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CoStar Group, Inc. (NASDAQ:CSGP)
Q2 2020 Earnings Call
Jul 28, 2020, 5:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Ladies and gentlemen, thank you for standing by and welcome to the CoStar Group's Second Quarter 2020 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded.

[Operator Instructions]. I would now like to hand the conference over to your speaker today, Sarah Spray, Investor Relations. Thank you. Please go ahead.

Sarah Spray -- Vice President, Investor Relations

Thank you. Good evening and thank you all for joining us to discuss the second quarter 2020 results of the CoStar Group. Before I turn the call over to Andy Florance, CoStar's CEO and Founder; and Scott Wheeler, our CFO, I would like to review our safe harbor statement. Certain portions of the discussion today may contain forward-looking statements, including expectations for the third quarter and full year 2020.

Forward-looking statements involve many risks, uncertainties, assumptions, estimates and other factors that can 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 most recent annual report on Form 10-K and quarterly report on Form 10-Q, under the heading Risk Factors.

All forward-looking statements are based on 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.

Reconciliation to the most directly comparable GAAP measure to the non-GAAP financial measures discussed on this call including EBITDA, adjusted EBITDA, non-GAAP net income and forward-looking non-GAAP guidance are shown in detail in our press release issued today along with definitions for those terms.

The press release is available on our website located at costargroup.com under Press Room. As a reminder, today's conference call is being webcast and the link is also available on our website under Investors. Please refer to today's press release on how to access replay of this call.

And with that, I would like to turn over to our Founder and CEO, Andy Florance.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Thank you, Sarah. Good evening and thank you for joining us today for CoStar's second quarter 2020 earnings call. A caveat, I see a large thunderstorm rolling into my position, so if I get disconnected, Scott Wheeler, our CFO will pick up my script and deliver it, not quite as well as I do, but he'll muddle through.

So going into the second quarter, it has been one of the most difficult to predict quarters in my decades of experience. It'd be hard to ever imagine the scale of dislocation our country is experiencing. Yet, despite the challenges we face so far, our team here at CoStar Group has performed exceptionally well turning in one of our strongest quarters ever.

We grew revenue 16%, increased adjusted EBITDA 17%, set a record sales month, raised $2.7 billion in equity and debt into the equity and debt markets and acquired Ten-X all while working 100% from remote locations.

Traffic to our Apartments.com and LoopNet marketplaces rose to new record levels, exceeding pre-pandemic levels. We had 62 million monthly unique visitors on our platforms in the second quarter, an increase of 13% over our record traffic levels of 55 million monthly unique visitors reached in the first quarter of 2020. I hope you can agree with me that these results indicate that our business is not only resilient, but is in fact countercyclical.

Our business, like I believe most businesses, was slowed in the first part of the quarter as people adjusted to the new normal. It has progressed back in each month this quarter eventually reaching our best sales results ever in June. CoStar, LoopNet, Apartments.com, LandsofAmerica, BizBuySell, Real Estate Manager, Risk Analytics and STR, all showed positive growth in the month of June.

In a world of social distancing our digital marketplace has uniquely enabled our clients to continue their mission-critical leasing efforts. While many were debating whether recovery would be V-shaped, CoStar Group's recovery to-date looks more like a check mark. While I believe the challenges from the pandemic are far from over, the progressive improvements in our operating results each month throughout the second quarter gives us greater confidence in the positive outlook for our business.

CoStar Group's total revenue grew 16% year-over-year to $397 million. Across the second quarter, our sales force brought in $35 million of net bookings with $22 million of that being in June alone.

Our Marketplace businesses delivered strong revenue growth with Apartments.com growing 21% and LoopNet growing 18% year-over-year in the second quarter. Our net income was strong at $60 million. Our overall EBITDA was well ahead of expectations at $109 million, an increase of 17% year-over-year. And our non-GAAP net income per share of $2.34 was up 5%, well ahead of expectations regardless of the 2% dilution from our equity raise in May.

Apartments.com was truly the countercyclical stand out in Q2, hitting new records throughout the quarter. Net new sales were up 33% against our previous record set in the second quarter of 2019. In fact, every single month this quarter, our sales hit a new record high. In the true and accurate words of Paige Forrest, our Head of Multifamily Sales, every single benchmark was blown away.

We had a series of all-time record high traffic numbers for our Apartments network sites during the quarter, including 23 million average monthly unique visitors, up 6% year-over-year and 200 million visits, up 16% year-over-year, according to ComScore.

Our Apartments.com sales force logged a 58% increase in quality meetings and interactions with our clients, delivering critical service to our customers at a time of significant challenges for their business. Apartments hit a new quarterly record revenue of $146 million.

This June, the largest annual multi-family industry conference, the National Apartment Association Conference was postponed due to the pandemic. This conference is a significant customer event for Apartments.com and typically makes June our best sales month of the year. Without the possibility of meeting in person, we organized and produced a two-day virtual summer showcase event conducted entirely with video meetings.

We lined up speakers from top-tech digital media and advertising companies, along with our own research staff and economists to speak on a range of topics from local market updates to marketing in anxious times, all in support of our customers.

The event was a resounding success. Over 3,200 customers participated, resulting in connections to over 1,000 new customers. The customer response was tremendous and contributed to a record June in terms of net new sales, nearly 20% above the previous record and for less than 5% of the cost of the annual in-person event. We saved $4 million going digital.

As announced last year, we've increased our marketing expense and we've increased our marketing investments in Apartments.com by nearly 50%. We plan to continue our increased investment in marketing despite the pandemic, because we believe that we can still generate an outsized ROI on that investment even in this environment. Based upon our results this quarter, we think we are in fact seeing an excellent ROI on that increased investment.

Our Q2 marketing campaign highlights start with the launch of our new broadcast ads featuring the iconic Jeff Goldblum as Brad Bellflower, the inventor of the Apartminternet. These ads hit the airwaves at the end of March with increase of 12% more ads over our 2019 campaign, airing across an even wider variety of digital and streaming video platforms.

This year, we also increased marketing via paid social and media and retargeting ads as well as addressable TV through personalized advertising- based on household composition. We raised our SEM spend significantly, leading to a higher frequency of number one positioning in a broad range of search terms.

Overall, these paid initiatives led to a 57% increase in impressions. Paid advertising isn't the whole story either. Our continuous investment in the functionality of and content on our site helped to continue to fuel organic site traffic growth of 16% in Q2.

We were also rewarded by new highs in unaided brand awareness, an important measure of the reach and effectiveness of our campaigns. And we are now leading the pack with Zillow in second place and Craigslist and Rent.com tied for third. We believe that strong and improving levels of consumer awareness is the key to our ultimate success in penetrating the broader rental markets and the timing and magnitude of our investment is clearly paying off.

The strength of our business is evident in that we can make these aggressive investments in growing Apartments.com, while still generating $109 million of EBITDA in the quarter. We are focused on accelerating our sales penetration across all categories of rentals from the largest apartment buildings to mid-size apartment communities, to single-family homes, condos and townhouses.

