CoStar Group Q2 2025 Earnings Report

CoStar Group EPS Results

• Actual EPS: $0.17
• Consensus EPS: $0.14
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $0.15

CoStar Group Revenue Results

• Actual Revenue: $781.30 million
• Expected Revenue: $772.06 million
• Beat/Miss: Beat by +$9.24 million
• YoY Revenue Growth: +15.20%

CoStar Group Announcement Details

• Quarter: Q2 2025
• Date: 7/22/2025
• Time: After Market Closes
• Conference Call Date: Tuesday, July 22, 2025
• Conference Call Time: 5:00PM ET

CoStar Group (NASDAQ:CSGP) is a leading provider of information, analytics and online marketplaces for the commercial real estate industry. Through its flagship CoStar platform, the company delivers comprehensive property data, market analytics and news to real estate professionals, enabling users to research properties, track market trends and make informed decisions. CoStar’s proprietary database includes millions of commercial properties across a range of asset classes, including office, industrial, retail and multifamily.

In addition to its core CoStar service, the company operates LoopNet, one of the largest online marketplaces for commercial property listings, and Apartments.com, a leading rental listing website for multifamily housing. CoStar Group also owns Ten-X, an online transaction platform that facilitates the sale of commercial real estate assets through an auction-style bidding process. These complementary offerings provide end-to-end solutions for site selection, property marketing, leasing and investment sales.

Founded in 1987 by Andrew C. Florance, who continues to serve as President and Chief Executive Officer, CoStar Group has expanded from a single-market research firm into a global enterprise. The company completed its initial public offering in 1998 and has grown both organically and through strategic acquisitions to broaden its geographic reach and product portfolio. Today, CoStar Group maintains operations in the United States, the United Kingdom, Canada and several countries across Europe, serving thousands of real estate brokers, appraisers, investors and corporate occupiers.

CoStar Group’s platform-driven approach leverages advanced data collection methods, proprietary analytics and real-time market updates to offer unparalleled visibility into property performance and market dynamics. By integrating its various online services—data subscriptions, listing marketplaces and transaction platforms—CoStar Group aims to streamline workflows for real estate professionals and foster greater transparency in commercial property markets worldwide.

CoStar Group Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: CoStar delivered an exceptional Q2 with $781 M in revenue (up 15% y/y), record $93 M in net new bookings (65% q/q increase), and $85 M in adjusted EBITDA (108% y/y), all beating the high end of guidance.
• Positive Sentiment: Apartments.com revenue rose 11% to $292 M with a record $45 M in net new bookings, a 99% renewal rate, and a major marketing push generating 4.8 billion impressions as the sales team is set to triple by year-end.
• Positive Sentiment: Homes.com signed 6,300 new members (up 56%), saw unique monthly visitors hit 111 M, and NPS jump to 38, while its Boost product drove 1,270 ad upgrades and strong conversion to full memberships.
• Positive Sentiment: Internationally, CoStar secured a Q3 close for the Domain acquisition in Australia, grew UK listings 20% y/y with record £9.4 M annualized bookings, and plans French and Spanish launches.
• Neutral Sentiment: CoStar will expand Matterport into a B2B model by increasing its salesforce, integrating digital-twin tech across platforms, and wind down the nonstrategic VHT photography unit.

Presentation

[Operator]

Thank you for standing by and welcome to the CoStar Group's Second Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in listen only mode. After the speakers' presentation, there will be a question and answer session. Today, we'd like to ask that you please limit yourself to one question and no multi part questions. As a reminder, today's program is being recorded.

[Operator]

And now I'd like to introduce your host for today's program, Richard Simonelli, Head of Investor Relations. Please go ahead, sir.

[Rich Simonelli, Head - IR at CoStar Group]

Thank you very much. Hello, everyone. Thank you for joining us to discuss CoStar Group's second quarter twenty twenty five results. Before I turn the call over to Andy Florence, CoStar's CEO and Founder and Chris Lown, our CFO, I'd like to review our safe harbor statement. Certain portions of the discussion today may contain forward looking statements, including the company's outlook and expectations for the third and fourth quarters and full year and beyond.

[Rich Simonelli, Head - IR at CoStar Group]

Forward looking statements may involve many risks, uncertainties, assumptions and estimates, and other factors that can actually cause actual results to differ materially from such statements. Important factors that can cause actual results to differ include, but are not limited to, those stated in CoStar Group's press release issued earlier today and in our filings with the SEC, including our annual report on Form 10 ks and quarterly reports on Form 10 Q, included under the heading Risk Factors in those filings as well as other filings with the SEC available on the SEC's website. All forward looking statements are based on the information available to CoStar on the date of this call. CoStar assumes no obligation to update these statements whether as a result of new information, future events or otherwise, except as required by applicable law. Reconciliations to the most directly comparable GAAP measures of any non GAAP financial measure discussed on this call are shown in detail in our press release issued today along with the definitions for these terms.

[Rich Simonelli, Head - IR at CoStar Group]

Press release is available on our website located at costargroup.com under our Press Room. Please refer to today's press release and how to access the replay of this call. Remember, one question during the q and a session, so make it a good one. And now with that, I'd like to turn the call over to our founder and CEO, Andy Florence. Andy?

[Andy Florance, Founder & CEO at CoStar Group]

Well, I'd have to say between the operator and Rich, you guys have set a very high bar for radio personality voices. So I'm gonna try to live up to that. Thank you for joining CoStar Group's earnings call for the second quarter of twenty twenty five. I'm very pleased to report another exceptional quarter. CoStar achieved CoStar Group achieved revenue of $781,000,000 a strong 15% increase compared to last year.

[Andy Florance, Founder & CEO at CoStar Group]

This marks our fifty seventh quarter, consecutive quarter of double digit revenue growth. Adjusted EBITDA rose significantly to $85,000,000 representing an impressive 108% increase compared to Q2 of twenty twenty four. Both revenue and adjusted EBITDA exceeded consensus estimates and were above the high end of our guidance range. Our Commercial Information and Marketplace businesses also delivered an outstanding profit margin of 43% this quarter. Net new bookings totaled $93,000,000 a remarkable 65% increase over the previous quarter.

[Andy Florance, Founder & CEO at CoStar Group]

This sets a new record as the highest quarterly net new bookings in CoStar Group's history. We're seeing strong performance across all our business segments, driven by strategic investments in expanding our sales force and innovative product development. Throughout 2025, we're growing our core sales team by 20% and tripling our homes.com sales force from two thirty representatives at the 2024 to about seven fifty by the end of twenty twenty five, all this to capture additional growth opportunities. Apartments.com had another excellent quarter with revenue up 11% from Q2 twenty twenty four, reaching $292,000,000 Our sales team achieved $45,000,000 in net new bookings, the fourth highest quarter ever, representing a 20% increase year over year. Apartments.com is approaching an annual revenue run rate of $1,200,000,000 and maintains a very strong EBITDA margin.

