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CoStar Group Delivers Broad-Based Growth

Joe Tenebruso, The Motley Fool

CoStar Group (NASDAQ: CSGP) reported first-quarter results on April 23. The real estate marketplace and analytics company is enjoying strong profit growth as apartment hunters, business buyers, and investors flock to its websites.

CoStar Group results: The raw numbers

Metric

Q1 2019

Q1 2018

Year-Over-Year change

Revenue

$328 million

$274 million

20%

Net income

$85 million

$52 million

63%

Earnings per share

$2.33

$1.44

62%

Data source: CoStar Group Q1 2019 earnings release. 

What happened with CoStar Group this quarter?

CoStar Group's companywide net new bookings surged 36% to $48 million, driven by the performance of the company's multifamily marketplaces.

"Apartments.com had an exceptionally strong sales quarter, growing quarterly net new bookings by 40% year over year, exceeding even the record net new bookings level we achieved in the fourth quarter of 2018," founder and CEO Andrew Florance said in a press release.

CoStar Group's websites continue to grow more popular with renters and investors. Unique visitors to its network of marketplaces jumped 29% year over year to 49 million in the first quarter.

In turn, CoStar's ballooning audience is helping to drive growth across its business lines. Revenue in Apartments.com leaped 30%. LoopNet -- CoStar's commercial real estate marketplace -- saw revenue rise 17%. Additionally, revenue in CoStar's rural lands and business-for-sale marketplaces climbed 21% and 12%, respectively. 

In all, companywide revenue rose 20% to $328 million.

A person pointing to an internet search box above digital images of houses and an apartment building

More people are turning to CoStar Group for their home-search needs. Image source: Getty Images.

Better still, CoStar Group continues to grow more profitable as it expands. Adjusted EBITDA -- which excludes stock-based compensation, acquisition-related charges, and restructuring costs -- rose 49% to $125 million. And adjusted (non-GAAP) net income increased 54% to $92 million, or $2.53 per share.

Looking forward

CoStar Group now expects 2019 full-year non-GAAP earnings per share of $9.90 to $10.10, up from a previous forecast of $9.80 to $10. The company also reiterated its guidance for revenue of $1.37 billion to $1.38 billion and adjusted EBITDA of $495 million to $505 million.

For the second quarter, CoStar's outlook includes:

  • Revenue of $333 million to $337 million, signifying year-over-year growth of 13% at the midpoint
  • Adjusted EBITDA of $98 million to $102 million
  • Non-GAAP EPS of $1.94 to $2.02 

"With strong traffic growth and a robust product development pipeline for Apartments, LoopNet, and CoStar[,] we believe we will continue to deliver strong, consistent revenue growth," Florance said.

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Joe Tenebruso has no position in any of the stocks mentioned. The Motley Fool recommends CoStar Group. The Motley Fool has a disclosure policy.