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CoStar Group Second Quarter 2022 Net New Bookings Grew 66% and Net Income Increased 37% Year-over-Year

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WASHINGTON, July 26, 2022--(BUSINESS WIRE)--CoStar Group, Inc. (NASDAQ: CSGP), a leading provider of online real estate marketplaces, information and analytics in the property markets, announced today that revenue for the quarter ended June 30, 2022, was $536 million, an increase of 12% over revenue of $480 million for the second quarter of 2021.

Net income for the second quarter of 2022 was $83 million, an increase of 37% compared to net income of $61 million for the second quarter of 2021. EBITDA for the second quarter of 2022 was $140 million, an increase of 5% compared to EBITDA of $133 million for the second quarter of 2021.

"We delivered outstanding results in the second quarter of 2022," said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. "With net new bookings of $84 million we easily surpassed the record sales results we set in the first quarter of this year. Our top three products, CoStar, Apartments.com and LoopNet, all achieved high double-digit sales increases over the second quarter of 2021. In addition, both revenue and profit in the second quarter of 2022 were ahead of forecast and we are raising our guidance for the year."

"I am particularly encouraged by the strong sales growth in Apartments.com and LoopNet", continued Florance. "Net new bookings increased over 130% in Apartments.com and over 40% for LoopNet on a year-over-year basis. It is increasingly clear that Multifamily market conditions continue to be more favorable, and our work to build a dedicated LoopNet sales team is paying off. We are also making strong progress on our residential growth initiatives with the on-time launch of Citysnap in New York City at the end of June."

Year 2021-2022 Quarterly Results - Unaudited

(in millions, except per share data)

2021

2022

Q1

Q2

Q3

Q4

Q1

Q2

Revenues

$458

$480

$499

$507

$516

$536

Net income

74

61

64

93

89

83

Net income per share - diluted(1)

0.19

0.16

0.16

0.24

0.23

0.21

Weighted average outstanding shares - diluted(1)

394

394

394

395

394

394

EBITDA

136

133

123

173

158

140

Adjusted EBITDA

160

150

144

193

178

159

Non-GAAP net income

108

103

99

138

123

112

Non-GAAP net income per share - diluted(1)

0.27

0.26

0.25

0.35

0.31

0.28

(1) Certain prior period amounts have been retroactively adjusted to reflect the ten-for-one stock split effected in the form of a stock dividend in June 2021.

As of June 30, 2022, the Company had approximately $4.0 billion in cash, cash equivalents and restricted cash and outstanding debt of approximately $1.0 billion.

2022 Outlook

The Company is raising its revenue guidance to a range of $2.165 billion to $2.180 billion for the full year of 2022, an increase of $13 million at the midpoint of the range compared to the prior outlook. The Company expects revenue for the third quarter of 2022 in the range of $552 million to $557 million, representing revenue growth of approximately 11% over the third quarter of 2021 at the midpoint of the range.

The Company is raising its adjusted EBITDA guidance to a range of $610 million to $630 million for the full year of 2022, an increase of $20 million at the midpoint of the range compared to the prior outlook. For the third quarter of 2022, the Company expects adjusted EBITDA in a range of $130 million to $140 million.

The Company expects full year 2022 non-GAAP net income per diluted share in a range of $1.09 to $1.13 based on 395 million shares, an increase of $0.11 per diluted share compared to the prior outlook. For the third quarter of 2022, the Company expects non-GAAP net income per diluted share in a range of $0.23 to $0.25 based on 395 million shares. These ranges include an estimated non-GAAP tax rate of 26% for the full year and the third quarter of 2022.

The preceding forward-looking statements reflect CoStar Group’s expectations as of July 26, 2022, including forward-looking non-GAAP financial measures on a consolidated basis, based on current estimates, expectations, observations, and trends. Given the risk factors, rapidly evolving economic environment, and uncertainties and assumptions discussed in this release and in our quarterly reports on Form 10-Q and annual reports on Form 10-K, including uncertainties as a result of the COVID-19 pandemic and responses to it by, and the impact on, global economies and the real estate industry, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.

