CoStar Group, Inc.
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Financial statements
data from SEC XBRL filings. Values are as-reported; restatements supersede originals.
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The following Management’s Discussion and Analysis of Financial Condition and Results of Operations contains “forward-looking statements,” including statements about our beliefs and expectations. There are many risks and uncertainties that could cause actual results to differ materially from those discussed in the forward-looking statements. Potential factors that could cause actual results to differ materially from those discussed in any forward-looking statements include, but are not limited to, those stated under the heading “Cautionary Statement Concerning Forward-Looking Statements” at the end of this Item 2, “Risk Factors” in Item 1A of Part I of our 2025 Form 10-K, as well as those described from time to time in our filings with the SEC.
All forward-looking statements are based on information available to us on the date of this filing, and we assume no obligation to update such statements, whether as a result of new information, future events or otherwise, except as required by applicable law. The following discussion should be read in conjunction with our 2025 Form 10-K, our subsequent Quarterly Reports on Form 10-Q, Current Reports on Form 8-K, other filings with the SEC, and the condensed consolidated financial statements and related notes included in this Report.
Overview
CoStar Group is a leading provider of online real estate marketplaces, information, analytics, and 3D digital twin technology in the property markets, based on the numbers of unique visitors and site visits per month; providing more information, analytics, and marketing services than many of our competitors; offering the most comprehensive commercial real estate database available; and having the largest commercial real estate research department in the industry. We have created and compiled a standardized platform of real estate information and analytics and online marketplaces where industry professionals, consumers of commercial and residential real estate, including apartments, and the related business communities, can continuously interact and facilitate transactions by efficiently accessing and exchanging accurate and standardized real estate-related information. Our service offerings span all property types, including office, retail, industrial, multifamily, residential, land, mixed-use, and hospitality.
Our services are primarily derived from a database of building-specific and marketplace information and visual content and offer customers specialized tools for accessing, analyzing, and using our information and advertising on our marketplaces. Over time, we have expanded, and we expect to continue to expand, our existing information, analytics, and online marketplaces. We have developed and we expect to continue to develop additional services leveraging our centralized database and 3D digital twin technology to meet the needs of our existing customers as well as potential new categories of customers.
Our services are typically distributed to our customers under subscription-based license agreements that generally renew automatically, the majority of which have a term of at least one year. Upon renewal, many of the subscription contract rates may change in accordance with contract provisions or as a result of contract renegotiations. To encourage customers to use our services regularly, we generally charge a fixed monthly amount for our subscription-based services rather than charging fees based on actual platform usage or number of paid clicks. Depending on the type of service, contract rates are generally based on the number of sites, number of users, organization size, the customer’s business focus, the customer's geographic location, the number of properties reported on or analyzed, the number and types of services to which a customer subscribes, the number of digital twins hosted, the number of properties a customer advertises, and the prominence and placement of a customer's advertised properties in the search results. Our subscription customers generally pay contract fees on a monthly basis, but in some cases may pay us on a quarterly or annual basis. Our transaction-based services primarily consist of (i) providing premium listings for individual properties on our marketplaces, (ii) providing data capture services to create digital twins, (iii) the sale of Matterport cameras and capture equipment, and (iv) Ten-X auction fees.
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Services
We operate, develop products, and deliver our services in two reportable segments, Commercial Real Estate and Residential Real Estate. Our Commercial Real Estate segment offers commercial real estate information and analytics, online marketplaces, and 3D digital twin technology. Our Residential Real Estate segment hosts marketplaces which aggregate consumer demand for homes and apartments and we sell marketing and leads to the agents, owners, landlords, and property management companies that need to reach those consumers with their offerings. Our principal services are described in the following paragraphs:
Commercial Real Estate
CoStar
CoStar is our subscription-based integrated platform for commercial real estate intelligence, which includes information about commercial real estate properties, properties for sale, comparable sales, tenants, space available for lease, industry professionals and their business relationships, industry news, and market status. CoStar also provides benchmarking for the hospitality industry under the STR brand, lease analytical capabilities, and risk management and other debt solutions for lenders. We also offer SaaS for lease management under the CoStar Real Estate Manager and Visual Lease brands.
LoopNet
Our LoopNet Network of commercial real estate websites offers online marketplaces across the U.S., Europe, and the U.K. that enable commercial property owners, landlords, and real estate agents to advertise properties for sale or for lease. Commercial real estate agents, buyers, and tenants use the LoopNet Network of online marketplaces to search for available property listings that meet their criteria. With the Domain Acquisition, we also offer commercial real estate listings in Australia.
Other Commercial Real Estate
Other Commercial Real Estate includes revenue from the Matterport Acquisition, BizBuySell Network, and Ten-X's online auctions for commercial real estate. Matterport primarily provides hosting services for its 3D digital twins on a subscription basis. Matterport also provides capture services of spatial data and other add-on services to existing subscription customers and sells 3D capture cameras and accessories. Our BizBuySell Network provides online marketplaces for businesses and franchises for sale.
We expect Commercial Real Estate's revenue growth rate for the year ending December 31, 2026 to moderate compared to the revenue growth rate for the year ended December 31, 2025 due to the lack of benefit from the Matterport Acquisition realized in 2025.
