CoStar touts Homes.com momentum, bets big on AI after strong Q4 

Revenue accelerated again at CoStar in the fourth quarter, and executives used a Feb. 24 earnings call to argue that its biggest bets — especially on Homes.com and artificial intelligence — are set to reshape the landscape in the competitive home search space. 

The company reported $900 million in revenue in Q4, a 27% increase from a year ago and CoStar's 59th consecutive quarter of double-digit year-over-year growth. Net income rebounded to $47 million following a $31 million loss in the third quarter.

For the full year, revenue reached $3.25 billion, up 19% compared to 2024, while net income totaled $7 million, reflecting acquisition-related costs tied to Matterport and Domain.

What CoStar had to say

Homes AI could redefine search: During this week's call with investors, CEO Andy Florance spent much of his time focused on Homes AI, the company's newly launched AI-powered home search interface. Early internal data shows users who engage with the AI mode spend significantly more time on the site and submit more leads, he said.

"I believe that it's going to be something that a year from now people are not going to be able to imagine the old way of interfacing with a website," Florance said of the experience, which operates through a natural language model. 

He added that some agents have described the tool as "a lot easier to use than the MLS," suggesting the product could shift how agents and consumers interact with listings over time.

Apartments.com vs. rivals: In contrasting Apartments.com's performance with competitors, Florance highlighted traffic dips at rival rental platforms and criticized what he described as "shotgunning leads" — a tactic where renters are encouraged to contact multiple properties at once. While that approach may inflate lead counts, Florance argued it reduces quality and conversion rates for property managers.

He also said CoStar signed roughly 1,200 apartment properties previously marketed through Redfin after Redfin secured its rental listings partnership with Zillow. CoStar, Florance noted, "didn't have to acquire anything" to win that business.

Homes.com momentum: The Homes.com Network now has more than 31,000 agent subscribers generating about $100 million in annualized revenue, with 76% on annual contracts, according to the company's earnings materials.

Florance said Homes.com's business model — marketing listings rather than selling buyer leads — mirrors what he described as the "global best practice for real estate portals."

M&A interest and opportunities: On potential acquisition opportunities, Florance said CoStar has "a lot on our plate right now" and is focused on executing current initiatives. However, there are "dozens, if not 100 opportunities out there," he added, signaling continued appetite for strategic deals.

Key numbers

Revenue: $900 million in Q4, up 27% year-over-year. The company reported $3.25 billion in revenue for the full year, up 19% compared to 2024.

Cash and cash equivalents: $1.63 billion at the end of 2025, down from $4.68 billion a year earlier, reflecting acquisitions and a $500 million share repurchase. 

Gross profit: $707 million in Q4, up from $569 million a year ago.

Net income: $47 million in Q4, compared to $60 million a year earlier. The company reported a net income of $7 million for the full year, down from $139 million in 2024.

Adjusted EBITDA: $177 million in Q4, up 58% year-over-year, and $442 million for the full year, up 83% from 2024. 

Website traffic: CoStar Group sites reached 139 million average monthly unique visitors in Q4. The Homes.com Network averaged 108 million average monthly unique visitors in 2025.

Q1 outlook: CoStar expects Q1 2026 revenue between $890 million and $900 million and adjusted EBITDA between $95 million and $115 million. Additionally, after completing a $500 million stock buyback in 2025, the company plans to repurchase $700 million worth of shares in 2026 under its $1.5 billion authorization. 

Notable moves

Florance's continued backing of the Homes.com business model comes amid pressure from activist investors Third Point and D. E. Shaw, both of which have pushed CoStar to drop the home search portal in recent weeks.

While CoStar has said that it plans to significantly reduce Homes.com spending in 2026 and over the next few years, the company has pushed back on investor criticism, dubbing calls to drop Homes.com "short-sighted."

During the Feb. 24 call, executives expressed continued optimism about the potential of both Homes.com and Apartments.com. "We feel great about the businesses and the trajectory we're on," Chief Financial Officer Chris Lown said.

Lown was also asked about Matterport, which CoStar acquired in 2024. He explained that, after the acquisition, CoStar eliminated "a number of duplicative public company costs" — primarily in executive compensation and related cash/equity costs, which he estimated to be around $120 million.

The context suggests these were reductions at the Matterport corporate level as part of integration and expense rationalization, rather than broad layoffs across the combined business.