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01/11 04:26
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings report shows strong financial performance, with record high revenue growth, increased EBITDA, and positive net new bookings. The company raised its guidance, signaling confidence in future growth. The Q&A session highlighted positive sentiment from analysts, with no significant concerns raised. The strategic plan includes aggressive expansion and integration efforts, further boosting optimism. Overall, the combination of strong past performance, positive guidance, and strategic initiatives suggests a strong positive stock price reaction over the next two weeks.
Revenue Third quarter 2025 revenue reached $834 million, a 20% year-over-year increase. This marks the 58th consecutive quarter of double-digit revenue growth.
Adjusted EBITDA Adjusted EBITDA in the third quarter rose to $115 million, up 51% over Q3 2024. The increase was attributed to continued expense discipline and better-than-expected revenue.
Profit Margin Profit margin in the Commercial Information and Marketplace businesses increased to 47% for Q3 2025, compared to 43% in Q3 2024.
Net New Bookings Net new bookings totaled $84 million, up 92% year-over-year. This growth was driven by contributions from all major products and an expanded sales force.
Residential Portals Revenue Residential portals revenue grew 31.3% year-over-year in Q3 2025. The growth was attributed to synergies across residential portals and increased exposure for advertisers.
Apartments.com Revenue Apartments.com generated $303 million in Q3 revenue, an 11% increase year-over-year. The growth was supported by a 99% monthly renewal rate and a 93 NPS score.
Homes.com Revenue Homes.com revenue in Q3 increased 20% year-over-year. Net new annualized bookings rose 1,225% year-over-year, driven by new revenue streams and increased subscriber growth.
Matterport Revenue Matterport's Q3 revenue was $44 million, 12% higher than expectations. Net bookings increased 194% year-over-year, driven by new customer acquisition and product rollouts.
LoopNet Revenue LoopNet achieved 10% revenue growth in Q3 2025. Growth was supported by international expansion and portfolio advertising packages.
CoStar Revenue CoStar generated $277 million in Q3 2025 revenue, reflecting 8% year-over-year growth. Growth was attributed to strong net new bookings and improved renewal rates.
European Business Revenue The European business achieved $5.7 million in net new bookings in Q3 2025, representing a 51% year-over-year growth. The U.K. business saw revenue up 17% year-over-year.
AI Smart Search: Launched on Homes.com, allowing users to search properties using natural language queries. Improved user engagement metrics significantly.
Matterport Max: Integrated into Apartments.com, with over 530 subscriptions sold, adding $5,000 per year in annual subscription revenue per unit.
Homes.com Boost: Sales rose 136% quarter-over-quarter to $617,000 in Q3. Homeowners pay $386 on average for enhanced exposure.
Domain Acquisition: Acquired for $1.9 billion, contributing $25 million in revenue for the stub period. Plans to expand Homes.com, CoStar, and LoopNet platforms to Australia.
OnTheMarket (UK): Leads up 21% year-over-year. Net new bookings increased for 17 months consecutively, delivering nearly $11 million in annualized net new bookings since acquisition.
LoopNet Expansion: Integrated French listings, bringing European listings to 100,000. Plans to expand to Australia through Domain acquisition.
Revenue Growth: Achieved 20% year-over-year growth in Q3 2025, reaching $834 million. Adjusted EBITDA rose 51% year-over-year to $115 million.
Sales Force Expansion: Increased sales team to over 500 representatives for Apartments.com and 500 for Homes.com, with 150 more in preproduction.
Cost Efficiency: Achieved higher-than-expected adjusted EBITDA due to expense discipline and headcount savings.
AI Integration: Investing 50% of Homes.com software development efforts into AI features. AI Smart Search improved user engagement and lead generation.
Legal Actions Against Competitors: Filed lawsuits against Zillow for copyright infringement and antitrust violations, aiming to protect CoStar's intellectual property and market position.
Focus on Core Products: Refocusing Domain's resources on profitable residential and commercial portals, reducing non-core initiatives.