In late 2019, we added an inside sales team based in Richmond, Virginia to focus on selling Apartments.com solutions to owners of mid-sized and smaller apartment buildings in single-family dwellings. Nine months into launching this under 100 unit sales force, we're seeing great results.

This quarter we grew our net new sales in the under 100 unit segment nearly 70% versus Q1 2020. Over the last 12 months, half of all advertisers we added 2,400 properties were in the sub 100 unit category. While -- when we acquired Apartments.com in 2014, little to no effort was made selling to apartment communities with under a 100 units. Now 16% of Apartments.com revenue comes from properties with under 100 units.

This means that today, we have more revenue in the previously overlooked below 100 unit communities than Apartments.com had in total when we bought them. Clearly, there's demand for Apartments.com and rentals of all types big and small. But as much as we have sold, we're still less than 1% penetrated into the sub 100 unit segment.

We are excited about the amazing multibillion-dollar scale of the opportunity we have here and plan to continue to build out the marketing efforts and sales teams to fully monetize our leading position. Some costs get behind us.

On June 9th, the bankruptcy court signed off on RentPath Chapter 11 plan and our acquisition proposal as part of the plan, so the remaining hurdle is the FTC process. On April 29th, we received a second request as part of the FTC approval process for our proposed acquisition of RentPath. This was anticipated and we are responding quickly to the request. Should we get approval to close the transaction, it would be completed within the three to 12 month time frame that we gave in February.

In the meantime, we continue to compete aggressively in the market as always. We believe that we are continuing to take significant market share away from RentPath because we offer vastly superior traffic, more exposure and thus more leads and leases.

Over this past quarter, we began integration of our successful lender Risk Analytics solutions in the CoStar Suite. Productizing these solutions into the larger platform will allow CoStar to expand its reach from the top-tier of CRE leaders to the many thousands of institutions that could greatly benefit from analytics-only available with CoStar data.

For over a decade, our highly experienced risk analytics team has been a trusted source to lenders providing credit risk models for portfolio stress testing and loan-loss reserves used in regulatory reporting, examinations and for internal risk management.

By leveraging curated CoStar property data and market research, we can provide up-to-the-minute information on our lender's collateral, allowing them to perform real-time performance surveillance. This is a capability unmatched in the industry. We think combining these time-proven models with CoStar data is a scalable -- in a scalable platform creates exceptional growth opportunity in the lending market.

LoopNet finished the quarter on a strong note overcoming the market disruption that began in March and April caused by the pandemic. Monthly unique visitors are now tracking over 7 million, which is an all-time high beating the record set earlier this year. Net new sales improvement followed the improvement in traffic finishing June with net new sales up 91% year-over-year.

To keep this momentum going, we have really leaned in with significant product enhancements and marketing efforts. We positioned LoopNet Diamond and Platinum level signature ads to property owners as powerful digital marketing innovation that generates unprecedented and differentiated marketing reach, frequency and branding for their valuable properties.

Beginning in April, we dramatically expanded our use of broad retargeting to further increase the frequency, reach and brand enhancements with our top signature advertisers enjoy on LoopNet. With over 7 million unique monthly visitors, LoopNet is by far and away the most heavily trafficked commercial real estate website, so we believe we have the best insights into who is currently in the market for commercial real estate.

Once we identify a prospective tenant or buyer on LoopNet, we retarget them across the Internet thereby increasing the critical frequency of use for our top signature ads by 600% above the great performance they're already getting.

In addition to driving up the frequency of that valuable exposure for our advertisers, this retargeting investment has a benefit bringing a significant number of LoopNet visitors back to LoopNet for further reengagement.

In addition to retargeting, we have launched a new program to leverage our database of 6 million tenants and digitally target them across the web and social media to bring these tenants to our advertisers' properties digitally. We've also added video conference-enabled CoTouring to LoopNet this quarter. This allows registered LoopNet users to invite colleagues to virtually tour potential spaces together.

At the end of June, we closed our first virtual M&A deal with our acquisition of Ten-X. Ten-X is the leading innovator of online commercial real estate auctions, having completed more than $24 billion in property sales online. In the few weeks since we closed the deal, Ten-X has held two auctions, transacting an aggregate value of $50 million. We have approximately $400 million in aggregate value going to online auction over the next two weeks.

Ten-X has been used by all the major brokerage firms in America to transact properties online and close deals faster. While Ten-X is used to transact both performing and distressed properties, it was borne out of the Great Recession and the need to liquidate a high volume of distressed properties quickly.

We believe that Ten-X is highly countercyclical. If there is an increase in distressed commercial properties in the cycle, we believe that Ten-X will see an increase in auctions and revenue. We are starting to see tangible signs of financial distress in the commercial real estate market, the first being delinquencies which are clearly on the rise.

This month, 30-day delinquencies jumped 5 percentage points versus June 2019. This is only 2 percentage points lower than the peak of the Great Recession. And this time around delinquencies are driven primarily by retail and lodging. In June of this year, we saw 7% of CMBS go 30 days delinquent, which could translate into over 3% of CMBS defaulting over the next few months.

You may remember that one of the key synergies of the Ten-X acquisition is that we can leverage our millions of LoopNet visitors and global CoStar users to increase awareness of properties go into auction at Ten-X and thereby dramatically increase the potential bidder pool for properties.

Auctions with three or more engaged bidders are much more likely to transact above the reserve than are auctions with just one or two bidders. More bidders drive more closed auctions, which we believe will draw more properties for sale, which in turn draws in more bidders. And all that generates more commissions for our brokers.

One of the first steps we've taken is to move Ten-X auction candidates to the top of LoopNet and CoStar and present them as enhanced Diamond placements with enhanced retargeting which will dramatically increase their exposure to potential bidders.

We will continue to invest in harvesting our unique data sets of millions of potential buyers and their search activities on our sites to digitally target them and draw these potential bidders to Ten-X. We're very excited about the enormous potential of this acquisition.

This quarter, the STR business model has clearly proven its resilience in what must sadly be the darkest days of the hospitality industry in modern times. Remarkably, STR generated positive net new sales in Q2 and a recovery in ad hoc revenues that was a positive surprise.

In April of this year, 19% of hotels in the U.S. were closed, but by this month, only 7% were closed. Looking elsewhere, in April, 98% of Spanish hotels were closed, but in contrast today, only 3% of the hotels in China remain closed.

Globally, the hotel industry is slowly recovering from the bottom, although more recently, occupancy and demand have started to climb again in the U.S. But as long as hotels are open, STR is essential. With global occupancy rates in the mid-40s, 40%, and little hope of a quick recovery in business travel, it is very probable that we will see many hotels restructuring and changing hands. The lenders, investors and new owners will also need STR data in order to accomplish those transactions.

As you know, our strategy is to combine STR hospitality data with CoStar's complementary building set in order to create new products that provide a full view of building data income and occupancy information, sales comps and for-sale information. We're making good progress on this step and hope to launch within the next year.

We had two successful capital raising events in the quarter. In May, we issued $1.7 billion in equity. In June, two of the three rating agencies awarded our initial debt issue with an investment-grade rating wisely. As a result, we were able to issue $1 billion of 10-year debt with a coupon of 2.8% on July 1.