Residential Real Estate
Our residential marketplaces enable renters and homebuyers to find their dream homes by combining our proprietary research and neighborhood content with listing information, while enabling property owners, managers, and real estate agents to advertise their properties. Our flagship brands in the U.S. are Apartments.com, Homes.com, and Land.com. Apartments.com and Land.com provide comprehensive advertising on a subscription basis. Homes.com offers real estate agents subscription memberships promoting the agent's listings and profile on our websites, as well as the ability for real estate agents and homeowners to promote a single listing. Domain and OnTheMarket are our primary brands in Australia and the U.K., respectively. Domain primarily provides agents premium listings for individual properties. OnTheMarket hosts agents' listings on a subscription basis. We expect Residential Real Estate's revenue growth rate for the year ending December 31, 2026 to accelerate compared to the revenue growth rate for the year ended December 31, 2025 due to a full year's benefit of the Domain Acquisition completed in August 2025 and an increase in the number of Homes.com members.
Subscription-based Services
For the three months ended March 31, 2026 and 2025, our annualized net new bookings of subscription-based services on all contracts were $67 million and $56 million, respectively. Net new bookings is calculated based on the annualized amount of change in our sales bookings resulting from new subscription-based contracts, changes to existing subscription-based contracts, and cancellations of subscription-based contracts for the period reported. Net new bookings is calculated on all subscription-based contracts without regard to contract term. Net new bookings is considered an operating metric that is an indicator of future subscription revenue growth and is also used as a metric of sales force productivity by us and investors. However, information regarding net new bookings is not comparable to, nor should it be substituted for, an analysis of our revenue over time. Revenue from our subscription-based contracts was approximately 90% and 96% of total revenue for the three months
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ended March 31, 2026 and 2025, respectively. The decrease in our percentage of subscription-based revenue was primarily due to Domain, which sells premium listings for individual properties, as well as the transactional products and services sold by Matterport.
For each of the trailing 12 months ended March 31, 2026 and 2025, our contract renewal rates for existing company-wide CoStar Group subscription-based services for contracts with a term of at least one year were approximately 89% and our cancellation rates for those services during the same periods were approximately 11%. Contract renewal rates are calculated on all subscription-based contracts with a term of at least one year. Our contract renewal rate is a quantitative measurement that is typically closely correlated with our revenue results. As a result, we believe that the rate may be a reliable indicator of short-term and long-term performance absent extraordinary circumstances. Our trailing 12-month contract renewal rate may decline as a result of negative economic conditions, consolidations among our customers, reductions in customer spending, or decreases in our customer base. Revenue from our subscription-based contracts with a term of at least one year was approximately 74% and 80% of total revenue for three months ended March 31, 2026 and 2025, respectively. The decrease in the percentage of revenue from our subscription-based contracts with a term of at least one year was primarily due to Domain, which sells premium listings for individual properties, as well as the transactional products and services sold by Matterport.
During the fourth quarter of 2025, we changed the composition of our segments from geography-based to product portfolio-based. This change aligns with the internal reporting used by the CODM for assessing performance and allocating resources. See Notes 2, 3, and 12 of the Notes to the Condensed Consolidated Financial Statements included in Part I of this Report for additional information on the segment change.
Development, Investments, and Expansion
We plan to continue to invest in our business and our services, evaluate strategic growth opportunities, and pursue our key priorities as described below. We are committed to supporting, improving, and enhancing our information, analytics, and online marketplace solutions, including expanding and improving our offerings for our client base and site users, including property owners, property managers, buyers, commercial tenants, and residential renters and buyers. We expect to continue our software development efforts to improve existing services, introduce new services, integrate and cross-sell services, integrate recently completed acquisitions, and expand and develop supporting technologies for our research, sales, and marketing organizations. We may reevaluate our priorities as economic conditions continue to evolve.
Our key priorities for the remainder of 2026 currently include:
•Enhancement of our residential products and platforms. Leveraging rentals marketing and lead generation across platforms, in particular, Apartments.com and Homes.com. Scaling Homes.com through new product releases including depth advertising and the new homes builder program. Continue to develop new and improved tools for residential agents and brokers to help amplify their reach.
•International expansion of LoopNet and CoStar. We launched our LoopNet branded advertising products in Spain and France and continue to expand our footprint of commercial listings in these markets. We plan to continue integrating Domain and expect to launch LoopNet into the Australian market. In addition, we expect to launch CoStar in France and Australia.
•Launching additional AI-enabled features across our products. We plan to extend the revolutionary capability of Homes AI across the Company’s portfolio of leading platforms, including Apartments.com and LoopNet, ushering in a new era of intelligent, conversational real estate discovery. Our AI capabilities draw from property data, Matterport 3D digital twin technology, images, proprietary school data, neighborhood insights, and market intelligence.
•Continuing to expand our CoStar offerings with additional modules, including new data and enhanced analytics. We plan to add new homes data, rent benchmarking, and debt benchmarking. These enhancements will continue to drive new subscribers and additional usage under one platform.
•Leveraging technology and AI capabilities in our internal processes. We are using advanced technology, including AI, to improve data collection, data generation, and data quality. AI is driving research efficiencies, improving data quality, and increasing the pace of product development. Proprietary data, an integrated delivery platform, and bespoke research processes underpin our product solutions.
We intend to continue to assess the need for additional investments in our business in order to develop and distribute new services and functionality within our current platform or expand the reach of, or otherwise improve, our current service offerings. Any future product development or expansion of services, combination and coordination of services, or elimination
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of services or corporate expansion, development, or restructuring efforts could reduce our profitability and increase our capital expenditures. Any new investments, changes to our service offerings, or other unforeseen events could cause us to experience reduced revenue or generate losses and negative cash flow from operations in the future. Any development efforts must comply with our credit facility, which contains restrictive covenants that restrict our operations and use of our cash flow and may prevent us from taking certain actions that we believe could increase our profitability or otherwise enhance our business.