[Andy Florance, Founder & CEO at CoStar Group]

I did have a percentage in there, but Chris had me take it out. During the second quarter, our sales team had over 171,000 quality interactions with clients and prospects, maintaining an outstanding Net Promoter Score of 94%. These interactions resulted in a 99% monthly renewal rate, the addition of 3,263 new rooftops, or nearly 83,000 multifamily communities advertising on our platform. In the first half of twenty twenty five, we've already added 7,600 new apartment communities, more than we added throughout all of 2024, and we did it without steep discounting or paying hundreds of millions of dollars for inorganic revenue, as our main competitor did. To address the multibillion dollar addressable market in apartments, we're growing our apartments.com sales team to 500 representatives in 2025.

[Andy Florance, Founder & CEO at CoStar Group]

So far, this year, we've added 65 new sales reps with large training classes scheduled for July and August. In Q2, apartments.com launched a marketing campaign generating over 4,800,000,000 media impressions. The campaign reached renters across their favorite media channels and targeted landlords with new commercials featuring Brad Bellflower. We significantly increased our investment across key media channels. Streaming video grew by 25%, paid social by 13%, and digital by 130% compared to q two twenty four.

[Andy Florance, Founder & CEO at CoStar Group]

Apartments.com was prominently featured during live sports events, including the NFL Draft, College World Series, PGA Tour, NBA, and MLB regular seasons, and across popular programming on Bravo, e, CBS, Netflix, Paramount Plus, and Hulu. We also made our Canadian broadcast to view during game six of the NHL playoffs. With the launch of our New York City specific search experience on apartments.com, we ran targeted out of home advertising across all five bureaus in New York City and partnered with local influencers. The apartments.com network averaged 42,000,000 monthly unique visitors and 234,000,000 network visits during this quarter according to Google Analytics. The latest Comscore data shows that all of the rental portals traffic declined q two, 25 over q two twenty four, but with apartments.com network doing the best with business only down 11%, while Zillow network rental network was down 13%, Apartment Guide was down 21%, and rent.com was down dramatically down 39%.

[Andy Florance, Founder & CEO at CoStar Group]

Market research indicates that our unaided awareness among apartment seekers remained best in class 68%, significantly higher than all competitors combined all primary competitors combined. Our closest competitor trails by 30 percentage points and the next closest by 58 points. Realtor.com's unaided awareness for apartments stood at only 4% in June. Apartments.com continues to deliver more leads and nearly twice as many leases as our two closest competitors combined according to Entrada data. We believe the apartments.com network holds the industry's most comprehensive inventory with a record 2,200,000 rental availabilities in June.

[Andy Florance, Founder & CEO at CoStar Group]

To further enhance exposure, we also feature apartments.com listings on the homes.com rental area, where traffic increased 26% year over year due to homes.com's robust marketing efforts. Canadian Apartments dot com also continues to perform well with visits up 31% and leads up 62% year over year. Since q two last year, we've grown our Canadian business by 300%, ending June with over 1,500 paying properties. Our presence at this year's National Apartment Association of Parliamentalized Convention in Las Vegas was highly successful. We hosted 1,500 clients at our kickoff party featuring Kenny Chesney, attracted 3,100 booth visitors and generated over $500,000 in monthly net new bookings, translating to 6,000,000 in annualized net new bookings.

[Andy Florance, Founder & CEO at CoStar Group]

We showcased our latest AI powered technology, including Matterport three d tours and AI voice search, an incredible interactive life-sized department exhibit called the BRAD. We rolled out our new Matterport Max packages with great success. Clients and prospects who experienced the power of Matterport at our booth were impressed and convinced of its value in accelerating the leasing process. These packages come with a Matterport Pro three camera and allow clients to create a virtual twin of their units, all their units, common areas, and the entire building. Having a Matterport digital twin is becoming essential.

[Andy Florance, Founder & CEO at CoStar Group]

40% of apartment seekers look for communities in different cities, and 41% are willing to rent sight unseen if provided high quality imagery. Significantly, 53%, they'll say, they will stop considering a rental unit without detailed imagery. Consumers love the Matterport experience on apartments.com. In q two, they viewed Matterports 67,000,000 times, up 193% over the same period last year, spending 71% more time on listing detail pages with the Matterport three d tour. Listings with the Matterport three d tour received 23 times more leads than those without.

[Andy Florance, Founder & CEO at CoStar Group]

Later this year, apartments.com and Homes will introduce an AI powered voice search, allowing consumers to find properties by speaking naturally or typing free form phrases. No more filtering required. We've also been working with the largest property management firms in the country to provide greater fee transparency for the market. Last week, in one of the top property managers in the country, we launched disclosure of their onetime and monthly fees associated with renting an apartment, creating complete fee transparencies for consumers on apartments.com. Homes.com delivered a strong second quarter, achieving solidly positive sales growth after overcoming Q1 churn from the initial sales last year.

[Andy Florance, Founder & CEO at CoStar Group]

Residential annualized net new bookings totaled $12,000,000 for the quarter. Our expanding sales force drove consistent monthly growth, with May sales increasing 5% over April and June sales increasing 15% over May. Revenue for Q2 compared grew by 8% compared to Q2 of twenty twenty four. We signed 6,300 net new members, representing a 56% increase in membership during the quarter. Our dedicatedhomes.com sales team significantly increased product demos, rising more than sixfold from March to June.

[Andy Florance, Founder & CEO at CoStar Group]

Our B2B marketing efforts generated the highest lead volume since launch, with over 3,600 leads to our sales team in June alone, resulting in more than 5,400 product demos with a conversion rate exceeding 50%. The homes.com network attracted an average of 111,000,000 unique monthly visitors in Q2 according to Google Analytics, putting us well ahead of our third and fourth ranked competitors. Our marketing campaign has successfully boosted unaided awareness intent among users. Unaided awareness has grown dramatically from four percent at the launch in 2024 to over 36% today or in Q2. Unaided intent has risen six points since April to reach 25%, signifying signaling a major breakthrough in user engagement.