Including our cash generation this quarter, this leaves us with a current cash balance of approximately $3.8 billion. This combined with our undrawn revolver of $750 million, gives us over $4.5 billion of firepower and growing. As we move forward to grow this business aggressively, we're positioned with a phenomenal balance sheet and are well prepared to take advantage of what we expect could be significant opportunities in the coming years.

I'm grateful for the confidence of our investors -- grateful for the confidence that our investors have placed in us. Our investors are the 12th player on the CoStar football team and one of our Company's greatest strengths.

We have a long successful history of acquisition integration, having made over 30 acquisitions since CoStar was founded. A number of our great acquisitions have been made during down cycles. Examples include COMPS.com which we purchased in 2000 at a 60% discount to the pre dot-com premium; and LoopNet, which we acquired in 2012, at a 40% discount to its pre-Great Recession premium.

In total, acquisitions have provided about 30% of our revenue growth since our IPO, but it is how we integrate them and how they accelerate our organic growth that's more important. Taking the two examples of above; COMPS.com now brings in 8 times its acquisition level revenue, and LoopNet 4 times.

It's this kind of discount and development potential that we aim to exploit in the coming years and why we view market stress as an opportunity rather than a concern. Over 7,000 proptech companies have emerged over the past decade or so. Probably 500 or so have truly viable business models that are interesting that create plenty of future M&A opportunity for CoStar Group.

CoStar Group is the largest proptech company with the strongest balance sheet and the most experienced and successful M&A, so we believe we are well positioned to make a number of accretive acquisitions in the proptech space in the years to come. We are very patient and have always waited for the right opportunity.

Digital real estate consolidation is clearly a very hot space right now. I think the proof point is Bill Foley's, Cannae and Senator launching a $7 billion hostile takeover bid for CoreLogic in the midst of a global pandemic. I'm very familiar with CoreLogic, since decades ago.

As a young software engineer starting CoStar Group, I invented the first ever version of their flagship digital public records product. Perhaps my first M&A success for our investors was declining an offer from CoreLogic's predecessor company to acquire the fledgling CoStar Group for $250,000 in our first year of operations.

I had thought we were aggressive in acquiring Ten-X in a friendly deal during a lockdown. But I must say that even leaving aside the clear antitrust issues, Foley has one upped us with the aggressiveness of seeking to operate a company acquired in a hostile takeover in the midst of a pandemic.

Lastly, a few words on what we're seeing in the U.S. economy and commercial real estate. The rebound in the labor market that began in April was largely driven by workers coming off of furlough and reattaching to their previous jobs in restaurants and retail. However, as a second wave of infections has spread across areas of the South and Southwest, the momentum in job gains has predictably slowed as reopening plans were paused and reversed.

The improvement in initial claims for unemployment has stalled at a level that is still more than double the worst single week during the Great Recession. Other high-frequency indicators and hiring seemed to have slowed as well, so it seems that the initial V-shape recovery in the labor market is likely to pause. And with the emergency unemployment benefit set to expire in some form at the end of the week, the sharp bounce back in retail sales could also be at risk.

Looking at the commercial real estate market, the lockdown has affected demand drivers for every property type in very different ways. None have been as negatively impacted as hospitality and retail. The retail sector has shown a sharp bifurcation in property performance and rent collections between tenants deemed essential and those labeled non-essential with the former nearly unaffected.

The vast majority of rent forbearance and delinquencies during the lockdown had come from hospitality and retail and we've seen a corresponding pickup in activity from clients in asset management and special servicing as well as from billions of dollars of opportunistic capital that have been raised in recent months.

While certain parts of the industrial market have also been negatively impacted, the lockdown has accelerated positive trends for logistics. In fact once CoStar researchers' capture all the leases signed in the month of June, it looks like it will be a record month for industrial leasing volume all-time record.

For multi-family data from Apartments.com suggests that the spring leasing season was disrupted as you would expect. Asking rents are largely flat year-to-date instead of the gains that are typically seen during the warmer months of the year. We're seeing more noticeable moves lower in the rents of four and five star properties in major metros, in the CBs predominantly, but these are also metros where there are record high levels of new supply coming into the market.

Given this increased competition among landlords looking to fill newly delivered space, it's no surprise that Apartments.com continues to experience record sales months. The office sector is perhaps the most talked about property type of them all, and it's certainly the most heavily debated in the media.

April leasing volume predictably dropped as the transition to work-from-home began and people were more worried about getting a new router delivered to their home office than looking at office space. That being said, April still saw nearly 15 million square feet of new leases signed. And as we move through the quarter, the number have increased sharply as the new cycle shifted from breathless stories about the benefits of remote work to ones about its obvious pitfalls.

There seem to be fewer stories today about companies moving toward full-time work-from-home and we're hearing more about hub-and-spoke office models where firms are looking to lease additional spaces closer to residential nodes from where their employees are commuting.

Even if we have a successful vaccine for immunity may be elusive and the realities of social distancing may be with us for years. In that context, I think it's highly likely that the amount of office space utilized at the workstation expands from a typical 36 square feet per workstation to a pi r- squared or 3.4 times 6 squared or 113 square feet from 36 square feet to 113 square feet. That could be a huge demand boost requiring tens of thousands of new office buildings, albeit in shifting geographies.

Uncertainty has permitted the capital markets landscape -- permeated the capital markets landscape and we've seen a drop-off in deal volume, which registered at just over $46 billion in the second quarter of this year, about 30% of where it trended in 2019 and 40% of what we've seen over the last five years.

Yet the absence of deal flow isn't a reflection of series -- commercial real estate's relevance waning, rather that investors and lenders are finding it difficult to underwrite deals in this uncertain environment and that there's a pricing disconnect between buyers hoping for a steep discount and sellers holding on to pre-pandemic valuations.

We expect that rising vacancy, slowing or negative rent growth, and rising cap rates is likely to impair pricing and valuations by upwards of 10% relative to pre-COVID levels. These capital market trends illustrate the countercyclical nature of CoStar's business and its suite of products.

During times of change and exogenous cyclicality, investors, owners, operators and lenders and tenants rely just as heavily on technology and data insights to inform their decisions and facilitate their deals operations and apartment searches on the Apartminternet.

As we conclude our first quarter operating results in this terrible pandemic, I'm very grateful to all of my colleagues who continue to execute in our business at the highest levels of professionalism. My colleagues did not miss a beat and I have the greatest confidence in their ability to continue to deliver great results for our customers and investors, whatever the challenges we face in the quarters ahead.

Our services clearly remain mission-critical. Our online marketplaces are providing critical support to tens of thousands of clients, maybe hundreds of thousands of clients who need our virtual leasing solutions to bridge them until we can return to the normalcy of an in-person property tour. This is a great quarter to be especially grateful to our great team, including you, our investors, the 12th player.

At this call, having survived the thunderstorm without a power failure, I will turn the call over to our CFO, Scott Wheeler.

Scott Wheeler -- Chief Financial Officer

Well done. Thank you, Andy. You moved through that quite quickly to avoid the storm. Glad I didn't have to pick it up and read it, never quite the same coming from me. So, yeah, I'm also encouraged by our second quarter results and we've seen great improvements in each month of this quarter since the pandemic disruption began back in March and April.