Regulatory and Legal Risks: Zillow is facing multiple lawsuits, including antitrust violations, copyright theft, and consumer deception. These legal challenges could disrupt the competitive landscape and impact CoStar's operations if similar scrutiny extends to the industry.
Competitive Pressures: Zillow's alleged anti-competitive practices, such as banning Compass listings, could create challenges for CoStar in maintaining its market position. Additionally, the Compass-Anywhere merger may intensify competition.
Economic and Market Conditions: Volatility in the commercial real estate sector could impact CoStar's revenue growth, particularly in its CoStar product line.
Technological and Strategic Execution Risks: The integration of AI technologies and new product developments, such as AI Smart Search and Matterport, require significant investment and execution precision. Failure to deliver could impact user engagement and revenue.
International Expansion Challenges: Expanding into markets like Australia and integrating acquisitions like Domain may face cultural, operational, and competitive hurdles.
Supply Chain and Operational Risks: The expansion of sales teams and product offerings, such as Matterport, requires effective management to avoid inefficiencies and cost overruns.
Revenue Growth: CoStar expects fourth quarter revenue to range between $885 million and $895 million, with full-year 2025 revenue projected at $3.23 billion to $3.24 billion. Residential revenue is expected to more than double to $210 million to $215 million for 2025, driven by the Domain acquisition.
Apartments.com Revenue: Fourth quarter 2025 revenue growth is expected to be 11% to 12%, resulting in full-year 2025 revenue growth of 11% to 12%.
LoopNet Revenue: Fourth quarter revenue growth is projected between 15% to 17%, with full-year revenue growth of 10% to 11%. Organic growth for Q4 is expected to be 11%, the highest since 2023.
Information Services Revenue: Full-year revenue growth is expected to range between 18% to 20%. New rent analytics and lease platform products are planned for launch in 2026.
Matterport Revenue: Matterport's Q3 revenue exceeded expectations at $44 million. The company plans to expand the sales force by 200 by the end of 2026 to drive accelerated revenue growth.
AI Integration: CoStar is investing 50% of Homes.com software development efforts in Q4 2025 and beyond towards AI-empowered features. AI Smart Search has already improved user engagement metrics significantly.
Domain Group Integration: Domain is expected to contribute $67 million in revenue for Q4 2025. CoStar plans to offer LoopNet, Homes, and CoStar platforms in Australia within 18 months.
CoStar Product Growth: CoStar product growth is expected to be 8% to 9% in Q4 2025, with full-year growth at 7%.
Adjusted EBITDA: Fourth quarter adjusted EBITDA is expected to range between $150 million and $160 million, with full-year adjusted EBITDA projected at $415 million to $425 million.
Share Repurchase Program: We repurchased 576,000 shares in the third quarter for $51 million, bringing our year-to-date total to 1.4 million shares repurchased for $115 million. We expect to purchase approximately $50 million of additional shares in the fourth quarter, bringing our 2025 total to approximately $165 million of the $500 million share repurchase authorization.
The earnings report shows strong financial performance, with record high revenue growth, increased EBITDA, and positive net new bookings. The company raised its guidance, signaling confidence in future growth. The Q&A session highlighted positive sentiment from analysts, with no significant concerns raised. The strategic plan includes aggressive expansion and integration efforts, further boosting optimism. Overall, the combination of strong past performance, positive guidance, and strategic initiatives suggests a strong positive stock price reaction over the next two weeks.
The earnings call summary reveals strong financial performance with consistent revenue growth, successful product development, and strategic market expansion. The Q&A session highlights management's confidence in their competitive position, despite some unclear responses. The positive guidance and growth in international bookings, alongside effective marketing strategies, further reinforce a positive outlook. However, the lack of specific details in some areas and timing-related EBITDA guidance adjustments temper the overall sentiment, leading to a positive prediction for the stock price movement over the next two weeks.
The earnings call reveals strong financial performance with a 12% revenue increase and a 429% rise in adjusted EBITDA. Positive guidance with 14-15% revenue growth and a $150 million share repurchase plan further supports a positive outlook. Despite some operational challenges and economic concerns, investor sentiment is likely to remain favorable, predicting a stock price increase of 2% to 8%.
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