[Andy Florance, Founder & CEO at CoStar Group]

Member agents listings on homes.com achieved 22 times greater reach compared to nonmembers, significantly enhancing consumer engagement. Listings from members received seven times more detailed views, four times more favorites, and six times more shares, resulting in faster sales and higher selling prices. Leveraging these marketing advantages, homes.com members secure 62% more listings than nonmembers, with an outstanding return on investment, especially given the average new listing commission value of $15,000 against a monthly membership fee under $500 Our growing dedicated sales team is doing an increasingly effective job at educating agents about the value proposition of homes.com. We have observed significant improvement in client satisfaction reflected in rising Net Promoter Scores. Our NPS grew from a modest three in 2024 to nine in Q1 of twenty twenty five, and then it jumped substantially to 38 in Q2, marking a 340% quarter over quarter increase.

[Andy Florance, Founder & CEO at CoStar Group]

Additionally, our early cancellation or failed payment rate on twelve month contracts remained well below 1% throughout most of Q2. The newly launched Boost product has been successful. Boost provides sellers and their agents with a flexible marketing option, allowing single property listings to be boostonhomes.com to benefit from membership level marketing. Since Q2 launch, we sold twelve seventy Boosts. Boosted listings reach over 14,000 homebuyers with an average of 32 views per buyer, making Boosted listings 25% more likely to go under contract within ten days.

[Andy Florance, Founder & CEO at CoStar Group]

Can't pass that up. Nearly 25% of Boost users have converted to fullhomes.com memberships, so the Boost program is a great lead pipeline for our sales force. This month, we launched a new advertising campaign for homes.com celebrating our success building an audience of over 100,000,000 monthly unique visitors to the homes.com network. In this spot, Dan Levy and Heidi Gartner draw attention to homes.com's massive audience to reinforce to real estate agents the value of marketing their properties and listings on this valuable to this valuable audience cost effectively on homes.com. The spots also tell home shoppers that 100,000,000 plus people have chosen to use homes.com, so perhaps they should check it out too.

[Andy Florance, Founder & CEO at CoStar Group]

We believe that the majority of homebuyers, once they try homes.com, prefer homes.com. We strategically placed ads across popular networks, including CBS, Fox, ESPN, context contextually relevant shows such as Girl Meets Farm and American Pickers, and major sporting events like the Stanley Cup playoffs, NBA finals, PGA Championship, MLB, WNBA regular seasons. Additionally, we expanded digital and streaming sponsorships with DraftKings and Roku and audio and podcasting partnerships with Spotify and Amazon Music, collectively generating over 4,000,000,000 targeted paid media impressions. We launched a highly customized direct mail member agent appreciation campaign aimed at nearly 100,000 home sellers represented by homes.com members. This personalized 20 page brochure delivered shortly after a listing goes live highlights the seller's home, their agent, and the marketing advantages provided by homes.com.

[Andy Florance, Founder & CEO at CoStar Group]

The campaign has received extremely positive feedback, reinforcing seller confidence, encouraging agent renewals. I believe that this campaign will further increase our NPS scores. This month, Zillow began questionably leveraging its market power by forcing agents to market listing on its platform within twenty four hours of the listing being marketed or risk the listing being permanently banned. This tactic, we believe, raises serious antitrust concerns. Indeed, Compass has already filed a lawsuit against Zillow for such practices.

[Andy Florance, Founder & CEO at CoStar Group]

Zillow banned its first listing despite it complying with Bright MLS and NAR regulations. Zillow falsely labeled the property as off market on their website misleading buyers. Zillow demands agents listings immediately to avoid losing the opportunity to divert and sell leads from those listings. Given recent relaxations and clear cooperation, no commingling rules, Zillow appears concerned that agents may opt for more agent friendly platforms like homes.com, which do not divert leads. By demanding immediate listings and simultaneously offering Zillow exclusive listing, Zillow risks weakening the relative value of the MLSs.

[Andy Florance, Founder & CEO at CoStar Group]

A major brokerage has informed us that Zillow now seeks direct feeds from brokerage, bypassing MLSs, suggesting MLSs may soon recognize Zillow as an existentialist threat or an existential threat, not an existentialist. Homes.com is offering free boost to any home for sale that Zillow bans. The first home ban that we're aware of is in Montgomery County, Maryland. And with the homes.com boost, we've been able to serve it up to buyers a 155,000 times in the first twelve days it was on the market. 205 buyers have favored listing on homes.com, and 43 have shared it with a friend or family member.

[Andy Florance, Founder & CEO at CoStar Group]

I visited that open house on that listing this weekend to support the agent, and there was good traffic. The agent told me they've already had 30 showings. Homes.com provides a compelling agent friendly alternative to Zillow's aggressive tactics. Agents are liking what we are doing. Our impressions on homes.com social media channels targeted to agents have increased 1247% in Q2 'twenty five compared to Q1 'twenty five.

[Andy Florance, Founder & CEO at CoStar Group]

We're seeing considerable social listening growth with our net sentiment score up 58% since last quarter. From April to June '5, our social media engagement has increased by 48% with a 30% growth in positive sentiment. The reason is simple. Homes.com benefits all parties involved, home buyers, sellers and agents, and MLSs. We eliminate friction by providing a professional online presentation of every home and community without distracting ads or spam, and we're connecting buyers honestly directly with a seller's agent.

[Andy Florance, Founder & CEO at CoStar Group]

Member listings in Boost reach more buyers more frequently. Members build their brand by being prominently featured across our site and retarget across thousands of websites. No other US portal offers this level exposure for agents and listings. In August, we plan to launch a robust new home section on homes.com. This is a vital segment as approximately 60% of homebuyers prefer new construction according to the National Association of Home Builders.

[Andy Florance, Founder & CEO at CoStar Group]

I'm glad they're that confident. We have already secured 200 agreements with leading builders, positioning this new feature as a significant future revenue stream, enabling us to capitalize on a substantial market opportunity. It was another strong quarter for our UK residential marketplace on the market. Our inventory continues to grow with over 800,000 listings now on-site, up 20% year over year and a new record for the business. We're delivering a significant ROI to over 16,300 subscribing customers, with leads up 12% in the quarter year over year and total page views on the site up 28% for the same period.

[Andy Florance, Founder & CEO at CoStar Group]

We're building an audience of serious property seekers with average time on-site per active user up 85% year over year and lead to visit conversions that we believe are beating Rightmove's conversion rate. Net new bookings reached a record of 100,000 in June, which was the fourteenth consecutive month of net new revenue growth, equivalent to an impressive $9,400,000 of annualized revenue. We're continuing to develop the product using the homes.com playbook as we further differentiate from our competitors. We are in the final stages of acquiring Domain Holdings, one of Australia's two largest real estate portals and among the top 10 real estate marketplaces globally. We anticipate the transaction will close in the third quarter of this year, and we're very excited about combining CoStar's capabilities with Domain.