Our revenues in the second quarter of 2020 increased 16% over the second quarter of 2019, coming in above our 13% revenue growth guidance for the second quarter and $5 million above the high end of our revenue guidance range. Revenue growth in the second quarter excluding STR was 12% year-over-year. We did not record any revenue from the Ten-X acquisition in the second quarter.

CoStar Suite revenue grew 8% in the second quarter of 2020 versus the second quarter of 2019 coming in at the high end of our guidance range. CoStar Suite sales hit a low point in April and improved throughout the quarter, with June sales for CoStar coming in as the strongest month of the quarter, resulting in positive net sales bookings for CoStar in the second quarter.

This is certainly encouraging when you compare it to the '08 or '09 recession when net sales bookings for CoStar were negative for four consecutive quarters. We certainly didn't see that trend materializing in the second quarter.

As the lower subscription sales levels this past quarter start to impact the second half revenue, the revenue growth rates for CoStar are expected to be sequentially lower for the third and fourth quarters of 2020.

Accordingly, we now expect the revenue growth rates for CoStar Suite to be in the 6% to 7% range for the full year of 2020. At this time, we don't have any renewal price increases assumed in our full year outlook.

Revenue in Information Services grew 47% year-over-year in the second quarter to $31 million coming in above the high-end of our guidance range. Overall, we expect reported revenue from Information Services to grow at a rate of approximately 45% on a year-over-year basis in 2020 with STR contributing revenue in the range of $52 million to $54 million for the year.

Multifamily revenue growth for the second quarter was outstanding, improving to 21% over the second quarter of 2019. As Andy mentioned, we had record sales in multifamily in the second quarter, driven by an increase in the number of properties advertising with us, which went up 10% in the second quarter as well as growth in the average revenue per property, which increased 11% in the second quarter as properties continue to upgrade to increase our exposure. Based on continuing strong sales, we expect revenue growth of approximately 21% for the full year of 2020.

Commercial property and land revenue grew 13% year-over-year in the second quarter, exceeding the high end of our guidance range. The LoopNet marketplace grew 18% year-over-year in the second quarter as sales results improved each month following a low point in March and April, very similar to CoStar.

With LoopNet traffic now above pre-pandemic levels and the increased exposure that our signature ads are producing for our customers, we expect sales and revenue to improve sequentially in the second half of this year and thus perform more or like to the apartments' marketplace. For the full year, we expect organic growth for commercial property and land of approximately 13%.

Beginning in the third quarter of 2020, we will be including Ten-X revenue in the commercial property and land category alongside LoopNet. Including forecasted revenue in the range of $25 million to $30 million in the second half of 2020 for Ten-X, we expect that the commercial property and land revenue growth rate will be approximately 25% to 28% for the full year of 2020.

Our gross margins came in at 81% in the second quarter, exceeding our forecast of 80%. We now expect gross margins of 81% to continue for the remainder of the year. Our profitability was strong in the second quarter with net income, adjusted EBITDA and non-GAAP EPS results all ahead of the guidance that we issued in April.

Our second quarter 2020 adjusted EBITDA of $129 million represents a 17% increase compared to adjusted EBITDA of $110 million in the second quarter of 2019. Q2 adjusted EBITDA was approximately $16 million above the midpoint of our guidance range. Approximately half of the favorable profit outcome was from higher revenues in the quarter and the other half was from holding overall spend levels in line with the first quarter of 2020. Our marketing costs increased seasonally in the second quarter, although less than expected, given some of the disruptions in April.

Our hiring restrictions continued throughout the second quarter, resulting in modest headcount declines as attrition continues at slow paces and resulting in lower personnel costs. The resulting adjusted EBITDA margin of 32% is 350 basis points above the midpoint of our guidance range and it's in line with the margin we achieved in the second quarter of 2019.

Now, let's take a look at the performance metrics for the quarter. At the end of the second quarter, our sales force totaled approximately 860 people, including approximately 60 salespeople from STR and Ten-X, which we've included for the first time in our reporting. Excluding STR and Ten-X, our sales force totaled approximately 800 people, which is in line with the sales headcount we had at the end of the first quarter of 2020.

The renewal rate on annual contracts for the second quarter of 2020 was 89%, down approximately 100 basis points from the first quarter of 2020, which was better a result than the 200 basis point decline that we expected when we gave you our outlook last quarter.

Our current forecast for renewal rate anticipates an additional decline of approximately 100 basis points in the third quarter with stabilization and gradual recovery expected thereafter. This is indeed a positive trend and testament to the value our customers place on our information.

In the Great Recession of '08 and '09, our renewal rates declined approximately 800 basis points before recovering. We're not seeing anything near that type of a recession impact in this downturn. Renewal rates for the quarters for customers who've been subscribers for five years or longer was 95%, in line with the renewal rate of 95% in the first quarter of 2020. Subscription revenue on annual contracts accounts for 82% of our revenue in the second quarter of 2020, slightly below the 83% from the first quarter of 2020.

Now, on to our outlook. We are reinstating revenue and earnings guidance for the remainder of 2020, given the stabilization and improvement in our sales and the operating results over the last 90 days. Although there's still potential for continued economic disruptions in the months ahead, we believe we can forecast the remainder of 2020 within a reasonable range of outcomes, given the relative predictability of our subscription revenue model.

We currently expect revenue for the full year in a range of $1.63 billion to $1.64 billion, which represents a growth rate of 17% at the midpoint of the range compared to 2019. This estimate includes approximately $25 million to $30 million in revenue from Ten-X in the second half of the year.

We expect revenue for the third quarter of 2020 in the range of $415 million to $420 million, representing topline growth of around 18% at the midpoint compared to the third quarter of 2019. This estimate includes approximately $12 million to $13 million in revenue from Ten-X.

We expect adjusted EBITDA for the full year 2020 to be in the range of $515 million to $525 million, which is within $5 million of the previous full year guidance range of $520 million to $530 million that we provided back in February of this year prior to the impacts of the COVID-19 pandemic. Our current forecast assumes roughly breakeven adjusted EBITDA for Ten-X in the second half of the year.

Our outlook for the year currently includes year-over-year increase in our marketing spend of approximately $80 million, which is a significant increase year-over-year, although lower than the full-year estimates we provided to you back in February.

As Andy discussed, our marketing efforts are focused on the most effective digital and broadcast marketing channels for both Apartments.com and LoopNet and they're proving to be very effective. Our marketing spend in these channels was briefly disrupted in early March and April, but has since returned to the spend levels that we anticipated in our original plans.

On the other hand, there are certain marketing activities from our original 2020 plan such as in-person industry conferences, direct-to-mail, advertising major sports events. These are no longer possible nor effective and so they're not included in our outlook for the remainder of this year.

For the third quarter of 2020, we expect adjusted EBITDA in the range of $120 million to $125 million. We expect marketing costs to increase sequentially in the third quarter as we continue to build momentum on the heels of our strong second quarter marketplace performances.