Non-GAAP Financial Measures
We prepare and publicly release quarterly unaudited financial statements prepared in accordance with GAAP. We also disclose and discuss certain non-GAAP financial measures in our public releases, investor conference calls, and filings with the SEC. The non-GAAP financial measures that we may disclose include EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted EPS.
EBITDA is our net income (loss) before interest income or expense, net, other expense or income, net, loss on debt extinguishment, income taxes, depreciation, and amortization. We typically disclose EBITDA on a consolidated and on an operating segment basis in our earnings releases, investor conference calls, and filings with the SEC.
Adjusted EBITDA is different from EBITDA because we further adjust EBITDA for stock-based compensation expense, acquisition- and integration-related costs, restructuring and related costs, including certain advisory fees, and settlements and impairments incurred outside our ordinary course of business.
Adjusted EBITDA margin represents Adjusted EBITDA divided by revenue for the period.
Adjusted Net Income represents our net income (loss) adjusted for stock-based compensation expense, acquisition- and integration-related costs, including gains or losses on equity investments acquired in prospective targets and related to deal-contingent financial instruments, restructuring costs, settlement and impairment costs incurred outside our ordinary course of business, and loss on debt extinguishment, as well as amortization of acquired intangible assets and other related costs, and then subtracting an assumed provision for income taxes.
Adjusted EPS represents Adjusted Net Income divided by the number of diluted shares outstanding for the period used in the calculation of GAAP earnings per diluted share. For periods with GAAP net losses and Adjusted Net Income, the weighted average outstanding shares used to calculate Adjusted EPS includes potentially dilutive securities that were excluded from the calculation of GAAP earnings per share as the effect was anti-dilutive.
We disclose Adjusted EBITDA, Adjusted EBITDA margin, and Adjusted Net Income on a consolidated basis in our earnings releases, investor conference calls, and filings with the SEC.
The non-GAAP financial measures that we use may not be comparable to similarly titled measures reported by other companies. Also, in the future, we may disclose different non-GAAP financial measures in order to help our investors meaningfully evaluate and compare our results of operations to our previously reported results of operations or to those of other companies in our industry.
We view EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted EPS as operating performance measures. We believe that the most directly comparable GAAP financial measure to EBITDA, Adjusted EBITDA, and Adjusted Net Income is net income (loss). We believe the most directly comparable GAAP financial measure to Adjusted EPS and Adjusted EBITDA margin are earnings per diluted share and net income (loss) divided by revenue, respectively. In calculating EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted EPS, we exclude from net income (loss) the financial items that we believe should be separately identified to provide additional analysis of the financial components of the day-to-day operation of our business. We have outlined below the type and scope of these exclusions and the material limitations on the use of these non-GAAP financial measures as a result of these exclusions. EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted EPS are not measurements of financial performance under GAAP and should not be considered as a measure of liquidity, as an alternative to net income (loss), or as an indicator of any other measure of performance derived in accordance with GAAP. Investors and potential investors in our securities should not rely on EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted EPS as a substitute for any GAAP financial measure, including net income (loss) and earnings per diluted share. In addition, we urge investors and potential investors in our securities to carefully review the GAAP financial information included as part of our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q that are filed with the SEC, as well as our quarterly earnings releases, and compare the GAAP financial information with our EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted EPS.
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EBITDA, Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted EPS may be used by management to internally measure our operating and management performance and may be used by investors as supplemental financial measures to evaluate the performance of our business. We believe that these non-GAAP measures, when viewed with our GAAP results and accompanying reconciliations, provide additional information to investors that is useful to understand the factors and trends affecting our business without the impact of certain acquisition-related items. We have spent more than 35 years building our database of commercial real estate information and expanding our markets and services partially through acquisitions of complementary businesses. Due to these acquisitions, our net income (loss) has included significant charges for amortization of acquired intangible assets; depreciation and other amortization; acquisition- and integration-related costs, including gains or losses on equity investments acquired in prospective targets and related to deal-contingent financial instruments; restructuring and related costs, including certain advisory fees; and loss on debt extinguishment. Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, and Adjusted EPS exclude these charges and provide meaningful information about the operating performance of our business, apart from charges for amortization of acquired intangible assets, depreciation and other amortization, acquisition- and integration-related costs, restructuring and related costs, including certain advisory fees, and settlement and impairment costs incurred outside our ordinary course of business. We believe the disclosure of non-GAAP measures can help investors meaningfully evaluate and compare our performance from quarter to quarter and from year to year without the impact of these items. We also believe the non-GAAP measures we disclose are measures of our ongoing operating performance because the isolation of non-cash charges, such as amortization and depreciation, and other items, such as interest income or expense, net, other expense or income, net, income taxes, stock-based compensation expenses, acquisition- and integration-related costs, restructuring and related costs, including certain advisory fees, loss on debt extinguishment, and settlement and impairment costs incurred outside our ordinary course of business, provides additional information about our cost structure, and, over time, helps track our operating progress. In addition, investors, securities analysts, and others have regularly relied on EBITDA and may rely on Adjusted EBITDA, Adjusted EBITDA margin, Adjusted Net Income, or Adjusted EPS to provide a financial measure by which to compare our operating performance against that of other companies in our industry.
Set forth below are descriptions of financial items that have been excluded from net income (loss) to calculate EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to net income (loss):
•Amortization of acquired intangible assets in cost of revenue may be useful for investors to consider because it represents the diminishing value of any acquired trade names and other intangible assets and the use of our acquired technology, which is one of the sources of information for our database of commercial real estate information. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
•Amortization of acquired intangible assets in operating expenses may be useful for investors to consider because it represents the estimated attrition of our acquired customer base. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
•Depreciation and other amortization may be useful for investors to consider because they generally represent the wear and tear on our property and equipment used in our operations. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
•The amount of interest income or expense, net and other expense or income, net we generate and incur may be useful for investors to consider and may result in current cash inflows and outflows. However, we do not consider the amount of interest income or expense, net and other expense or income, net to be a representative component of the day-to-day operating performance of our business.