[Andy Florance, Founder & CEO at CoStar Group]

Recently, a new dynamic has emerged in the Australian market. The country's antitrust regulator, the ACCC, has announced an investigation into REA Group, which is Domain's primary competitor. In July, numerous real estate agents in Australia reported that REA Group increased their monthly subscription fees by up to 78%, likely prompting that investigation. We believe the situation creates an excellent opportunity for Domain for Domain to position itself as the more reasonable and stable service provider. It's worth noting that REA Group in Australia and realtor.com in The US share common ownership under News Corp and the Murdoch family.

[Andy Florance, Founder & CEO at CoStar Group]

Media reports speculate that realtor.com CEO might return to Australia to replace REA Group's current CEO. If that were to occur, it would mean two disruptive leadership changes in our favor in one move. Our CoStar product achieved two seventy one million dollars in revenue in Q2 'twenty five. Revenue growth accelerated sequentially from Q1, increasing 7% year over year in Q2. Net new bookings from our CoStar product accelerated from last quarter as we achieved our highest quarter of CoStar net new bookings since Q3 twenty twenty three.

[Andy Florance, Founder & CEO at CoStar Group]

STR had its best quarter for net new bookings, up 24% year over year as compared to Q2 'twenty four. This is the third consecutive quarter of increasing net new bookings for CoStar as we generate strong sales with banks, institutional investors and owners. I'm happy to see net new bookings for brokers trending upward each quarter this year. We remain on track to increase the CoStar product sales force by 20% in 2025, reaching a total of 400 sales representatives to position us to capture the substantial and growing total addressable market there. Our lender sales continue to exhibit strong growth as our expanded sales team meets the increasing demand for our product.

[Andy Florance, Founder & CEO at CoStar Group]

With over 400 clients and revenue approaching $100,000,000 we've established a strong foundation pretty quickly that we'll continue to build on as we roll out additional capabilities and expand our sales force to target the larger $1,000,000,000 TAM in the lender space. Our quarterly CoStar renewal rate increased to 93%. Our Net Promoter Score for the U. S. Sales team reached an outstanding 70%.

[Andy Florance, Founder & CEO at CoStar Group]

That was a major first for us and been a solid progression for a couple of years there. Our Canadian team's NPS grew to 63%, again, an all time high for both teams. In addition, gross productivity per rep has improved in each of the last six months. The number of subscribers for CoStar grew to 275,000, up 19% year over year, driven predominantly by the ongoing migration of STR users into CoStar and the addition of new STR subscribers to the CoStar platform. I am very pleased with our continued growth in a challenging market.

[Andy Florance, Founder & CEO at CoStar Group]

The CRE market continues to face difficulties, particularly in the office segment with persistently high vacancy rates, though moderating, and slightly worsening negative net absorption rates. We're seeing a sharp decline in new deliveries, which should help stabilize the office market in the near future. Transaction volumes have maintained a positive seasonal trend with Q2 up 43% year over year. The increase in deal flow was consistent across the five main property types, with office transaction volumes spiking 71%, retail increasing 46%, multifamily rising 42% and industrial growing 29% and hospitality up 18% for the same period. Our international businesses have achieved four consecutive quarters of all time high net new bookings, with an impressive 90% year over year growth in Q2 'twenty five compared to Q2 'twenty four.

[Andy Florance, Founder & CEO at CoStar Group]

In The UK, we're solidifying our market leading positioning, leading boosting our year to date net new bookings by 257% compared to the first half of last year and accelerating year over year revenue growth to 14% in Q2 'twenty five versus Q2 'twenty four. Concurrently, we've streamlined our cost structure, realizing $40,000,000 in cost savings this year, which represents 19% of our 2024 expense base in Europe. Our European sales initiatives are led by Alexa Maria Rathbourne Barker, who was recently promoted to lead the CoStar business in Europe. Alexa joined CoStar Group as head of European sales three years ago following a decade long tenure at Bloomberg, where she held senior leadership roles focused on international growth and led the European analytics team. In her new capacity, Alexa will drive the continued expansion of our UK business and oversee the broader growth of CoStar across Europe.

[Andy Florance, Founder & CEO at CoStar Group]

We're positioning our European business to take advantage of the substantial international growth opportunity. In Europe, over 50% of the value of CRE transactions are cross border, yet there are no comprehensive pan European CRE solutions. We have been methodically expanding our European research and marketplace capabilities. We anticipate launching CoStar in France by the end of the year. LoopNet delivered an outstanding performance in the second quarter.

[Andy Florance, Founder & CEO at CoStar Group]

It generated more net new business in the 2025 than the entirety of 2024. Net new bookings in the 2025 surged by three forty five percent compared to the same period last year. Consequently, revenue growth accelerated sequentially from Q1 and increased by 8% year over year. We expect LoopNet's revenue growth to exceed 10% in the second half of twenty twenty five, moving to double digit growth. Despite ongoing challenges and volatility in the commercial real estate market, we've implemented significant changes to unlock LoopNet's full potential.

[Andy Florance, Founder & CEO at CoStar Group]

As previously discussed, our focus on selling LoopNet packages that enable advertisers to promote their entire portfolio rather than a selected few properties. This approach delivers a high return on investment for our clients, increases listing coverage on LoopNet, and enhances both the consumer and customer experience. Furthermore, the rollout of Asset Based pricing continues to yield positive outcomes. With each passing month, our service is increasingly priced relative to the value we deliver to clients, resulting in year over year increase in monetization per listing. Lupin is the world's most active commercial real estate marketplace.

[Andy Florance, Founder & CEO at CoStar Group]

Tenants and investors begin their search online, and LoopNet is their preferred destination. Properties listed on LoopNet sell and lease faster. For instance, one of the largest global brokerage firms and longtime client of CoStar recently significantly increased their investment in LoopNet marketing after we quantitatively demonstrated that listings on LoopNet were 60% more likely to close in a given time period than those not listed on the platform. We've built the largest audience of commercial real estate shoppers globally with hundreds of thousands of properties available for sale and lease. In 2024, 120,000,000,000 worth of transactions occurred on LoopNet, where tenants or buyers viewed listings on our site before pursuing the deals they ultimately closed.

[Andy Florance, Founder & CEO at CoStar Group]

Our effort to expand LoopNet's global footprint are progressing well. We launched LoopNet in Spain, and we expect to launch LoopNet France in Q4. This will bring our total listings across Europe to over 100,000, with significant potential for further expansion as we address the evident market need for a pan European and global commercial real estate marketplace. With the expected close on the Domain acquisition in Q3 twenty twenty five, Australia will soon become part of the LoopNet network. That'll be a good day.