We now expect full year non-GAAP earnings per share in the range of $9.22 to $9.42 a share based on 38.3 million weighted average shares. This estimate includes the impact of the recently completed equity and debt offerings.

For the equity offering in May, we issued 2.6 million additional shares. The additional shares dilute our non-GAAP EPS by approximately $0.06 for the second quarter and approximately $0.38 for the full year, which is an approximate 4% dilution, which is lower than any of our previous follow-on equity raises.

With regard to the debt offering which closed July 1st, the net interest impact of the new notes after the pay down of the revolver is expected to be approximately $7 million or $0.14 in non-GAAP earnings per share for the full year that's incremental for the interest on the revolver. For the third quarter of 2020, we expect non-GAAP net income per share in the range of $2 to $2.10 based on 39.4 million shares.

So, I'd like to make a few comments about our balance sheet and our capital structure before we open up the call for questions. Over the past 90 days, we raised approximately $2.7 billion, consisting of our follow-on equity offering of $1.7 billion in May and our first public debt offering of $1 billion in June, which closed July 1st. In addition, we renewed our revolving credit agreement for additional five-year term at $750 million and we converted it to an unsecured structure.

Our balance sheet is stronger than ever. We now have approximately $3.8 billion in cash, $1 billion of structured debt and an undrawn revolver. We're in a very strong position to take advantage of both organic and acquisition growth opportunities that might present themselves in the months and years ahead.

We have a strong track record of successful value-creating acquisitions, which is why I believe investors are confident in our ability to effectively deploy acquisition capital in the future.

Over the past 10 years, we've used a balanced approach to fund almost $3 billion of acquisition deploying operating cash equity and debt in roughly equal amounts. In just the past year, we have committed approximately $1.2 billion for three strategic acquisitions; STR, Ten-X and RentPath. If we can continue executing our acquisition strategy at this pace, it would take us approximately three years to deploy our current cash reserves.

In summary, we had a very eventful second quarter. We adjusted to a new way of working, we continue to support our customers, protect our employees, deliver very strong financial results, complete our first remote acquisition and raised $2.7 billion, and significantly strengthened our balance sheet.

I can't wait to see what we're going to do next. Thank you for your continued support. I look forward to updating you all on our progress in October.

With that, we will now open up the call for questions.

Questions and Answers:

Operator

[Operator Instructions] And your first question comes from the line of Pete Christiansen from Citibank. Your line is open.

Peter Christiansen -- Citibank -- Analyst

Good evening. Thanks for letting me take -- ask a question here. Good trends and congrats on the recent capital raises. I had a question...

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Thank you, Pete.

Peter Christiansen -- Citibank -- Analyst

You're welcome. As the health crisis has kind of changed here and it's migrated to other states, do you believe that you can continue the bookings momentum that you saw in June into July? Have you seen similar trends there? Just curious if you've seen changes in bookings activity with the health crisis changing?

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

The trending seems to be similar to what it has been in the last three months, so it seems to be performing roughly the same. So we're not seeing much of a shift in any way.

Peter Christiansen -- Citibank -- Analyst

That's helpful. Thank you.

Operator

Your next question comes from the line of David Chu from Bank of America. Your line is open.

David Chu -- Bank of America -- Analyst

Hi. Thank you. So Andy, why do you believe that renewal rates will be so much better in this recession versus the past recession? Is this a reflection of just lower CRE broker bankruptcies?

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

I think it's a couple of things. I think one factor is that in the Great Recession we had two super low-cost competitors. So we're competing against a very well-funded Xceligent back in the Great Recession. And approximately for every dollar they charged a customer, they were spending $2 to $3 producing the product.

So they were heavily subsidized. And they were charging probably -- they were probably charging 15%, 20% of what we charge for a service. So we saw people shifting down to the lower cost product. We also were competing against LoopNet at that time who is offering a product at 5% of the cost of our product.

So those two things are no longer a factor. And I think that we've made good progress over the last, gosh, over the last 10 years or so, continued to improve the product, the value of the product, getting news, more functionality, people are living in it more frequently.

So unless someone is going out of business, which is certainly happening, we would anticipate more resiliency in this downturn than the last on the CoStar side. And then the other areas, I think, are in fact countercyclical.

I think we're ready for the next question.

Operator

And your next question comes from the line of George Tong from Goldman Sachs. Your line is open.

George Tong -- Goldman Sachs -- Analyst

Hi, thanks. Good afternoon.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Hello, George.

George Tong -- Goldman Sachs -- Analyst

So CoStar Suite revenue growth, decelerated in 2Q to 8% year-over-year. Can you elaborate on the broader sales environment for CoStar Suite, including changes in the sales cycle and sales force productivity as well as what impact you expect the commercial real estate market to have on CoStar Suite?

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Yeah. So, I think that the big takeaway is that first month of the quarter, April was just a stop, not much was happening. So that was a big factor. And then, it began to build back up and I think it will continue to build back up. Sales productivity began to return back to more normal levels, as we went into June, it began to -- continue to improve.

And one of the things that -- one of the considerations is that, we have this -- the CoStar sales force is selling both LoopNet and CoStar. So you can get -- you could get sales force productivity climbing, while you have one of those two products not climbing as quickly. So one could take from the other. So one of the things we'll be looking to do over the next year or so is continue to invest at a modest level in building more resources to be able to go after both product areas simultaneously.

But I think in my remarks I've addressed the fact that I think CoStar remains in strong demand throughout a cycle. Opportunistic PE folks coming with billions -- hundreds of billions of dollars to invest and look for dislocation. People continue to return -- renew leases. I fully expect that. And, so people are going to still be looking to CoStar to understand where the values are, what transactions are possible.

So I think we'll be optimistic about it. Also remember we're adding more and more to CoStar. So you'll be seeing Ten-X auctions in CoStar. You're going to be seeing STR data in CoStar. You're going to continue to see enhancement, you're going to see more lending solutions. So it's growing, it's strong. We feel good about it.

Operator

And your next question comes from the line of Bill Warmington from Wells Fargo. Your line is open.

William A. Warmington, Jr. -- Wells Fargo Securities -- Analyst

Good afternoon, everyone.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Good evening, Bill.

Scott Wheeler -- Chief Financial Officer

Hello Bill.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

We've changed the [Indecipherable]. For 20 years, we did these things in the morning, we switched to evening and it can take a while to catch up.

William A. Warmington, Jr. -- Wells Fargo Securities -- Analyst

I'd appreciate your patience. So I had a question for you on signature ads and it sounded like in some of your prepared remarks you talked about LoopNet recovering. I remember in the first quarter, it sounded like January and February had started really strong and then COVID had derailed things.

And I was hoping you could talk a little bit about what the average price you're getting these days is and where you're getting traction within Diamond, Platinum, Gold and the Premium lister? And what the contract links look like?

I think that it started out at three months now their moving north of six months. I was hoping to get a better picture of where signature ads are headed?

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Yes. That's correct, they started three months, they've gone to six months and that's basically because we invest a fair amount upfront in bringing them up online and it takes more than three months to lease a $100 million building or to sell a large product like that. Scott, do you have specific numbers on the movement? I mean it's small, but...