•Income tax expense may be useful for investors to consider because it generally represents the taxes that may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.
•The amount of loss on our debt extinguishment may be useful for investors to consider because it generally represents losses from the early extinguishment of debt. However, we do not consider the amount of the loss on debt extinguishment to be a representative component of the day-to-day operating performance of our business.
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Set forth below are descriptions of additional financial items that have been excluded from EBITDA to calculate Adjusted EBITDA and the material limitations associated with using this non-GAAP financial measure as compared to net income (loss):
•Stock-based compensation expense may be useful for investors to consider because it represents a portion of the compensation of our employees and executives. Determining the fair value of the stock-based instruments involves a high degree of judgment and estimation and the expenses recorded may bear little resemblance to the actual value realized upon the future exercise or termination of the related stock-based awards. Therefore, we believe it is useful to exclude stock-based compensation in order to better understand the long-term performance of our core business.
•The amount of acquisition- and integration-related costs incurred may be useful for investors to consider because such costs generally represent professional service fees and direct expenses related to acquisitions. Because we do not acquire businesses on a predictable cycle, we do not consider the amount of acquisition- and integration-related costs to be a representative component of the day-to-day operating performance of our business.
•The amount of settlement and impairment costs incurred outside of our ordinary course of business may be useful for investors to consider because they generally represent gains or losses from the settlement of litigation matters, charges related to terminations of contracts or impairments of acquired intangible assets or other long-lived assets. We do not believe these charges necessarily reflect the current and ongoing cash charges related to our operating cost structure.
•The amount of restructuring and related costs, including certain advisory costs, incurred may be useful for investors to consider because they generally represent costs incurred in connection with changes to the structure of our operations, governance, offices and related properties, and suppliers or employees used to deliver services and include costs to terminate contracts, advisory fees and other professional services, and severance. Because we do not carry out restructuring activities on a predictable cycle, we do not consider the amount of restructuring-related costs to be a representative component of the day-to-day operating performance of our business.
The financial items that have been excluded from our net income (loss) to calculate Adjusted Net Income and Adjusted EPS are amortization of acquired intangible assets and other related costs, stock-based compensation, acquisition- and integration-related costs, including gains or losses on equity investments acquired in prospective targets and related to deal-contingent financial instruments, restructuring and related costs, and settlement and impairment costs incurred outside our ordinary course of business. These items are discussed above with respect to the calculation of Adjusted EBITDA together with the material limitations associated with using non-GAAP financial measures as compared to net income (loss). In addition to these exclusions from net income (loss), we subtract an assumed provision for income taxes to calculate Adjusted Net Income. In both 2026 and 2025, we assume a 26.0% tax rate, which approximates our historical long-term statutory corporate tax rate, excluding the impact of discrete items.
Management compensates for the above-described limitations of using non-GAAP measures by using a non-GAAP measure only to supplement our GAAP results and to provide additional information that is useful to investors to understand the factors and trends affecting our business.
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Consolidated Results of Operations
Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
The following table compares our selected condensed consolidated results of operations for the three months ended March 31, 2026 and 2025 (in millions):
| Three Months Ended March 31, | |||||||||||||||||||||
| 2026 | 2025 | Increase (Decrease) ($) | Increase (Decrease) (%) | ||||||||||||||||||
Revenue | |||||||||||||||||||||
| CoStar | $ | 331 | $ | 305 | $ | 26 | 9 | % | |||||||||||||
| LoopNet | 85 | 73 | 12 | 16 | |||||||||||||||||
Other Commercial Real Estate | 56 | 31 | 25 | 81 | |||||||||||||||||
Total Commercial Real Estate | 472 | 409 | 63 | 15 | |||||||||||||||||
Residential Real Estate | 425 | 323 | 102 | 32 | |||||||||||||||||
| Total revenue | 897 | 732 | 165 | 23 | |||||||||||||||||
| Cost of revenue | 196 | 153 | 43 | 28 | |||||||||||||||||
| Gross profit | 701 | 579 | 122 | 21 | |||||||||||||||||
| Operating expenses: | |||||||||||||||||||||
| Selling and marketing (excluding customer base amortization) | 421 | 369 | 52 | 14 | |||||||||||||||||
| Software development | 114 | 95 | 19 | 20 | |||||||||||||||||
| General and administrative | 126 | 141 | (15) | (11) | |||||||||||||||||
| Customer base amortization | 37 | 17 | 20 | 118 | |||||||||||||||||
| Total operating expenses | 698 | 622 | 76 | 12 | |||||||||||||||||
Income (loss) from operations | 3 | (43) | 46 | (107) | |||||||||||||||||
Interest income, net | 10 | 38 | (28) | (74) | |||||||||||||||||
| Other expense, net | (1) | (2) | 1 | (50) | |||||||||||||||||
Income (loss) before income taxes | 12 | (7) | 19 | (271) | |||||||||||||||||
Income tax expense | 9 | 8 | 1 | 13 | |||||||||||||||||
Net income (loss) | $ | 3 | $ | (15) | $ | 18 | (120) | % | |||||||||||||
Revenue. Revenue increased by $165 million, or 23%, to $897 million, driven by the following:
Commercial Real Estate revenue increased by $63 million, or 15%, to $472 million due to:
•an increase in CoStar revenue of $26 million, or 9%, due to an increase in subscribers, inflation-based price increases, and additional sales of STR Benchmarking,
•an increase in LoopNet revenue of $12 million, or 16%, due to an increase in the number of listings, as well as an increase in the average price per listing and the Domain Acquisition completed in August 2025, and
•an increase in Other Commercial Real Estate revenue of $25 million, or 81%, primarily due to the Matterport Acquisition completed in February 2025.