[Andy Florance, Founder & CEO at CoStar Group]

Land.com achieved the highest quarter of net new bookings since Q3 twenty twenty two. This was a result of improved segmentation and servicing of clients. Clients elected to migrate their marketing exposure from the lower and middle advertising plans to the highest plan. Signature ads increased by 49%. Land professionals will benefit from a tremendous increase in reach and value because of the promotion of Land's paid listings on homes.com and the integration of our recently acquired ACRE Value.

[Andy Florance, Founder & CEO at CoStar Group]

CoStar Real Estate Manager continues to grow revenue and drive centers between Visual Lease and Real Estate Manager. Subscription revenue grew 9% in q two twenty five compared to q two twenty four. I recently had the opportunity to spend some time in Atlanta working with the product teams and integration of CoStar between Visual Lease and Real Estate Manager along with Matterport and LoopNet. I'm confident this will be an amazing solution for anyone that leases commercial space. BizBuySell revenue reached $8,800,000 in the second quarter, a nine percent increase year over year.

[Andy Florance, Founder & CEO at CoStar Group]

Business for sale net new bookings increased 200% from Q2 twenty twenty four, driven by strong growth in both business owner and broker subscriptions. Subscription revenue from Business Buy Sell Edge, which offers entrepreneurs advanced tools and marketing insights, grew 50% year over year. Buyer demand continued to strengthen with lead volume increasing 23% Q2 year over year. Business owners are increasingly turning to BizBuySell for valuation estimates, educational content, other resources. Over 25,000 new business owners registered on BizBuySell during the quarter, with 5,000 creating detailed business profiles that shared location, industry revenue and profit.

[Andy Florance, Founder & CEO at CoStar Group]

Importantly, thousands of these owners also turned to BizBuySell each quarter to connect with our network of business brokers, subscribers for expert guidance and listing representation. In Q2, brokers reported 2,342 sold business transactions on the platform, totaling nearly $2,000,000,000 in enterprise value. Brokers are rapidly adopting our recently released deal accelerator feature, which streamlines deal making by automating buyer qualification and information sharing processes, helping brokers close more deals and earn higher commissions. Finally, turning to Matterport, saving the best for last. Matterport is clearly the world's leading provider of digital twin solutions technology.

[Andy Florance, Founder & CEO at CoStar Group]

Its primary competition comes from the hundreds of billions of traditional two dimensional images used to market real estate and manage facilities. However, these two d photos fall significantly short of Matterport's immersive capabilities, which intuitively transport transport remote viewers into a space, providing experience second only to physically being there, hence porting Matter. While Matterport offers an exceptional product, the business has not yet achieved profitability, and its growth rate has slowed. We strongly believe that integrating Matterport with CoStar Group will help the company thrive, accelerate growth and achieve strong profit margins. An integrated Matterport solution will significantly enhance the value of CoStar's marketplaces and information platforms.

[Andy Florance, Founder & CEO at CoStar Group]

Currently, Matterport has a very small sales force, I believe fewer than 30 quota carrying salespeople globally, not quite one per major country, which means many of Matterport's most promising revenue opportunities have never been contacted by a Matterport salesperson. That will change. We plan to significantly expand Matterport's Salesforce and market its integrated solutions through the thousands of CoStar sales representatives at homes.com, LoopNet Domain, Real Estate Manager Land, apartments.com and other platforms. Historically, Matterport has operated as a product led company with strong business to consumer focus, which resulted in less emphasis on sales efforts or field sales efforts and less focus on its most powerful technology, the Matterport three camera. We intend to shift Matterport towards a business to business or B2B approach.

[Andy Florance, Founder & CEO at CoStar Group]

The Matterport Pro three camera delivers a superior capture experience and a very superior display experience compared to mobile devices. Customers using the Pro three camera have an 85% renewal rate for our SaaS services, while those using an Android phone only have a 40% renewal rate. We plan to invest time and capital in developing even more advanced cameras, appropriately named the Matterport Pro four and the Pro four Ultra expects to be revealed one day. We will work to make our highest end cameras more price accessible to the hundreds of thousands of potential users around the world. Right now, the first Matterport taken with the Pro three effectively costs a photographer 6,500.

[Andy Florance, Founder & CEO at CoStar Group]

The first picture costs you 6,500. The second costs $3. The third, the fourth, the fifth, each costs $3. As a result, many potential users never get to the second Matterport or the first Matterport. This is easy enough to profitably change and solve for.

[Andy Florance, Founder & CEO at CoStar Group]

We're integrating Matterport's amazing capabilities more deeply into all of our portals and information solutions. I think that in combination, we can bring properties to life like never before. We're relaunching the Matterport brand, adding the signature CoStar Group Starwheel logo to the front of the Matterport name, and we're going to co brand Matterport with our portal brands appropriately to the property types. While we invest in profitable growth initiatives at Matterport, we have a sharp eye on getting to profitability so that we all ultimately are positioned to achieve our goal of digitizing the world's real estate. Yesterday, we began winding down operations of Matterport's photography business, VHT.

[Andy Florance, Founder & CEO at CoStar Group]

Matterport acquired VHT in June 2022 but has not realized its strategic potential. VHT primarily operates as a loss making real estate photography service largely focused in the Chicago market. Approximately 75% of VHT's photography services do not include a Matterport tour, and none of their contractors are using the high quality Pro three camera. VHT generated roughly $14,000,000 in annual revenue but incurred losses exceeding $10,000,000 It's a nonstrategic asset, so we're going to reallocate resources to more productive areas. In conclusion, I'm thrilled with our strong financial results and CoStar record annualized net new bookings quarter of $93,000,000 a remarkable 65% increase over the prior quarter.

[Andy Florance, Founder & CEO at CoStar Group]

Again, 93,000,000 in net new bookings in the quarter. With a $100,000,000,000 total addressable market in the world's largest asset class, we remain committed to our mission of digitizing global real estate. At this point, I will finally turn the call over to our CFO, Chris Loan.

[Christian Lown, CFO at CoStar Group]

Thank you, Andy. Good evening. I'm happy to report that CoStar has now reached its fifty seventh consecutive quarter of double digit revenue growth, coming in at 15%. We also achieved a commercial information and marketplace brands margin of 43% in the second quarter. As a reminder, this margin excludes homes.com on the market and the recently acquired Matterport.

[Christian Lown, CFO at CoStar Group]

Net new bookings for the second quarter were a record $93,000,000 representing a 65% sequential increase from the first quarter and a 38% increase year over year. Apartments.com, CoStar, and LoopNet all contributed strong bookings growth as our growing dedicated sales forces are delivering. Revenue for the second quarter was $781,000,000 exceeding the high end of guidance. Matterport revenue was $44,000,000 in the second quarter, beating our guidance estimate and contributing to our performance in the second quarter. Second quarter adjusted EBITDA came in at $85,000,000 an 11% margin, also exceeding the high end of our guidance range.