Reconciliation of EBITDA, adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share to their GAAP basis results are shown in detail below, along with definitions for those terms. A reconciliation of forward-looking non-GAAP guidance to the most directly comparable GAAP measure, net income, can be found within the tables included in this release.

Non-GAAP Financial Measures

For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the Company’s financial condition and results of operations, please refer to the Company’s latest periodic report.

EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before interest (expense) income and other (expense) income, loss on debt extinguishment, income taxes, depreciation and amortization.

Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, and settlements and impairments incurred outside the Company’s normal course of business. Adjusted EBITDA margin represents adjusted EBITDA divided by revenues for the period.

Non-GAAP net income is a non-GAAP financial measure determined by adjusting GAAP net income attributable to CoStar Group for stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, settlement and impairment costs incurred outside the Company's normal 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. In 2022, the Company is assuming a 26% tax rate in order to approximate its statutory corporate tax rate excluding the impact of discrete items.

Non-GAAP net income per diluted share is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period used in the calculation of GAAP net income per diluted share. For periods with GAAP net losses and non-GAAP net income, the weighted average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.

Operating Metrics

Net new bookings is calculated based on the annualized amount of change in the Company's sales bookings resulting from new subscription-based contracts and changes to existing subscription-based contracts for the period reported. Information regarding net new bookings is not comparable to, nor should it be substituted for, an analysis of the Company's revenues over time.

Earnings Conference Call

Management will conduct a conference call to discuss the second quarter 2022 results and the Company’s outlook at 5:00 PM EST on Tuesday, July 26, 2022. A live audio webcast of the conference will be available in listen-only mode through the Investors section of the CoStar Group website: https://investors.costargroup.com. A replay of the webcast audio will also be available in the Investors section of our website for a period of time following the call.

CoStar Group, Inc.

Condensed Consolidated Statements of Operations - Unaudited

(in thousands, except per share data)

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

Revenues

$

536,308

$

480,333

$

1,052,133

$

938,030

Cost of revenues

100,971

89,566

196,450

178,314

Gross profit

435,337

390,767

855,683

759,716

Operating expenses:

Selling and marketing (excluding customer base amortization)

181,344

164,612

325,341

303,299

Software development

51,587

48,573

105,608

95,357

General and administrative

77,345

58,226

155,306

122,076

Customer base amortization

14,878

18,345

30,970

36,764

325,154

289,756

617,225

557,496

Income from operations

110,183

101,011

238,458

202,220

Interest expense, net

(3,399

)

(7,877

)

(11,117

)

(15,755

)

Other income, net

1,343

847

2,207

797

Income before income taxes

108,127

93,981

229,548

187,262

Income tax expense

24,654

32,833

56,757

51,902

Net income

$

83,473

$

61,148

$

172,791

$

135,360

Net income per share - basic

$

0.21

$

0.16

$

0.44

$

0.35

Net income per share - diluted

$

0.21

$

0.16

$

0.44

$

0.34

Weighted-average outstanding shares - basic

393,342

392,306

393,119

391,942

Weighted-average outstanding shares - diluted

394,478

394,098

394,356

393,906

CoStar Group, Inc.

