition to its copyright infringement case against Zillow, CoStar was hit with a lawsuit involving the California Regional Multiple Listing Service in October, though that case was settled a few days later.

Zillow also pulled CoStar's Matterport tours from its website, alleging that the company changed its media rights terms in an effort to wall off data. That's something CoStar disputes, saying Zillow is "intentionally misrepresenting" its terms.

In October, Homes.com launched its AI-driven Smart Search, a feature that allows users to search for homes using natural language instead of specific filters. Over the summer, the company also launched Community Boost, which focuses on home builder membership.