[Christian Lown, CFO at CoStar Group]

The outperformance in adjusted EBITDA was a result of timing of investment spend and our revenue beat this quarter. CoStar revenue grew 7% in the second quarter, ahead of guidance. Sales rep productivity has steadily improved over the past six quarters, and second quarter productivity was the highest since Q3 twenty twenty three. The strong second quarter performance, combined with internal leading indicators, compels us to increase our full year revenue growth guidance to 7%. We expect growth in third quarter to also be 7%.

[Christian Lown, CFO at CoStar Group]

Residential revenue was $28,000,000 in the second quarter. We expect third quarter residential revenue to increase 3,000,000 to $4,000,000 sequentially, and we now expect residential revenue growth of over 20% in 2025. Apartments.com's second quarter revenue growth came in at 11% year over year, ahead of the 10% guidance we provided last quarter. Sales rep productivity improved to its highest level in two years, an impressive feat considering we are also at our highest number of sales reps. Our 2025 results are broadly in line with expectations, and we remain on track to achieve the 11% to 12% full year revenue growth guidance we provided last quarter.

[Christian Lown, CFO at CoStar Group]

Third quarter revenue growth is also expected to be 11% to 12%. LoopNet revenue grew 8% in the second quarter, one percentage point higher than last quarter's guidance. LoopNet's dedicated sales force continues to perform. In fact, the sales team delivered LoopNet's highest first half net new bookings ever. The shift in sales strategy to focus on selling broad subscription packages and utilize asset based pricing has been working well, and we anticipate the benefits of the strategic shift to continue.

[Christian Lown, CFO at CoStar Group]

This first half performance and strong momentum gives us the confidence to increase our 2025 revenue growth expectations to 8% to 9%. Third quarter revenue growth is now expected to be between 1011%. Revenue from Information Services was $39,000,000 in the second quarter. We are updating our guidance for Information Services revenue growth to 16% to 18% and expect third quarter revenue growth of approximately 20%. Other revenue was $75,000,000 in the second quarter, with Matterport contributing $44,000,000 For the third quarter, we expect other revenue of approximately $75,000,000 including approximately $40,000,000 from Matterport.

[Christian Lown, CFO at CoStar Group]

Through our integration and streamlining efforts, we are discontinuing certain noncore Matterport revenue that did not positively contribute to earnings, which is why we are expecting Q3 revenue to be below the level realized in Q2. The impact from the discontinued revenue to our full year outlook is around $10,000,000 As such, we are revising the top end of our revenue guidance and now expect other revenue between $270,000,000 and $275,000,000 Adjusted EBITDA for the second quarter was $85,000,000 at an 11% margin, meaningfully above the high end of our 50,000,000 to $60,000,000 second quarter guidance. The favorable performance relates to higher than projected revenue, lower than anticipated professional services costs, and timing of certain growth initiatives. We have made great progress on bolstering our sales force, which has reached 1,800 reps at quarter end. This is an increase of more than 400 salespeople since the beginning of the year and a 43% increase in reps year over year.

[Christian Lown, CFO at CoStar Group]

While sales head while sales headcount has reached the most at homes.com has increased the most at homes.com, we are delivering sales rep growth in all our major brands. Our contract renewal rate was 89% for the second quarter, with the renewal rate for customers who have been subscribers for five years or longer at 95%. Subscription revenue on annual contracts was 78% for the second quarter. Matterport's inclusion decreased this metric by two percentage points. On June 30, our June 30 balance sheet includes $3,700,000,000 in cash, which earned net interest income of $33,000,000 in the second quarter, a 3.5% rate of return.

[Christian Lown, CFO at CoStar Group]

We repurchased 585,000 shares in the second quarter for $45,000,000 bringing our year to date totals to 825,000 shares repurchased for $64,000,000 In 2025, we anticipate repurchasing at least $150,000,000 of the $500,000,000 share repurchase authorized. On May 9, we formally agreed to purchase Domain Group for 4.43 Australian dollars per share. As mentioned last quarter, we already acquired a 16.9 percent ownership in Domain. We expect to pay an incremental 2,300,000,000.0 Australian dollars to acquire the remaining shares when the transaction closes. In anticipation of the deal closing, we entered into a forward swap of USD to AUD to mitigate foreign currency risk while the deal is pending.

[Christian Lown, CFO at CoStar Group]

We expect the total remaining equity purchase price to be around $1,500,000,000 Based on our outperformance in the second quarter, we are increasing the midpoint of our 2025 revenue guidance. We are now providing a range of 3,135,000,000 to $3,155,000,000 implying an annual growth rate of 15%. Our guidance does not contemplate the expected closing of The Domain Group acquisition in the third quarter. The company expects third quarter revenue of $800,000,000 to $8.00 $5,000,000 representing 16% year over year growth at the midpoint of the range. We are also increasing our adjusted EBITDA guidance for the year with revised guidance of $370,000,000 to $390,000,000 Our revised adjusted EBITDA guidance reflects our second quarter beat versus guidance and incorporates the timing of the growth initiative spend getting pushed to the back half of the year.

[Christian Lown, CFO at CoStar Group]

For the third quarter of twenty twenty five, adjusted EBITDA is expected to be in a range of $75,000,000 to $85,000,000 And with that, I'll now turn the call back over to our call operator to open the line for questions.

[Operator]

Certainly. Our first question comes from the line of Brian Tomasello from KBW. Your question please.

[Ryan Tomasello, Managing Director at Keefe, Bruyette & Woods (KBW)]

Hi, everyone. Thanks for taking the question. I wanted to touch on apartments.com. Regarding the competitive dynamics in the space, can you say whether or not you've observed any signs of wallet share loss either directly through properties being moved off the platform or indirectly, winning less share of budget growth? And given Zillow's rental package, I believe, is priced below apartments.com, have you seen any pressure on your ability to take price in that business or drive upgrades from that customer base?

[Andy Florance, Founder & CEO at CoStar Group]

Thank you for the question. We have not seen any loss of share or ability to really capture price value at apartments.com. I think we're conflating two different things here. Obviously, the product is extremely strong with very high NPS, renewal rates, growing bookings, robust sales bookings, growing ASP. And, that's being conflated, a little bit with looking at a lot of, purchasing clients by our competitor, paying top dollar to buy share from Redfin and from Realtor.

[Andy Florance, Founder & CEO at CoStar Group]

That's relatively low quality advertisers coming in. The ASP on those properties is dramatically below the ASP on apartments.com. So I would say we feel that we're in a very strong competitive position and nothing's changing.

