CoStar confirms layoffs following investor criticism, AI push 

CoStar Group has confirmed layoffs just weeks after activist investors publicly pressed the company on its spending and strategy around Homes.com.

The confirmation of workforce reductions also comes the same week that the Arlington, Virginia-based real estate data giant formally introduced its new Homes AI feature for the residential portal. 

The company said the cuts are part of a broader effort to reduce costs and align operations with its strategic priorities, including a deeper push into artificial intelligence and technology-driven products. 

What happened: CoStar Group conducted a round of layoffs this week, though the company did not disclose or confirm the total number of affected employees or provide a full breakdown of which divisions were impacted.

Multiple former employees shared posts on LinkedIn indicating they were part of the reductions. Based on publicly-shared posts, the layoffs appeared to largely impact photo and video production teams within CoStar Group, as well as content roles tied to Homes.com. CoStar did not confirm which departments were affected.

Homes.com has been central to CoStar's growth strategy, backed by significant advertising, hiring and content production over the past three years. The latest workforce reductions — coupled with the company's stated emphasis on AI-driven efficiencies — suggest CoStar's shift from an aggressive expansion phase toward tighter cost controls and operational streamlining amid investor pressure is well underway. 

What CoStar said: In a statement attributed to a company spokesperson, CoStar framed the job cuts as a decision that was "not taken lightly" but was a necessary organizational update tied to the company's next phase of growth.

The company pointed to "rapid growth" over the past two years following the launch of Homes.com and said its strategy now centers on deploying advanced AI technologies across its portfolio.

"These initiatives are designed to accelerate revenue growth and operational efficiencies, enabling us to streamline processes, elevate the customer experience, and unlock innovative solutions throughout our entire portfolio," the spokesperson said.

"To align our organization with these strategic objectives and position the company for continued success, we have made the difficult decision to eliminate certain roles within the organization."

Separately, Florance highlighted the launch of the company's new Homes AI feature — which leverages Microsoft Azure's AI models alongside CoStar's proprietary property data — in a LinkedIn post. He did not address the company's layoffs in his post.

Why the timing matters: The layoffs follow mounting pressure from two activist investors who have publicly questioned CoStar's spending levels and strategy — particularly its heavy investment in marketing and building out Homes.com as it competes with Zillow and Realtor.com.

In late January, New York-based hedge fund Third Point called for an overhaul of CoStar's board and urged the company to exit Homes.com, arguing that the portal was a poor allocation of capital. Shortly thereafter, D. E. Shaw, another investor in CoStar, criticized the company's strategy, urging CoStar to drop Homes.com and refocus on its core commercial real estate business.

The job cuts come about a year after CoStar laid off about 120 employees in Richmond — many tied to Homes.com — in a move that impacted writers, editors, video staff and production roles, the Richmond Times-Dispatch reported last February. CoStar's HR chief said at the time that those reductions were tied to efficiency needs and technological changes, including the growing influence of AI.