Residential Real Estate revenue increased by $102 million, or 32%, to $425 million primarily due to:
•$60 million of revenue from the Domain Acquisition completed in August 2025 and
•an increase in the number of agents and properties advertised on our network, partially offset by a reduction in average price.
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Gross Profit and Cost of Revenue. Gross profit increased by $122 million, or 21%, to $701 million, and the gross profit margin decreased from 79% to 78%. The increase in gross profit was due to higher revenue, partially offset by an increase in the cost of revenue. Cost of revenue increased by $43 million, or 28%, to $196 million and, as a percentage of revenue, increased from 21% to 22%. The increase in cost of revenue included:
•higher amortization expense related to acquired technology and trade names from the Matterport and Domain acquisitions,
•an increase in personnel costs of $9 million, primarily due to incremental headcount added through the Matterport and Domain acquisitions,
•an increase in web hosting, data, and content costs of $8 million, associated with the Matterport and Domain acquisitions,
•an increase of $3 million in credit card processing fees, and
•an increase of $3 million in costs related to sales of digital twin capture equipment and services attributable to the Matterport Acquisition completed in February 2025.
Selling and Marketing Expenses (Excluding Customer Base Amortization). Selling and marketing expenses increased $52 million, or 14%, to $421 million and, as a percentage of revenue, decreased from 50% to 47%. The increase included:
•an increase in personnel costs and related overhead, reflecting sales hiring and the addition of sales personnel from the Matterport and Domain acquisitions,
•an increase in marketing expenses of $12 million for advertising of our brands, and
•an increase in conference expenses of $4 million related to increased sales force.
Software Development Expenses. Software development expenses increased by $19 million, or 20%, to $114 million and, as a percentage of revenue, were consistent at 13%. The increase included:
•an increase in personnel costs, primarily driven by additional headcount from the Matterport and Domain acquisitions and
•an increase in software and equipment costs of $3 million, primarily due to the Domain Acquisition.
General and Administrative Expenses. General and administrative expenses decreased by $15 million, or 11%, to $126 million and, as a percentage of revenue, decreased from 19% to 14%. The decrease included:
•a decrease of $20 million from Matterport-related acquisition fees incurred in February 2025 and
•a decrease of $11 million in professional services fees, primarily due to lower legal-related expenses from defending our intellectual property, partially offset by
•an increase in personnel costs of $11 million primarily due to the Matterport and Domain acquisitions and
•an increase in software and equipment costs of $6 million primarily due to the Matterport and Domain acquisitions.
Customer Base Amortization Expense. Customer base amortization expense increased by $20 million, or 118%, to $37 million, and, as a percentage of revenue, increased from 2% to 4%. The increase was primarily due to amortization of intangible assets recognized in connection with the Matterport and Domain acquisitions.
Interest Income, Net. Interest income, net decreased by $28 million, or 74%, to $10 million. The decrease was primarily due to a decrease in our cash and cash equivalents.
Income Tax Expense. Income tax expense increased by $1 million, or 13%, to $9 million, and the effective tax rate was 74% of income before income taxes for the three months ended March 31, 2026, compared to (114)% of loss before income taxes for the three months ended March 31, 2025. The change in income tax expense was primarily due to higher income before taxes.
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Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024
The following table compares our selected condensed consolidated results of operations for the three months ended March 31, 2025 and 2024 (in millions):
| Three Months Ended March 31, | |||||||||||||||||||||||
| 2025 | 2024(1) | Increase (Decrease) ($) | Increase (Decrease) (%) | ||||||||||||||||||||
Revenue | |||||||||||||||||||||||
| CoStar | $ | 305 | $ | 283 | $ | 22 | 8 | % | |||||||||||||||
| LoopNet | 73 | 69 | 4 | 6 | |||||||||||||||||||
Other Commercial Real Estate | 31 | 17 | 14 | 82 | |||||||||||||||||||
Total Commercial Real Estate | 409 | 369 | 40 | 11 | |||||||||||||||||||
Residential Real Estate | 323 | 287 | 36 | 13 | |||||||||||||||||||
| Total revenue | 732 | 656 | 76 | 12 | |||||||||||||||||||
| Cost of revenue | 153 | 141 | 12 | 9 | |||||||||||||||||||
| Gross profit | 579 | 515 | 64 | 12 | |||||||||||||||||||
| Operating expenses: | |||||||||||||||||||||||
| Selling and marketing (excluding customer base amortization) | 369 | 366 | 3 | 1 | |||||||||||||||||||
| Software development | 95 | 82 | 13 | 16 | |||||||||||||||||||
| General and administrative | 141 | 99 | 42 | 42 | |||||||||||||||||||
| Customer base amortization | 17 | 11 | 6 | 55 | |||||||||||||||||||
| Total operating expenses | 622 | 558 | 64 | 11 | |||||||||||||||||||
Loss from operations | (43) | (43) | — | — | |||||||||||||||||||
Interest income, net | 38 | 56 | (18) | (32) | |||||||||||||||||||
| Other expense, net | (2) | (1) | (1) | 100 | |||||||||||||||||||
Loss (income) before income taxes | (7) | 12 | (19) | (158) | |||||||||||||||||||
Income tax expense | 8 | 5 | 3 | 60 | |||||||||||||||||||
Net loss (income) | $ | (15) | $ | 7 | $ | (22) | (314) | % | |||||||||||||||
| __________________________ | |||||||||||||||||||||||
(1) We have recast certain prior period disclosures to align with the way we internally manage our business. See Note 2 of the Notes to the Consolidated Financial Statements included in Part I of this Report for additional information. | |||||||||||||||||||||||
Revenue. Revenue increased by $76 million, or 12%, to $732 million, driven by the following:
Commercial Real Estate revenue increased by $40 million, or 11%, to $409 million due to:
•an increase in CoStar revenue of $22 million, or 8%, due to increased sales driven by inflation-based price increases on renewals and an increase in subscribers, as well as the Visual Lease Acquisition,
•an increase in LoopNet revenue of $4 million, or 6%, due to an increase in the average price per listing, as well as the number of listings, and
•an increase in Other Commercial Real Estate revenue of $14 million, or 82%, primarily attributable to the Matterport Acquisition.
