CoStar Group Q1 Earnings Call Highlights

Key Points

• Q1 beat and upgraded outlook: Revenue rose 23% to $897M and adjusted EBITDA doubled to $132M, leading CoStar to raise full‑year adjusted EBITDA to $780–$820M and lift adjusted EPS to $1.32–$1.39.
• Heavy buybacks and bookings mix: CoStar repurchased $505M of stock in Q1 under a $1.5B authorization and expects ~$700M of buybacks in 2026, while net bookings rose 20% to $67M and management said roughly 40% of near‑term revenue growth will come from acquisitions/non‑subscription sources.
• Residential momentum and AI monetization: Homes.com revenue jumped 58% to $26M with a $550M 2026 investment plan and planned subscription price increases after strong subscriber ROI, and Apartments.com plus AI features are driving higher engagement as the company targets residential profitability in Q2 2026.

CoStar Group NASDAQ: CSGP reported first-quarter 2026 results the company characterized as an “exceptional quarter,” led by 23% year-over-year revenue growth and a doubling of adjusted EBITDA. Founder and CEO Andy Florance said the quarter marked CoStar’s “60th consecutive quarter of double-digit revenue growth,” while CFO Christian Lown attributed profitability outperformance partly to cost efficiencies, including lower personnel costs tied to AI and other initiatives.

Financial results and updated outlook

Lown said Q1 revenue was $897 million, up 23% year-over-year and “toward the high end” of guidance. Adjusted EBITDA was $132 million, which doubled from Q1 2025 and came in $17 million above the high end of the company’s guidance range. CoStar posted positive net income and adjusted EPS of $0.23 per share, which Lown said was “considerably higher than our guidance.”

For Q2 2026, CoStar guided to:

• Revenue: $922 million to $932 million (18% to 19% year-over-year growth; 10% organic growth at the midpoint)
• Adjusted EBITDA: $160 million to $180 million (17% to 19% margin)
• Adjusted EPS: $0.27 to $0.30 per share (409 million weighted average shares)

For full-year 2026, the company reaffirmed revenue guidance of $3.78 billion to $3.82 billion (16% to 18% growth) and raised adjusted EBITDA guidance to $780 million to $820 million, which Lown said represents a $30 million increase at the midpoint and “a full percentage point increase in margin.” CoStar also lifted its adjusted EPS outlook to $1.32 to $1.39, citing accelerated share repurchases and expense reductions.

Bookings, revenue mix, and share repurchases

Florance said Q1 net bookings were $67 million, up 20% year-over-year, and Lown reiterated that result in the Q&A, calling performance “broadly in line with what we’re looking for.” Addressing how investors should think about bookings translating into revenue, Lown said roughly 15% of revenue is currently non-subscription, a mix that increased following the Domain and Matterport acquisitions. At the midpoint of 2026 revenue guidance, he said CoStar expects about $550 million of year-over-year revenue growth, with around 40% from acquisitions or non-subscription revenue growth, and the remaining growth “driven by net new.”

On capital returns, Lown said CoStar completed a prior $500 million share repurchase program in 2025 and began a new $1.5 billion authorization announced in January. During Q1, the company repurchased 11.4 million shares for $505 million, mostly through an accelerated share repurchase program. Lown said CoStar expects to repurchase an additional $195 million in the remaining nine months of 2026, bringing total 2026 buybacks to $700 million.

Commercial segment: CoStar, LoopNet, STR, and Debt Solutions

CoStar’s commercial segment generated $472 million of revenue in Q1, up 15% year-over-year, with adjusted EBITDA of $161 million (34% margin). Florance said the core CoStar product produced $331 million of revenue, and users grew 22% year-over-year to 317,000. He highlighted broker and tenant sales strength, with broker sales up 29% and tenant sales up 27% year-over-year, along with a CoStar NPS of 69 and a 92% quarterly renewal rate.

Among product updates, Florance said CoStar Rent Benchmark is slated to launch this summer and is positioned as the “only net effective rent benchmark product” incorporating starting rents, effective rents, tenant improvement allowances, free rent, and escalations. He also said CoStar New Homes is in development, with a phase-one release planned for Q2, tracking new residential construction “from planning through delivery.”

In CoStar Debt Solutions (formerly CoStar Lender), Florance said net new bookings rose 26% year-over-year as the business crossed $100 million in revenue, and it now serves more than 500 financial institutions. He said the unit is targeting CRE debt benchmarking in the second half of 2026, followed by CRE loan origination workflow in Q1 2027, and that the company has formed a client advisory committee with more than 12 institutions.