Scott Wheeler -- Chief Financial Officer

Yeah. Yeah, as far as the signature ad pricing that you're talking about, we continue to see upward lift in signature ad pricing as they're shifting into more high-value ads. I think the average price now in the signature ads blended across the different tiers, it is about $750 for those ads compared to the Premium Listers, which are somewhere in the low to mid-$60's per ad. So our overall blended around $70 to $75 bill on the ad with the mix. So still seeing good positive pricing generation and pricing momentum on the signature ads.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

And Bill, if we were to look out over the next five years, I actually feel that those -- that $700 price point could move into the thousands of dollars pretty comfortably and I think we could take significantly more share into the signature ads, up from the premium listing, which would give us dramatic growth in the blended average price and do that with a satisfied customer base, which we're feeling they're getting value.

And I'm very bullish on the value we're delivering our advertisers. I think we're delivering amazing value to these folks right now and I think that it's our job to communicate how much value we're bringing to them. So I think we'll have a lot -- a good story there for five years plus.

Operator

Your next question comes from the line of Ryan Tomasello from KBW. Your line is open.

Ryan Tomasello -- KBW -- Analyst

Hi, good evening, everyone. Thanks for taking my question. I wanted to hone in on Apartments.com, it really seems like the current environment is a bit of a Goldilocks scenario for that business with the accelerated move to digital and some of the counter cyclicality starting to play out.

So I guess my question is, if this backdrop is changing your strategic thinking if at all around the apartment business in terms of penetrating that TAM that you've talked about with products outside of just advertising, do you think that there is enough greenfield opportunity there to continue just to focus on the advertising product or is there also an opportunity more near term to move beyond lead gen and more directly monetize other areas in leasing and payments and areas like that?

Scott Wheeler -- Chief Financial Officer

I think that the approach we're taking is, first of all, to be very clear, I think there is a massive amount of greenfield. So I am absolutely convinced that the area below 100 units is just as relevant as the area above 100 units. And it's just sort of an accident of history that it hasn't been monetized to-date.

And so we have growth above a 100 units and we have only penetrated 1% of the below 100 units. So we have 99% to go. So it's a massive opportunity. However, we -- it doesn't keep us from wanting to add more tools to improve the overall experience and the margin as we invest in these tools and we can spread that across a large audience it won't really impact our margin.

So we want to provide as much value as we possibly can to accelerate penetration. I think that the addition of this relatively small inside sales team in Richmond and the fact that they spun up and became productive working on new sectors so quickly is a lesson that we may want to invest in growing our sales force at a measured level because we -- the productivity per salesperson and the ROI per salesperson is great and the market is huge.

Operator

Your next question comes from the line of Sterling Auty from J.P. Morgan. Your line is open.

Sterling Auty -- J.P. Morgan Securities -- Analyst

Yes, thanks.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Good evening, Sterling.

Sterling Auty -- J.P. Morgan Securities -- Analyst

Good evening. And I'm glad...

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

I was worried as I got the 20th page, there would be feedback.

Sterling Auty -- J.P. Morgan Securities -- Analyst

So, you talked about the efficiencies in terms of the customer acquisition by doing digital marketing versus in-person. How do you think about as we move past and business travel opens up etc., to whatever extent it does, how much did you have a learning experience that maybe you're going to be able to capture and even drive higher margins than what you may have thought six and nine months ago because of how effective this has been through this environment?

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Well, I think it's a really excellent question and there's a lot of truth laced in there. So there are a lot of things we do as we deploy people in different markets and the amount of business travel we do to reach our customers face-to-face and we invest a lot in travel and move even within a city.

And I think there is no substitute for face-to-face interaction with our customers over time, but we have seen 100 million people have now just learned what Zoom is and FaceTime and GoToMeeting and Webex. And so 100 million people who before were complete luddites are now well versed in digital and video communication. So our ability to train, on-board, support, grow our accounts very cost-effectively I think is really enhanced.

And that's a positive that's come out of this. But I do think there'll still be -- on return there'll still be a need for face-to-face, but dramatically less. So there's a little bit of margin benefit there a little, probably a little bit of customer acquisition benefit there, maybe a lot.

Operator

Your next question comes from the line of Mario Cortellacci from Jefferies. Your line is open.

John -- Jefferies -- Analyst

Hi, it's John [Phonetic] filling in for Mario. You have a lot of cash right now. Could you give us a sense for what a third leg to the business might look like? The Ten-X deal was interesting in that you haven't played that market before. What other types of businesses where you look at? Any specific criteria from a growth perspective or end market or product type? Thank you.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Well, I think one of the challenges would be careful not to say anything. So that's probably the hardest thing is not answering. So there are a wealth of opportunities and if you look at the things we've done in the past, those are sort of indicative of what we might do in the future. So we're looking for things that have high overlap with strengths we already have.

So where we look at their business and we think that there are things that we can bring into our business that will not incur incremental costs, but incur incremental value into our existing business and vice versa, so that we can bring things into their business that we already have as part of our inventory and part of our sum [Phonetic] costs and will add value to their business that could be distribution channel, data, software, marketing, any number of things.

So, example at Ten-X, we can bring that into our operation and bring them massive exposure for their auctions which I think will dramatically improve their business and it has relatively low cost to us. So things like that.

Now we're not going to stray terribly far from, like there's no need to stray terribly far from where we've been in the past because there are literally hundreds of companies that are immediately adjacent to some area we're already in and they range from small to very, very large.

So I think that the future is going to be more like the past. I know I've been waiting for the first phone call. We raised a first question on the call and thank you for delivering it. I talked about it while we were raising the capital. I said we will complete this capital round and we'll be answering the question.

But we'll be patient. The first earnings call we'll be answering the question what we can do with the money. We'll be patient and we'll be prepared to answer the question multiple times until we find the right deal. It may take one, two, three, four or five deals to make an impact, it may take four or five earnings calls, it may take 10 earnings calls.

But we're looking for the right deal at the right value with low risk and with us prepared to do the right integration execution. So we'll be patient and it will be related and we'll have more than two or three thesis for why we think the deal will work.

Operator

Your next question comes from the line of Jeff Meuler from Baird. Your line is open.

Jeffrey Meuler -- Robert W. Baird & Co. -- Analyst

Yeah, thanks. Good evening. Was hoping you could expand on your comments about the data that you're using for digital outreach targeting and retargeting in LoopNet Signature. So you mentioned the tenant data, just if you could be more specific about how granular you get. And obviously you have a broad wealth of data throughout Suite. So would just love more detail on the data informing the targeting and the retargeting?

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Sure. I think I won't go into painful detail there, but just give you a couple of examples. So, we could look at any particular cluster of buildings in the United States by property type and say office in Tysons Corner, and then we can look at 15 years of leasing history and we can see what the most probable sources of a tenant are for any particular building.

So we know that there's a high correlation between tenants in Tysons Corner that tend to lease in Tysons Corner, but also tenants in Boston tend to shift to Tysons Corner a little bit less going from Ruston to Tysons Corner. Shockingly some from Bethesda over to Tysons Corner.