Residential Real Estate revenue increased by $36 million, or 13% to $323 million primarily due to:
•an increase in the number of agents and properties advertised on our network, partially offset by
•a decrease of $3 million due to the discontinuation of certain products that were inconsistent with our long-term business strategy.
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Gross Profit and Cost of Revenue. Gross profit increased by $64 million, or 12%, to $579 million, and the gross profit margin was consistent at 79%. The increase in gross profit was due to higher revenue, partially offset by an increase in cost of revenue. Cost of revenue increased by $12 million, or 9%, to $153 million and, as a percentage of revenue, was consistent at 21%. The increase in cost of revenue primarily included:
•an increase in personnel costs of $4 million due to the Matterport Acquisition,
•an increase of $3 million for web hosting costs, and
•an increase of $2 million in costs of goods sold related to sales of Matterport capture equipment and services.
Selling and Marketing Expenses (Excluding Customer Base Amortization). Selling and marketing expenses increased by $3 million, or 1%, to $369 million and, as a percentage of revenue, decreased from 56% to 50%. The increase included:
•an increase in personnel costs related to sales hiring, partially offset by
•a decrease in marketing expenses of $17 million.
Software Development Expenses. Software development expenses increased by $13 million, or 16%, to $95 million and, as a percentage of revenue, were consistent at 13%. The increase included:
•an increase in personnel costs of $10 million related to increases in salaries, stock-based compensation, and benefit costs as a result of the Matterport Acquisition, as well as costs for our existing employees.
General and Administrative Expenses. General and administrative expenses increased by $42 million, or 42%, to $141 million and, as a percentage of revenue, increased from 15% to 19%. The increase included:
•an increase in professional services of $23 million, primarily due to acquisition activities,
•an increase in personnel costs of $8 million, primarily due to increases in salaries and stock-based compensation as a result of the Matterport Acquisition, and
•an increase of $7 million in costs of intellectual property disputes.
Customer Base Amortization Expense. Customer base amortization expense increased by $6 million, or 55%, to $17 million, and, as a percentage of revenue, was consistent at 2%. The increase was primarily due to the Matterport Acquisition.
Interest Income, Net. Interest income, net decreased by $18 million, or 32%, to $38 million. The decrease was primarily due to a decrease in our cash and cash equivalents.
Income Tax Expense. Income tax expense increased by $3 million, or 60%, to $8 million, and the effective tax rate was (114)% of loss before income taxes for the three months ended March 31, 2025, compared to 42% of income before income taxes for the three months ended March 31, 2024. The change in income tax expense was primarily due to a discrete tax expense for transaction costs.
Business Segment Results for Three Months Ended March 31, 2026 Compared to Three Months Ended March 31, 2025
We manage our business by product portfolios in two operating segments, with the primary areas of measurement and decision-making being Commercial Real Estate and Residential Real Estate. Segment reporting is based on the management approach, whereby external segment reporting is aligned with the internal reporting used by the CODM, which is the Company’s Chief Executive Officer. The CODM relies on an internal management reporting process that provides operating segment revenue, EBITDA, and Adjusted EBITDA for making decisions and assessing performance as the source of the Company’s reportable segments. Adjusted EBITDA is used by management internally to measure operating and management performance and to evaluate the performance of the business. Operating results by segment include items that are directly attributable to each segment and also include shared expenses such as legal, including settlements and fines, corporate infrastructure and support costs, facilities, and IT expenses from our integrated platform. Shared expenses are primarily allocated based on revenue or headcount. There are no intersegment transactions. Refer to Note 2 and Note 12 of the Notes to the Condensed Consolidated Financial Statements included in Part I of this Report for additional information. See “Non-GAAP Financial Measures” for further information regarding our segment operating results.
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Segment Adjusted EBITDA. Commercial Real Estate Adjusted EBITDA increased by $10 million to $161 million. The increase was due to the increase in revenue discussed above, partially offset by:
•higher personnel costs, primarily due to the Matterport Acquisition completed in February 2025, as well as higher costs related to headcount growth within existing brands and
•a $20 million increase in general and administrative expenses, primarily due to incremental expenses from Matterport's post-acquisition operations for a full quarter in the current period, including costs of product web hosting, sales of Matterport equipment and capture services, and third-party commissions.
Residential Real Estate Adjusted EBITDA improved by $56 million to a loss of $29 million. The improvement was due to the increase in revenue discussed above, partially offset by:
•a $20 million increase in personnel costs, primarily due to the Domain Acquisition completed in August 2025,
•a $17 million increase in general and administrative expenses, primarily due to the Domain Acquisition, and to a lesser extent, from an increase in conference expenses from existing brands, and
•a $9 million increase in marketing expenses, primarily due to the Domain Acquisition.