LoopNet delivered $85 million of Q1 revenue, up 16% year-over-year, and Florance pointed to paid listing growth and a U.S. rollout of asset-based pricing. He said early results were “outstanding,” citing a 650% month-over-month increase in silver listings sold at $300 or more per month from February to March, as well as growth in listings sold below $40 per month, which he said opened “an entirely new category of inventory.”

Florance also highlighted STR’s launch of profitability benchmarking with more than 150 P&L data points, saying 750 hotel subscribers submitted data to access the functionality. He framed participation as critical to future monetization.

Residential segment: Apartments.com, Homes.com, and pricing actions

Residential revenue was cited at $421 million by Florance and $425 million by Lown, with both noting 32% year-over-year growth. Residential adjusted EBITDA improved and came in at negative $29 million, which Lown said was better than guidance; Florance said the company expects the residential segment to reach profitability in Q2 2026.

Apartments.com revenue was $312 million, up 10% year-over-year, marking what Florance called the platform’s 15th consecutive quarter of double-digit revenue growth. He highlighted platform activity metrics, including 220 million renter visits, 370,000 tours, and 300,000 applications submitted directly to owners, along with 40 million Matterport tours. He also noted a 99% monthly renewal rate and said Apartments.com introduced “Smart Search,” including AI-powered voice search, with early engagement metrics showing users spending 94% more time on-site and viewing 63% more listings.

During Q&A, Florance attributed some Apartments.com ARPU pressure to customer mix after winning rooftops from Rent.com, describing that shift as a “once…in a decade opportunity” that skewed toward “lower ARPU rooftops.” He said he was not seeing a major shift in levels or depth advertising tied to competitive dynamics.

Homes.com was a major focus of the call. Florance said Homes.com revenue grew 58% year-over-year to $26 million in Q1 and reiterated the company’s plan for a 2026 net investment target of $550 million in the platform. He said Homes.com added more than 4,300 members in Q1, up 205% from the prior-year quarter, bringing total agent subscribers to 35,175, with 76% on annual contracts. Net new bookings for Homes.com were $11 million, and Florance said March annual revenue run rate reached $106 million, up 92% year-over-year.

Florance also shared an ROI analysis of the first 11,400 Homes.com members, comparing commission earnings in the 12 months before and after joining. He said the average subscriber earned $36,400 more in commissions in the first year versus an average annual subscription cost of $3,400, which he characterized as an “11 times return.” Based on those results, Florance said the company will raise subscription fees for new customers on May 1 and “evaluate measured potential renewal increases.” In response to an analyst question about timing, Florance said he believes the company can both grow membership and “capture more of the value,” citing high close rates among the better-trained portion of the sales team.

Florance tied engagement to Homes AI, saying AI users run nearly four times as many searches and spend significantly more time on site than non-AI users. He said that in April, time on site reached 18 minutes for AI users versus 4 minutes 32 seconds for non-AI users, arguing that the engagement pattern is a precursor to consumer share shift. He also noted an expanded relationship with eXp Realty that allows eXp agents to display “pre-market Coming Soon listings” on Homes.com.

Matterport integration and sales force priorities

Matterport’s subscription revenue grew 19% year-over-year, according to both executives, and Florance emphasized its role across CoStar’s portfolio, including Homes AI. In Q&A, he said CoStar is refocusing Matterport toward professional users and a “razor and razor blade strategy,” with lower hardware pricing and higher SaaS subscription pricing, and he referenced work on a Pro4 camera. He also described “Matterport Exteriors with X-ray” functionality in alpha and said the company believes its innovation pace is outpacing competitors.

On go-to-market execution, Lown said sales headcount ended March at 2,090, including 570 Homes.com reps, 520 Apartments.com reps, 475 CoStar reps, and 225 LoopNet reps. Management repeatedly discussed productivity ramp timing, especially for Homes.com, where Florance described the team as relatively junior. He said CoStar plans to add roughly 50 more Homes.com field salespeople in batches by city, while continuing measured growth in other field sales organizations, including Apartments.com, LoopNet, and Matterport.

Florance also said the “activist distraction is behind us,” and he framed the company’s focus as “growing EBITDA.” He closed by saying the quarter’s performance across commercial real estate, Apartments.com, and Homes.com “confirms one thing: the strategy is working.”

About CoStar Group NASDAQ: CSGP

CoStar Group, Inc is a provider of information, analytics and online marketplaces for the commercial real estate industry. The company gathers property-level data, builds market analytics and supplies research tools used by brokers, owners, lenders, investors and other real estate professionals to evaluate markets, track inventory and manage listings. CoStar's offerings are delivered primarily through subscription-based platforms that combine proprietary databases, mapping and workflow applications to support decision-making across the property life cycle.

In addition to its core CoStar research service, the company operates prominent online listing and marketing platforms that connect buyers, sellers, tenants and brokers.

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