CoStar Group Inc (CSGP) Q3 2024 Earnings Call Highlights: Strong Revenue Growth Amid Market ...

GuruFocus News
4 min read

In This Article:

  • Revenue: $693 million in Q3 2024, an 11% increase year-over-year.

  • Net Income: $53 million in Q3 2024, up from $7 million in Q1 2024.

  • EBITDA: $51 million in Q3 2024, up from negative $13 million in Q1 2024.

  • Adjusted EBITDA: $76 million in Q3 2024, exceeding guidance of $47 million to $52 million.

  • Profit Margin: 43% for commercial information and marketplace businesses in Q3 2024.

  • Net New Bookings: $44 million in Q3 2024.

  • CoStar Revenue Growth: 10% in Q3 2024.

  • Apartments.com Revenue: $272 million in Q3 2024, with 16% growth.

  • LoopNet Revenue Growth: 5% in Q3 2024.

  • Residential Revenue: $28 million in Q3 2024.

  • Cash Balance: $4.9 billion with a 5% rate of return.

  • Contract Renewal Rate: 91% overall, 95% for customers subscribed for five years or longer.

  • Sales Force: 1,340 people at the end of Q3 2024, a 19% year-over-year increase.

Release Date: October 22, 2024

For the complete transcript of the earnings call, please refer to the full earnings call transcript.

Positive Points

  • CoStar Group Inc (NASDAQ:CSGP) reported a strong third quarter with revenue of $693 million, marking an 11% increase year-over-year and aligning with their guidance.

  • The company achieved its 54th consecutive quarter of double-digit growth, showcasing consistent performance.

  • Apartments.com, a key segment, reported a revenue of $272 million for the quarter, with a 16% growth rate, maintaining its leadership position in the multifamily segment.

  • CoStar's adjusted EBITDA of $76 million exceeded the guidance range, indicating effective cost management and operational efficiency.

  • The company is expanding its sales force across CoStar, LoopNet, and Apartments.com, indicating confidence in market opportunities and future growth potential.

Negative Points

  • The pivot of the sales force to focus on the new Homes.com product led to lower productivity and renewal rates, impacting overall sales performance.

  • The commercial real estate market has been challenging, with office prices down 18% over the past year and multifamily prices down 11%, affecting market conditions.

  • Net new bookings were $44 million, reflecting a decrease in core bookings, which could impact future revenue growth.

  • The transition of sales resources back to core products from Homes.com has been slower than expected, affecting short-term sales productivity.

  • The residential revenue guidance was adjusted downward due to sales force productivity issues and less favorable property market conditions.

Q & A Highlights

Q: It seems like your commercial real estate backdrop is improving. How are you thinking about the growth outlook in 2025 for businesses like the Suite and LoopNet? A: Andrew Florance, CEO: We have done remarkably well in a difficult market, and as conditions improve, this should switch from a headwind to a tailwind. There's plenty of room to grow, especially with a larger sales force and improved pricing models. We are optimistic about growth in the coming year, barring any unforeseen external events.

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