Business Segment Results for Three Months Ended March 31, 2025 Compared to Three Months Ended March 31, 2024
Segment Adjusted EBITDA. Commercial Real Estate Adjusted EBITDA increased $8 million to $151 million. The increase was due to the increase in revenue discussed above, partially offset by:
•higher personnel costs, primarily due to the Matterport and Visual Lease acquisitions completed in February 2025 and November 2024, respectively and
•an $8 million increase in general and administrative expenses, primarily due to incremental expenses from Matterport's post-acquisition operations, including costs of product web hosting, sales of Matterport equipment, capture services, and third-party commissions.
Residential Real Estate Adjusted EBITDA improved by $45 million to a loss of $85 million. The improvement was due to the increase in revenue discussed above and a $25 million decrease in marketing expense, partially offset by:
•a $10 million increase in personnel cost due to the higher sales headcount from existing brands and
•a $7 million increase in general and administrative costs due to higher product hosting and merchant fees associated with revenue growth, as well as higher conference, occupancy, and related overhead costs resulting from increased sales headcount across our existing brands.
Liquidity and Capital Resources
We believe the balance of cash, cash equivalents, and restricted cash, which was $1.3 billion as of March 31, 2026, along with cash generated by ongoing operations and continued access to capital markets, will be sufficient to satisfy our cash requirements over the next 12 months and beyond. Other than the matters discussed below, our cash requirements have not changed materially from what is described in the 2025 Form 10-K.
Construction Commitments. We are expanding our Richmond, Virginia campus, which is expected to result in a material cash requirement in 2026. We broke ground on the expansion in November 2022 and expect construction to be substantially completed in the first half of 2026. We have engaged a project manager, architects, and a general contractor on terms that generally require payments as services are provided or construction is performed. As of March 31, 2026, we were obligated to spend an additional $115 million as further work is performed under these contracts. We intend to fund these expenditures with cash on hand.
In conjunction with this expansion, we negotiated various tax incentives with the Commonwealth of Virginia and the City of Richmond, including the allowance to use market-based income apportionment for income taxes and partial reimbursements of property tax assessments related to the value of the campus expansion. These incentives are conditional upon achieving job creation and capital expenditure targets from 2022 to 2029. Failure to meet these targets could result in a reduction of the value of the tax incentives and repayment of previous tax reductions. The value of the allowance to use a market-based income
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apportionment for income taxes is dependent on our taxable income. We estimate the value of the allowance to use market-based income apportionment for income taxes for tax years 2023 to 2032 and partial reimbursements of property tax assessments related to the value of the campus expansion to be in the range of $275 million to $285 million.
Stock Repurchase Program. In February 2025, our Board of Directors approved the Prior Stock Repurchase Program, which authorized the repurchase of up to $500 million of CoStar Group Shares. The repurchases under the Prior Stock Repurchase Program were completed in December 2025. In December 2025, the Board of Directors approved a Stock Repurchase Program which authorizes, but does not obligate, the repurchase of up to $1.5 billion of CoStar Group Shares. Stock repurchases may be effected through open market and privately negotiated purchases, from time to time as market conditions shall warrant, or such other method as advised by the Company’s advisors, including without limitation pursuant to an accelerated share repurchase program or issuer self-tender offer. Repurchases may be made from time to time at management's discretion, and the timing and amount of any such repurchases will be determined based on share price, market conditions, legal requirements, and other relevant factors. The program has no time limit and can be discontinued at any time at the Company’s discretion.
During the three months ended March 31, 2026, we repurchased 11.4 million CoStar Group Shares for an aggregate cost of $505 million under the Stock Repurchase Program. As of March 31, 2026, $995 million remains available for repurchases under the Stock Repurchase Program. We anticipate repurchasing at least $195 million of additional CoStar Group Shares in 2026.
Cash on Hand. Cash, cash equivalents, and restricted cash decreased to $1.3 billion as of March 31, 2026, compared to cash, cash equivalents, and restricted cash of $1.7 billion as of December 31, 2025. The decrease in cash, cash equivalents, and restricted cash for the three months ended March 31, 2026 was due to $514 million of net cash used in financing activities and $54 million of net cash used in investing activities, partially offset by $152 million of cash provided by operating activities.
Net cash provided by operating activities for the three months ended March 31, 2026 was $152 million compared to $53 million for the three months ended March 31, 2025. The $99 million increase in net cash provided by operating activities was primarily driven by an increase in non-cash expenses of $51 million, a decrease in working capital of $30 million and an increase in net income.
Net cash used in investing activities for the three months ended March 31, 2026 was $54 million compared to $911 million for the three months ended March 31, 2025, primarily driven by the Matterport and Domain acquisitions in 2025, including the initial purchase of equity securities in Domain and a decrease in purchases of property, equipment, and other assets for new campuses in 2026, partially offset by proceeds from the sale of investments in 2025.
Net cash used in financing activities for the three months ended March 31, 2026 was $514 million compared to $47 million for the three months ended March 31, 2025. The increase was primarily driven by repurchases of the Company's outstanding common stock under the Stock Repurchase Program, partially offset by a reduction in the repurchases of restricted stock to satisfy tax withholding obligations and an increase in the proceeds from the exercise of stock options and employee stock purchase plan.