[Christian Lown, CFO at CoStar Group]

Yeah. I'd add one other two other points. One, the greenfield TAM in this industry is still massive. And so this concept of wallet share, taking wallet share really isn't applicable here given how large the TAM are. We're both competing, and there's massive TAM.

[Christian Lown, CFO at CoStar Group]

And the second thing, and I think Andy says this the best, is we sell leases. We don't sell leads, and that's why we have the the products we have and the results we have. And so I just I think you always need to keep those two things in mind.

[Operator]

Thank you. And our next question comes from the line of Steven Sheldon from William Blair. Your question, please.

[Stephen Sheldon, Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C]

Hey, thanks. Just on homes.com, great to hear about the improving NPS scores. So curious, what do you think is driving that improvement? Is it better breadth of leads, higher lead quality, especially as I think you're starting to screen some of the inbounds, other value levers like including Matterport membership, etcetera? So what's driving that?

[Stephen Sheldon, Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C]

And where do you think there's still significant work to do to improve the ROI of ahomes.com membership?

[Andy Florance, Founder & CEO at CoStar Group]

Sure. So I think it's important to keep all this stuff in context and in perspective. This is a brand new product. We're pretty much, rounding, the first year and some number of months on the product. We are, we believe we're launching a vastly superior product offering to anything else offered in The United States, and we are inspired by some very successful and profitable business outside The United States and other countries.

[Andy Florance, Founder & CEO at CoStar Group]

So we're building up a sales force. These folks are doing a great job. They are relatively rookies. They're in their first year of sales for many of them. And you're just seeing quarter to quarter, month to month improvements in NPS and in bookings.

[Andy Florance, Founder & CEO at CoStar Group]

Largely, the challenge is just sort of communicating accurately to clients, the value propositions and how to utilize the product most effectively. It's a compelling offering for these folks, and it's just a learning curve. So winning 60% plus more listings because you have a better marketing solution, for homes for sale is a no brainer. And we're seeing people begin to appreciate the value of marketing real estate on the Internet. Again, real estate, there hasn't been any major player offering marketing residential real estate on the internet as a value proposition.

[Andy Florance, Founder & CEO at CoStar Group]

So it's having been the leader in that space, beating any competitor and providing that service of total revenue achieved is new and gaining traction. We are seeing huge take up of the Matterport offering or the combined Matterport. And as we look forward, I think that product and similar products that we develop will be differentiators in providing marketing solutions for real estate on the internet. I hope that answers the question. And I'd also say you see CoStar crossing through 70%.

[Andy Florance, Founder & CEO at CoStar Group]

You see apartments in the mid low 90s. That takes years to build that NPS higher and higher and higher and get to that 99% renewal rate, but we're on the track, we're focused on it, and the years do go by, and we will win.

[Operator]

Thank you. And our next question comes from the line of Pete Christiansen from Citi. Your question, please.

[Peter Christiansen, Director at Citi]

Thank you. Good evening. Really nice results here, guys.

[Andy Florance, Founder & CEO at CoStar Group]

Thank you. We really appreciate that.

[Peter Christiansen, Director at Citi]

I I was hoping you'd talk a little bit about pricing. I mean, you you mentioned multifamily ASPs, I guess, are are are are positive there, and, obviously, the the AUM based pricing of LoopNet is starting to to really hit its stride. But I'm just curious about maybe other parts of the business suite and then the new homes model, just if you can elaborate on that. Thank you.

[Andy Florance, Founder & CEO at CoStar Group]

Sure. So I'll defer on CoStar to Chris if he's got any information. I have no information that ASP on CoStar is changing in one way or another. I believe we're in the same place. I would actually say that our lender ASP would be dramatically higher, than our standard broker owner ASP.

[Andy Florance, Founder & CEO at CoStar Group]

But on the home side, we continue to optimize to the member's portfolio, And we are seeing pricing coming in at, for a very small player, at a couple $100 a month. We're also seeing for larger players, deals come in at $7,500 a month or $8,000 a month. We're very comfortable at this low penetration rate playing a little bit more to penetration than to maximizing ASP. So if you're introducing a new product, you wanna play the penetration game initially, you have the rest of eternity to play the ASP game. So we're comfortable with where where it's going, and we're thinking we're getting good result there.

[Operator]

Thank you. And our next question comes from the line of Curtis Nagle from BofA. Your question, please.

[Curtis Nagle, Director - Senior US SMID Cap Internet Analyst at Bank of America]

Great. Thanks very much for taking the question. Maybe just wanted to contextualize the new member growth. I think it was up 61% for homes.com, CC 300. When I compare it to 1Q and then in terms of what's factored in the guidance for the rest of the year, what are you factoring for net new member growth within that guidance?

[Christian Lown, CFO at CoStar Group]

Yes. We haven't provided that detail from member perspective, that level of detail other than the guidance we provided in my earnings comments.

[Curtis Nagle, Director - Senior US SMID Cap Internet Analyst at Bank of America]

Okay. Can I take a shot at another question then?

[Andy Florance, Founder & CEO at CoStar Group]

Definitely. You do. Freebie.

[Curtis Nagle, Director - Senior US SMID Cap Internet Analyst at Bank of America]

Okay. All right. We'll do them all then. Yes. Chris, maybe just in terms of the EBITDA guide for the third quarter, right?

[Curtis Nagle, Director - Senior US SMID Cap Internet Analyst at Bank of America]

I think there's a bit of timing shifts, but anything else kind of going on there in terms of, you know, rate going down just a little bit versus versus last year? Is is it just timing?

[Christian Lown, CFO at CoStar Group]

Yeah. Because if you actually look at the second quarter beat in the third quarter and you take sort of take the those two together, you'll see the beat the organic actual beat in there, but you also see the timing shift that kinda amounts for the delta if you look at consensus, third quarter versus the second quarter beat. So it really is primarily timing. And the beat's the benefit on the upside, but then the majority of it is timing.

[Operator]

Thank you. And our next question comes from the line of Alexey Kokulev from JPMorgan. Your question please.

[Alexei Gogolev, Executive Director at JPMorgan Chase]

Everyone and congrats for the great results. Andy, Congrats again. I wanted to I wanted to double check. Is there any seasonality in the commercial booking, excluding apartments.com? Just wondering if it's normal for that portion of the bookings to be broadly unchanged quarter on quarter.

[Christian Lown, CFO at CoStar Group]

The answer is no. Obviously, in the in the broader commercial margin that we we provide, apartments usually has a very strong second quarter. CoStar historically has a stronger fourth quarter. You know, it sort of all moves out. I think there's there is a margin improvement, but there's rounding. It gives you that 43 number.

