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CoStar Group, Inc. Bookings Soar 47%

By Joe Tenebruso - Feb 26, 2018 at 7:50AM

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The real estate information company achieved a $1 billion revenue run rate.

CoStar Group (CSGP 5.84%) reported fourth-quarter results on Feb. 21. The provider of commercial real estate information, analytics, and online marketplaces is enjoying accelerating sales growth as it takes share from its rivals.

CoStar Group results: The raw numbers

Metric

Q4 2017

Q4 2016

Year-Over-Year change

Revenue

$254 million

$218 million

16%

Net income

$44 million

$30 million

49%

Earnings per share

$1.22

$0.91

34%

Data source: CoStar Group Q4 2017 earnings press release.

What happened with CoStar Group this quarter?

Companywide net new bookings jumped 47% year over year to $43 million, driven by a 100% surge in CoStar Suite bookings and a 36% leap in Apartments.com bookings.

"Apartments.com amazingly bucked the historically negative seasonality of the winter months and had its best net new bookings quarter ever," founder and CEO Andrew Florance said in a press release.

Florance also noted that CoStar is benefiting from the recent bankruptcy of its No. 1 competitor, Xceligent. CoStar converted nearly 400 of its former rival's clients into customers in December and a total of 1,000 through Jan. 31.

On a chess board, a golden king stands before toppled silver pieces.

CoStar Group's competitors are falling by the wayside. Image source: Getty Images.

In all, CoStar Group revenue rose 16% in the fourth quarter, to $254 million, fueled by a 26% jump in multifamily revenue. For the full year, the company's revenue increased 15%, to $965 million.

"We had an exceptional year and I am delighted that we reached $1 billion in revenue run rate in the fourth quarter of 2017, one full year ahead of our goal we announced in 2014," Florance said.

Moreover, CoStar Group continues to use acquisitions to press its advantage in the multifamily arena, most recently with its purchase of ForRent, a rental property website company.

"I welcome the ForRent team to the best multifamily marketing service in the United States," Florance said. "We continue to deliver unparalleled value to our advertisers and consumer users as a leader in the apartments industry in traffic, visits, leads, leases, and revenue."

All told, adjusted EBITDA -- which excludes stock-based compensation, acquisition-related charges, and certain other items -- grew 4% to $78 million. And adjusted (non-GAAP) net income, which benefited from a lower effective tax rate, increased 8% to $45 million, or $1.25 per share.

Looking forward 

CoStar Group expects first-quarter revenue of $269 million to $272 million, signifying year-over-year growth of 19% at the midpoint of that range. The company also anticipates adjusted EBITDA of $70 million to $74 million and non-GAAP EPS of $1.32 to $1.40.

In addition, CoStar Group issued full-year guidance for 2018, including:

  • Revenue of $1.170 billion to $1.190 billion, representing 22% growth at the midpoint.
  • Adjusted EBITDA of $365 million to $375 million, up from $280 million in 2017.
  • Non-GAAP EPS of $7.01 to $7.21, up from $4.59.

"We believe our exceptional sales performance throughout the year and particularly in the fourth quarter of 2017 positions us well for accelerating revenue growth in 2018," CFO Scott Wheeler said.

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