Critical Accounting Estimates
The preparation of financial statements and related disclosures in conformity with GAAP requires management to make estimates, judgments, and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses, and related disclosures. While we have used our best estimates based on facts and circumstances available to us at the time, different acceptable assumptions would yield different results. Changes in the accounting estimates are reasonably likely to occur from period to period, which may have a material impact on the presentation of our financial condition and results of operations. We review these estimates and assumptions periodically and reflect the effects of revisions in the period that they are determined to be necessary. We consider the accounting for the following matters to contain critical accounting estimates:
•Intangible assets and goodwill,
•Income taxes, and
•Business combinations.
For an in-depth discussion of each of our significant accounting policies, including the related critical accounting estimates and further information regarding estimates and assumptions involved in their application, see the 2025 Form 10-K and Note 2 of the Notes to the Condensed Consolidated Financial Statements included in Part I of this Report. During the three months ended March 31, 2026, there were no material changes to our critical accounting estimates from those described in the 2025 Form 10-K.
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Recent Accounting Pronouncements
See Note 2 of the Notes to the Condensed Consolidated Financial Statements included in Part I of this Report.
Cautionary Statement Concerning Forward-Looking Statements
We have made forward-looking statements in this Report and make forward-looking statements in our other reports filed with the SEC, press releases, and conference calls that are subject to risks and uncertainties. Forward-looking statements include information that is not purely historic fact.
Our forward-looking statements are also identified by words such as “hope,” “anticipate,” “may,” “likely,” “might,” “believe,” “expect,” “observe,” “consider,” “think,” “intend,” “envision,” “will,” “should,” “could,” “would,” “plan,” “target,” “estimate,” “predict,” “continue,” “commit,” and “potential” or the negative of these terms or other comparable terminology. You should understand that these forward-looking statements are estimates reflecting our judgment, beliefs, and expectations, not guarantees of future performance. They are subject to a number of assumptions, risks, and uncertainties that could cause actual results to differ materially from those expressed or implied in the forward-looking statements. The following important factors, in addition to those discussed or referred to under the heading “Risk Factors” in Item 1A of Part I of our 2025 Form 10-K and “Risk Factors” in Item 1A of Part II of this Report and other unforeseen events or circumstances, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements:
•our inability to attract and retain new clients;
•our inability to successfully develop and introduce new or updated online marketplace services, information, and analytics;
•the risks related to AI Technologies, such as Homes AI;
•our inability to compete successfully against existing or future competitors in attracting advertisers and in general;
•the effects of fluctuations and market cyclicality;
•the effects of global economic uncertainties and downturns or a downturn or consolidation in the real estate industry;
•our inability to hire qualified persons for, or retain and continue to develop, our sales force, or unproductivity of our sales force;
•our inability to retain and attract highly capable management and operating personnel;
•the downward pressure that our internal and external investments may place on our operating margins;
•our inability to increase brand awareness;
•our inability to maintain or increase internet traffic to our marketplaces, and the risk that the methods, including Google Analytics, that we use to measure average monthly unique visitors to our portals may misstate the actual number of unique persons who visit our network of mobile applications and websites for a given month or may differ from the methods used by competitors;
•our inability to attract new advertisers;
•our inability to successfully identify, finance, integrate, and/or manage costs related to acquisitions;
•our inability to complete certain strategic transactions if a proposed transaction is subject to review or approval by regulatory authorities pursuant to applicable laws or regulations;
•our inability to realize the benefits of the Matterport Acquisition or the Domain Acquisition;
•the inability of third-party suppliers upon which Matterport relies to fulfill its needs;
•the effects of cyberattacks and security vulnerabilities, and technical problems or disruptions;
•the significant costs associated with undertaking a large infrastructure project;
•our inability to generate increased revenue from our current or future geographic expansion plans;
•the risks related to acceptance of credit cards and debit cards and facilitation of other customer payments;
•the effects of climate-related events and other events beyond our control;
•the effects related to attention to climate-related risk and opportunities;
•our inability to obtain and maintain accurate, comprehensive, or reliable data;
•our inability to obtain and maintain stable data feeds, or disruption of our data feeds;
•our inability to enforce or defend our ownership and use of intellectual property;
•the effects of use of new and evolving technologies, including AI, on our ability to protect our data and intellectual property from misappropriation by third parties;
•our inability to defend against potential legal liability for collecting, displaying, or distributing information;
•our inability to obtain or retain listings from real estate brokers, agents, property owners, and apartment property managers;
•
Next expected filings
- ~2026-07-22 10-Q expected by 2026-08-05 (in 82 days)
- ~2026-10-28 10-Q expected by 2026-11-11 (in 180 days)
- ~2027-02-25 10-K expected by 2027-03-02 (in 300 days)
- ~2027-04-28 10-Q expected by 2027-05-12 (in 362 days)
Predicted from historical filing cadence; not an SEC commitment.
Recent SEC filings
- 2026-04-29 10-Q Quarterly Report
- 2026-04-28 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-03-16 8-K Officer/Director Change; Regulation FD Disclosure
- 2026-02-26 10-K Annual Report
- 2026-02-24 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2026-02-13 8-K Officer/Director Change; Financial Statements and Exhibits
- 2026-01-07 8-K Officer/Director Change; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-10-29 10-Q Quarterly Report
- 2025-10-28 8-K Earnings Release; Regulation FD Disclosure
- 2025-07-23 10-Q Quarterly Report
- 2025-07-22 8-K Earnings Release; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-06-27 8-K Officer/Director Change; Shareholder Vote Results; Financial Statements and Exhibits
- 2025-05-09 8-K Material Agreement Entered; Regulation FD Disclosure; Financial Statements and Exhibits
- 2025-05-01 10-Q Quarterly Report
- 2025-04-29 8-K Earnings Release; Financial Statements and Exhibits