So we can look at those patterns and then we can -- we have a list of all of the tenants that are roughly in that quality zone for property in the chart in the -- in the source markets over history and then we have lists of emails and people associated with those tenants, and then we retarget those people aggressively.

So, we funnel our spend for a Tysons Corner building against the people who are most likely to come in. And now, we also know the lease expirations. We know when they moved into this space. We know if they're growing, if they're contracting. So it's very, very targeted spend.

Then when someone -- when we see someone come from a particular organization to look at a property in Tysons Corner, we can look at other people that looked at that same property what other buildings they looked at. We use collaborative filtering and similar the way Amazon does to then invest in retargeting against people that either looked at the subject building to sync in frequency or we may use a collaborative filtered property to bring in -- bring someone from a building that just like that one and try to engage them in this other building.

And that's also true with people that have -- we look at buying patterns of what people are investing in. We're looking at what people are searching and looking at for Ten-X. So it's just an endless sort of big data exercise, AI exercise of how we invest money against the right targets to very efficiently drive people and that's working like a rock star right now.

The -- I'm very, very happy with the 600% increase in frequency we delivered to our Silver -- our Diamond and Platinum advertisers in LoopNet over the last quarter. That is real value they're going to see and it really drives their brands home to their target. So -- and it's sort of fun to do. We have a bunch of folks that enjoy doing that, a couple of walks over here.

Operator

Your next question comes from the line of Andrew Jeffrey from SunTrust. Your line is open.

Andrew W. Jeffrey -- SunTrust Robinson Humphrey -- Analyst

Hey guys, appreciate you taking the question. Andy, maybe would like to expand a little bit on a question asked earlier at a more strategic level. I hear you talk about, for example, the sub 100 unit apartment market is being -- you implied a $10 billion TAM.

I think when you add up these marketplace's TAMs, they're are bigger, you might argue how many times bigger than Suite, but bigger than Suite and clearly have these countercyclical or even structural growth attributes in terms of the shift to digital.

So I guess what I'm getting at is, does there come a time or are we approaching a time where Suite, although it still grows is positioned more as the funding source for growth in these marketplace businesses which are bigger and perhaps can sustain faster multi-year growth? I mean, would you articulate that kind of strategic change in CoStar's business?

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Well, I mean, I think you're -- if you look at five to 10 years, I think there will be a lot of growth in these marketplaces. The -- for sure, and I wouldn't be surprised if they don't -- if our source of revenue doesn't become more and more diversified between CRE marketplace, multifamily marketplace, some -- land marketplace, BizBuySell marketplace and other marketplaces we may enter.

So I would not at all be surprised if the marketplaces didn't eclipse the revenue from CoStar Suite as CoStar Suite grows. But I wouldn't count CoStar Suite out. There are many, many growth drivers for CoStar Suite. So we are well penetrated in the brokerage community, but we have a lot of green space, lot of greenfield in the owner area, in the lender area, and in international growth.

So we have some exciting stuff happening in the fourth quarter and in the first quarter; third and fourth quarter and first quarter. So in the third and fourth quarter, we're going to have a fully internationalized version of CoStar Suite in many languages, so people can look at properties from Spain and in Spanish across multiple European countries and across the United States. And I think that just like the company experienced a surge of growth as we went from being in three or four U.S. cities to being a largely national footprint, I think we have that same opportunity internationally.

And we'll be communicating some things over the months to come that I think will sort of reinforce that opportunity. And I think that it will change the way that London Broker perceives us when their terminal isn't just showing them Mayfair information, but is showing them the whole civilized world in their terminal eventually, right?

I think it will change the perception and the value of the product and the reach, especially the owners and lenders investors and private equity funds. So there's a lot of growth there. Also, the tools that are going to productize our lender solutions to a much broader audience, I think are pretty exciting. So I think there are a lot of growth drivers there.

I worry about one of the things that I think is a stressor on the business right now is not the market, it's not the -- it's just -- it's the fact that our sales force over the last five or six years hasn't grown much. We have roughly the same size sales force, but it has CoStar and LoopNet now. It has the banking side. It has so many things going on. But I just think that maybe we need to grow that sales force, a little bit to be able to capture all the different opportunities we've got.

Operator

Your next question comes from the line of Brett Huff from Stephens, Inc. Your line is open.

Brett Huff -- Stephens Inc. -- Analyst

Good evening, guys. Thanks for taking the time. I appreciate it.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Good evening.

Brett Huff -- Stephens Inc. -- Analyst

A quick question, a follow-up on LoopNet -- a follow-up on LoopNet that was the business of yours that we struggled most in trying to figure out what would happen in this pandemic. Looking at history it was -- I think Andy you mentioned, it was hit harder than this time.

My gut is that there's some demand compression because people may just not be advertising as much in some instances bid-ask prices -- or bid-ask spreads are wider. On the other hand, you have a much stronger shift to quote on digital advertising within the vertical that is commercial real estate.

Can you talk about that trend and kind of the power of the down arrow and the up arrow and where we're -- the fact that Scott said, revenue is going to get better over the next couple of quarters is really I think, indicative. But how do we think about those down and up arrows.

And then I'll ask again the question I asked last time, which I thought was helpful, if any change the microeconomic decision of a person thinking about advertising a building or lease. Has that changed at all gotten better or worse etc.? Thanks.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Yeah. So LoopNet is, and I think the arrows overall go strongly toward countercyclical to LoopNet and I think it's a trend you're going to see even after we come out of this particular cycle. So your comment about bid-ask spread is correct. People are not going to be doing as many transactions, but you can actually pick up that business over in the Ten-X side. So you'll pay us differently, but we'll monetize the transaction -- really the value we're delivering is the digital marketplace, but you're going to monetize it over on Ten-X.

On the leasing side, I think you're a nut job right now if you're not leasing your high-end -- marketing your high-end building on LoopNet. I mean, I think it's just beyond me, what you'd be thinking. So you have this $200 million building, no one wants to crowd in an elevator and go up and down you're building with a bunch of people look at it. But you have -- most people searching for office space on LoopNet right now are retail space, industrial space and to not be front and center in front of that community and that buying audience in this environment is just nutty.

So I think it's more of an education thing. I think that Apartments.com was -- it's an education thing and it's a size of sales force thing. So Apartments.com had a much bigger sales force going into this cycle and people were more -- it was more established and people were more used to digital marketing for apartments. So the combination of bigger sales force and the behavior allowed it to flex hard into countercyclical LoopNet, in the -- it predominantly have been a lower-end broker marketing solution was newer at the upper end property solution area.

The office retail industrial industry was less experienced to digital marketing. We have smaller sales force there. So it's taking longer for it to flex into countercyclical. But we're going to be looking forward to do that and truth is on our side. So, we'll work into that and play into that.

Operator

Your next question comes from the line of Mayank Tandon from Needham & Company. Your line is open.