Reconciliation of Non-GAAP Financial Measures - Unaudited

(in thousands, except per share data)

Reconciliation of Net Income to Non-GAAP Net Income

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

Net income

$

83,473

$

61,148

$

172,791

$

135,360

Income tax expense

24,654

32,833

56,757

51,902

Income before income taxes

108,127

93,981

229,548

187,262

Amortization of acquired intangible assets

22,815

25,293

46,005

51,120

Stock-based compensation expense

18,112

15,144

35,959

30,689

Acquisition and integration related costs

504

2,001

2,143

10,463

Other expense

2,063

786

4,099

1,857

Non-GAAP income before income taxes

151,621

137,205

317,754

281,391

Assumed rate for income tax expense(1)

26

%

25

%

26

%

25

%

Assumed provision for income tax expense

(39,421

)

(34,301

)

(82,616

)

(70,348

)

Non-GAAP net income

$

112,200

$

102,904

$

235,138

$

211,043

Net income per share - diluted

$

0.21

$

0.16

$

0.44

$

0.34

Non-GAAP net income per share - diluted

$

0.28

$

0.26

$

0.60

$

0.54

Weighted average outstanding shares - basic

393,342

392,306

393,119

391,942

Weighted average outstanding shares - diluted

394,478

394,098

394,356

393,906

(1) The assumed tax rate approximates our statutory federal and state corporate tax rate for the applicable period.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Three Months Ended
June 30,

Six Months Ended
June 30,

2022

2021

2022

2021

Net income

$

83,473

$

61,148

$

172,791

$

135,360

Amortization of acquired intangible assets in cost of revenues

7,937

6,948

15,035

14,356

Amortization of acquired intangible assets in operating expenses

14,878

18,345

30,970

36,764

Depreciation and other amortization

7,010

7,028

13,975

15,528

Interest expense, net

3,399

7,877

11,117

15,755

Other income, net

(1,343

)

(847

)

(2,207

)

(797

)

Income tax expense

24,654

32,833

56,757

51,902

EBITDA

$

140,008

$

133,332

$

298,438

$

268,868

Stock-based compensation expense

18,112

15,144

35,959

30,689

Acquisition and integration related costs

504

2,001

2,143

10,463

Adjusted EBITDA

$

158,624

$

150,477

$

336,540

$

310,020

CoStar Group, Inc.

Condensed Consolidated Balance Sheets - Unaudited

(in thousands)

June 30,
2022

December 31,
2021

ASSETS

Current assets:

Cash, cash equivalents and restricted cash

$

3,964,116

$

3,827,126

Accounts receivable

161,811

138,191

Less: Allowance for credit losses

(9,638

)

(13,374

)

Accounts receivable, net

152,173

124,817

Income tax receivable

9,278

Prepaid expenses and other current assets

55,194

36,182

Total current assets

4,180,761

3,988,125

Deferred income taxes, net

5,034

5,034

Property and equipment, net

298,361

271,431

Lease right-of-use assets

98,495

100,680

Goodwill

2,314,176

2,321,015

Intangible assets, net

385,245

435,662

Deferred commission costs, net

119,778

101,879

Deposits and other assets

16,893

21,762

Income tax receivable

2,005

11,283

Total assets

$

7,420,748

$

7,256,871

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

32,132

$

22,244

Accrued wages and commissions

84,545

81,794

Accrued expenses

91,168

81,676

Income taxes payable

1,841

31,236

Lease liabilities

35,426

26,268

Deferred revenue

104,838

95,471

Total current liabilities

349,950

338,689

Long-term debt, net

988,572

987,944

Deferred income taxes, net

87,657

98,656

Income taxes payable

14,112

12,496

Lease and other long-term liabilities

96,104

107,414

Total liabilities

$

1,536,395

$

1,545,199

Total stockholders’ equity

5,884,353

5,711,672

Total liabilities and stockholders' equity

$

7,420,748

$

7,256,871

CoStar Group, Inc.

Condensed Consolidated Statements of Cash Flows - Unaudited

(in thousands)

Six Months Ended
June 30,

2022

2021

Operating activities:

Net income

$

172,791

$

135,360

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

64,127

68,516

Amortization of deferred commissions costs

35,996

30,847

Amortization of Senior Notes discount and issuance costs

1,178

1,159

Non-cash lease expense

15,080

13,136

Stock-based compensation expense

35,959

30,689

Deferred income taxes, net

(14,946

)

...