CoStar Group (CSGP) Q2 Earnings Top Estimates, Revenues Up Y/Y
CoStar Group CSGP reported non-GAAP earnings of 31 cents per share in second-quarter 2023, beating the Zacks Consensus Estimate by 3.33% and increasing 10.7% year over year.
Revenues of $605.9 million missed the Zacks Consensus Estimate by 0.26% but increased 13% year over year.
Top-Line Details
CoStar revenues (37.8% of revenues) of $229.2 million beat the consensus mark by 0.86% and increased 10.9% year over year. Apartments.com revenues increased 23% year over year. Net new bookings jumped 84% year over year to $82 million.
Information Services revenues (6.9% of revenues) of $41.9 million missed the consensus mark by 1.01% but increased 8.9% year over year. Multifamily revenues (37% of revenues) of $224.3 million were in line with the consensus estimate but increased 23% year over year.
CoStar Group, Inc. Price, Consensus and EPS Surprise
CoStar Group, Inc. price-consensus-eps-surprise-chart | CoStar Group, Inc. Quote
LoopNet revenues (10.8% of revenues) of $65.6 million missed the consensus mark by 2.13% but were up 16.5% year over year.
Second-quarter residential revenues (2.1% of revenues) were $12.7 million, beating the consensus mark by 5.9% but declining 36.9% year over year.
Other marketplace revenues (5.3% of revenues) of $32.3 million missed the consensus mark by 7.9% and decreased 0.5% year over year.
Operating Details
In the reported quarter, selling and marketing expenses increased 37.9% year over year to $250 million. As percentage of revenues, selling and marketing expenses were 41.3% compared with 33.8% reported in the year-ago quarter.
General and administrative expenses, as a percentage of revenues, increased 50 basis points (bps) on a year-over-year basis to 14.9%.
Software development expenses, as a percentage of revenues, expanded 80 bps. Customer base amortization expenses contracted 110 bps on a year-over-year basis.
Adjusted EBITDA margin in the second quarter was 20.9% compared with 29.6% in the year-ago quarter.
Balance Sheet and Cash Flow Statement
CoStar reported cash and cash equivalents of $5.2 billion as of Jun 30, 2023, compared with $5.05 billion as of Mar 31, 2023.
The company had long-term debt of $989.9 million as of Jun 30, 2023, compared with $989.5 million as of Mar 31, 2023.
It generated $298.4 million in cash from operations compared with $123.2 million in the previous quarter.
Guidance
CoStar expects 2023 revenues between $2.45 billion and $2.46 billion, indicating a year-over-year growth of 13% at the midpoint. Third-quarter 2023 revenues are expected between $622 million and $627 million, indicating growth of approximately 12% year over year at the midpoint. The Zacks Consensus Estimate for the quarter’s revenues is pegged at $632.8 million.
The company expects 2023 adjusted EBITDA in the range of $510-$520 million. For the third quarter of 2023, CoStar expects adjusted EBITDA in the range of $115-$120 million.
Earnings are expected between $1.24 and $1.26 per share for 2023. Moreover, earnings are projected between 29 and 30 cents per share for the third quarter. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 31 cents.
Stocks to Consider
CoStar currently carries a Zacks Rank #4 (Sell).
CSGP’s shares have gained 18.8% compared with the Zacks Computer and Technology sector’s rise of 38.9% year to date.
Here are some better-ranked stocks worth considering in the broader sector.
ON Semiconductor ON, Autohome ATHM and Intel INTC are some better-ranked stocks that investors can consider in the broader sector. While ATHM carries a Zacks Rank #1 (Strong Buy), ON and INTC carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
onsemi shares have gained 60.4% year to date. ON is set to report its second-quarter 2023 results on Jul 31.
Autohome shares have declined 0.2% year to date. ATHM is set to report its second-quarter 2023 results on Jul 27.
Intel shares have gained 29% year to date. INTC is set to report its second-quarter 2023 results on Jul 27.
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