Kyle Peterson -- Needham & Co. -- Analyst

Hey, good evening. This is actually Kyle Peterson on for Mayank. Thanks for taking my question. Just wanted to drill down on the STR business, it's a good sign, seems like the trends and net new sales have actually been at least better than we were expecting given all the headwinds, the travel industry is facing. Just wondering if you could just drill down a little bit more into what drives these sales and eventually revenue growth, if it's not directly, I guess, related to things like occupancy.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Yeah. So the -- one of the first things that drives the positive sales result in the face of just astoundingly negative economic conditions is the fact that no one -- people don't cancel their STR because things are going poorly. So in a rough environment STR is your compass. When you're lost in the woods STR is your compass to try to find your way out.

And you're paying -- you've got a multimillion-dollar property or a $100 million property and STR is costing you a couple of thousand dollars a year. So -- you don't -- when you discover you're lost in the woods, that's not the time you throw out your compass. So that's a critical fact.

Secondly, the -- some independent owners, this will be too much for them. A sustained low occupancy levels will break their ability to keep their properties. There's billions of dollars of capital looking to take advantage of that dislocation and some of those folks are coming in and buying information and services from STR. So we're getting a little countercyclical going on there.

We anticipate that, we will lose some of those independents. Bad debt is coming up a little bit some of the small independents. But there may well be significantly more revenue on the Ten-X side as we pick up that business in other forms elsewhere in our business.

Longer term, I think we have a really straightforward opportunity to provide some real software value to the industry; lenders, investors, operators, REITs by integrating the STR content into CoStar. STR's technology magic for the first decade of its life were benchmarking and the ability to keep the data anonymized and secure and give people quality benchmarking.

I think we'll retain that technical skill, but we're going to bring a new skill set, which is more processing power against the analytics more correlating data, expanding the breadth and depth of the different sorts of data sets we have from benchmarking to P&L benchmarking to forward casting to forward-booking information, all that sort of stuff. So product flow will probably drive a lot of growth in the future.

They'll likely be -- we also going into the future intermediate term. STR did a really great job at selling into the hotels themselves. But there are so many other parties that are interested in the intelligence STR produces that a larger sales force, a larger marketing operation will allow us to reach more untapped segments there.

So, a bunch of drivers there, and I think all of us, our investors, our analysts and our staff are pleasantly surprised at the fact that STR has actually been so resilient in unprecedented economic headwind. So, hats off to the team at STR, Amanda Hite, Elizabeth and the whole team holding things together, marching on in a tough environment.

Operator

Your next question comes from the line of Stephen Sheldon from William Blair. Your line is open.

Stephen Sheldon -- William Blair & Company -- Analyst

Hi, thanks. Wanted to ask for some more detail on bookings trends. So how much of bookings activity in June was potentially a catch-up of activity from prior months? What does have booking trends look like so far in July? And then, Andy, maybe what surprised you the most in terms of bookings activity overall since the pandemic began? Thanks.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Yeah. So, I never had a context for a pandemic. So, anything would surprise me, and I everything is like, what is this?

Scott Wheeler -- Chief Financial Officer

Everything is.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Everything was a surprise. So, by far and away the biggest surprise was the mega empirical counter cyclicality of Apartments.com. That was just amazing. And I don't think the selling activity is catch-up, I think the management team, Fred Saint, Paige Forrest, Patrick, Dan did a great job of innovating, when NAA canceled their conference, our team put on their own conference, and sold a lot of product for little to no money invested.

So I don't think it was catch-up. I think this is new business they're winning and I think they're just people in a world in which they can't put a sign spinner in front of their apartment building productively or buying digital instead. So, that's just a very positive trend. And I think that's going to go forward.

I also think that one of the positive things that comes out of these bad situations is that people modify their behaviors going into one of these severe disruptions, but they don't modify them back. Very often that 30 unit community that never bought any solution from Apartments.com starts buying it because of a particularly tough environment, but settles into it, likes the results, and stays with it for a while.

I think the other thing that, if I could say surprised me was the fact that I've spent 30 years looking closely at employment data and this is the worst it's ever been by far. So I would have expected a much more severe down drop than we've actually experienced. So -- and to come into June with virtually every one of our product platforms growing is remarkable.

That was a big surprise. Everything is growing. There's nothing, and even STR is growing. And so the speed at which we came out of it -- and I think that I'm just going to -- we will definitely chalk up April permanently to just people saying what's going on. It's the buying a comfortable office chair for home and a router. That's what April 2020 was.

Operator

And your next question comes from the line of Joe Goodwin from JMP Securities. Your line is open.

Joe Goodwin -- JMP Securities -- Analyst

Hey guys, thank you for taking the question. Can you talk about how the pricing for Apartments.com changes when you're selling into the sub 100 unit segment? And perhaps maybe how you're approaching that segment differs on pricing versus the north of 100 unit segment? Thank you.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Yes, absolutely. So the price per unit comes way up. So actually the cost of marketing apartment -- a 10-unit apartment building in traditional methods versus the cost of marketing a 400 unit apartment building in traditional methods, your cost per unit is much higher at the smaller properties and going down to the -- if I take the cost per unit at a single-family dwelling, that might be paying a real estate agent a month of rent which -- that's where you're getting your highest cost per unit.

So our pricing sort of follows a little bit of that. So you're going to come down where you might be spending $700, $800 for a 130 unit community or for a mid-line ad you might, that prices may come down to several hundred dollars at the lower end. Also, you may be in and out of the market at the single-family dwelling, so that may be a shorter contract period.

But surprisingly, the pricing is actually not that dissimilar and what really happens is that people with the 200 unit community will go aggressively for the Diamond plus because they need higher lead flow, they've got more units to fill. So they might choose to up their exposure, their sort and go up to $7,000 a month, whereas the person with single-family dwelling can be quite happy with the results they get at $295 in a month or $295 for a campaign that might last for two months or three months. So it's not wildly dislocated. There is more money at the bottom than there is at the top in this industry, I believe.

Operator

And there are no further questions at this time. Andy, I turn the call back over to you for some closing remarks.

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Well, thank you all for joining us on this call. We had a solid quarter despite the challenges. And again, I want to thank the investors, the new investors who joined us. Thank you for your confidence and we're getting to work, deploying your capital responsibly in the best time frame possible. So thank you everyone for joining us.

Operator

[Operator Closing Remarks]

Duration: 80 minutes

Call participants:

Sarah Spray -- Vice President, Investor Relations

Andrew C. Florance -- Founder, Director, President and Chief Executive Officer

Scott Wheeler -- Chief Financial Officer

Peter Christiansen -- Citibank -- Analyst

David Chu -- Bank of America -- Analyst

George Tong -- Goldman Sachs -- Analyst

William A. Warmington, Jr. -- Wells Fargo Securities -- Analyst

Ryan Tomasello -- KBW -- Analyst

Sterling Auty -- J.P. Morgan Securities -- Analyst

John -- Jefferies -- Analyst

Jeffrey Meuler -- Robert W. Baird & Co. -- Analyst

Andrew W. Jeffrey -- SunTrust Robinson Humphrey -- Analyst

Brett Huff -- Stephens Inc. -- Analyst

Kyle Peterson -- Needham & Co. -- Analyst

Stephen Sheldon -- William Blair & Company -- Analyst

Joe Goodwin -- JMP Securities -- Analyst

More CSGP analysis

All earnings call transcripts

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