[Alexei Gogolev, Executive Director at JPMorgan Chase]

Craig, I was I was talking more about bookings.

[Christian Lown, CFO at CoStar Group]

Oh, I'm sorry. I I apologize. So

[Andy Florance, Founder & CEO at CoStar Group]

bookings Bookings in CoStar is pretty stable through the year. Sometimes you get us a little bit of a lift in the fourth quarter.

[Christian Lown, CFO at CoStar Group]

Yeah. And apartments always has a strong second quarter, which we've talked about historically.

[Andy Florance, Founder & CEO at CoStar Group]

And I think through time, homes will probably have a strong second quarter too.

[Christian Lown, CFO at CoStar Group]

Yeah. And LoopNet is clearly on a path to see organic growth, which would be a lack of seasonality given the change in business model.

[Andy Florance, Founder & CEO at CoStar Group]

LUMI used to have a strong negative seasonality in the fourth quarter, which we've now eliminated.

[Operator]

Thank you. And our next question comes from the line of George Tong from Goldman Sachs. Your question, please.

[George Tong, Senior Research Analyst - Equity Research & Business Services at Goldman Sachs]

Hi, thanks. Good afternoon. Andy, in homes.com, you mentioned playing more to penetration than maximizing price. Can you remind us how the average price for new memberships changed during the quarter? And how you're thinking about the broader pricing strategy going forward?

[George Tong, Senior Research Analyst - Equity Research & Business Services at Goldman Sachs]

Is there a strategy to price based on tiers or just pricing based on agent performance, listing volumes, etcetera?

[Andy Florance, Founder & CEO at CoStar Group]

So we're very mindful that every single subscription sold has a very high gross margin. We're looking at, our direct costs, our Matterport costs, all that. And we wanna have a very high direct margin. We wanna drive participation and referrals, so as NPSs go up, we wanna sell profitable business that drives margin. Again, we're at a very low penetration point with a new product area.

[Andy Florance, Founder & CEO at CoStar Group]

The pricing is based on, we've done some shifting like we used to charge agents, based on some of their buyer agency work. We've shifted that away and we more focus on the pricing model being on the listing side of the business and the value of the assets, the volume of the assets, the size of the team. And then we've begun to put a bit of a factor in there for their rental portfolios because with the homes.com rental listing syndicating over to apartments.com, that creates a lot of value for them on the rental listing side. So it's a constantly changing mix, I anticipate best practice, we'll keep shifting it and playing with it every quarter. But thematically, we want to have profitable penetration growth on a unit basis.

[Andy Florance, Founder & CEO at CoStar Group]

And again, if you look at like a LoopNet where you might be in the 60 some percent penetration or at the institutional end of apartments, you might be at that 60% penetration. We're down the low, low, low, penetration cycle for homes.com. So we don't want to we wanna focus on growing share profitably, on unit basis, knowing that you have a lot of time to capture more value. And also remember that folks who are successful in the model we're adopting are the one we're selling in The United States, which is around marketing the real estate. Again, we're the only platform in The United States that's really focused on marketing real estate.

[Andy Florance, Founder & CEO at CoStar Group]

The folks that do this kind of platform, and what we do currently at apartments.com in The United States and LoopNet in The United States, you begin by selling a product which is around participation. So you sell first the entry level listing, just a silver ad, like a baseline promotion ad. Through time, you can do something called depth advertising or signature advertising, but it's something that evolves through time. And if I look at like an REA group in Australia, I would imagine that 80% of their revenue comes from depth advertising. But that's a lever you pull in intermediate out years.

[Operator]

Thank you. And our next question comes from the line of Jeff Meuler from Baird. Your question please.

[Jeffrey Meuler, Senior Research Analyst at Robert W. Baird]

Yes, thank you. The 750homes.com headcount figure exiting the year, is that a change? I thought you were talking $506,100. And how are you thinking about, I guess, the serviceable addressable market in terms of agent headcount that you're going after at this point? Thank you.

[Christian Lown, CFO at CoStar Group]

Sure.

[Andy Florance, Founder & CEO at CoStar Group]

Yes, I am, reining in Andy Stearns, who has built quite an effective machine down there in Richmond, Virginia. So it has been inching up. We're gonna hold it there at that number. We may take some of those resources and use them for selling Matterport. Again, there's, Matterport has had a relatively small Salesforce.

[Andy Florance, Founder & CEO at CoStar Group]

And the second part of the question was, the I'm sorry, the addressable market there. So the addressable market is just massive, right? So you have, 1,500,000 agents there that you can sell to. In reality, you probably have 500,000 to 750,000 who are really viable candidates. And you have, you you need to look at these folks, these, 700,000 some prospects, not as a one time sale.

[Andy Florance, Founder & CEO at CoStar Group]

You're not just selling them something on day one and then never talking to them again. You wanna sell them something and develop a relationship with them. You want to communicate, with them about the value they are receiving from their membership, continue to educate them on the value they're receiving, keeping in mind that, in models around the world and in commercial real estate in The United States, these client relationships grow, and you are able to sell them more and more products and services. So, if you get to seven fifty salespeople, you're talking about roughly, 1,000 clients or prospects per salesperson, which is a pretty aggressive load. I mean, it's one of the beauties of this space is that it is a huge market opportunity.

[Andy Florance, Founder & CEO at CoStar Group]

One of the beauties of our business model is that unlike our competitors that can only really sell to 5% of the market, our business model can sell to sixty, seventy, 80% of the market, which is why we love it and why investors should too.

[Operator]

Thank you. This does conclude the question and answer session of today's program. I'd like to hand the program back to Andy Florence for any further remarks.

[Andy Florance, Founder & CEO at CoStar Group]

Thank you, everyone, for joining us for the second quarter earnings call. Sorry if I'm a little too enthusiastic, but for good reason. And we look forward to updating you on the progress in the business in the next earnings call. Thank you very much for joining us.

[Operator]

Thank you, ladies and gentlemen, your participation in today's conference. This does conclude the program. You may now disconnect. Good day.

Participants

Executives

• Rich Simonelli, Head - IR
• Andy Florance, Founder & CEO
• Christian Lown, CFO

Analysts

• Ryan Tomasello, Managing Director at Keefe, Bruyette & Woods (KBW)
• Stephen Sheldon, Research Analyst - Technology, Media & Communications at William Blair & Company, L.L.C
• Peter Christiansen, Director at Citi
• Curtis Nagle, Director - Senior US SMID Cap Internet Analyst at Bank of America
• Alexei Gogolev, Executive Director at JPMorgan Chase
• George Tong, Senior Research Analyst - Equity Research & Business Services at Goldman Sachs
• Jeffrey Meuler, Senior Research Analyst at Robert W. Baird