CoStar Group (CSGP 8.66%) reported second-quarter results on July 24. The provider of commercial real estate information services and online marketplaces delivered strong revenue and profit growth, prompting it to boost its financial forecast for the second time this year.
CoStar Group results: The raw numbers
|
Metric |
Q2 2018 |
Q2 2017 |
Year-Over-Year Change |
|---|---|---|---|
|
Revenue |
$297 million |
$237 million |
25% |
|
Net income |
$44 million |
$22 million |
98% |
|
Earnings per share |
$1.20 |
$0.68 |
76% |
Data source: CoStar Group Q2 2018 earnings release.
What happened with CoStar Group this quarter?
CoStar is using acquisitions to widen its economic moat in its online apartment-listings business. Its integration of recent purchase ForRent is progressing ahead of schedule, the company said, and is already helping to boost traffic and sales for CoStar's Apartments.com network of sites.
"In multifamily, we continue to expand our leadership position in unique visitors, visits, leads, and revenue," CEO Andrew Florance said in a press release.
In all, multifamily revenue surged 54% to $105 million in the second quarter.
Apartment owners are increasingly turning to CoStar Group for help in finding renters. Image source: Getty Images.
Moreover, CoStar Suite revenue jumped 18% to $134 million. By successfully converting its LoopNet information users to its higher-priced CoStar Suite offerings, the company is boosting its sales while cutting costs and increasing profitability.
"With the integration of the CoStar and LoopNet databases, we were able to eliminate LoopNet's information product and focus LoopNet entirely on being the best possible marketing solution for commercial real estate," Florance said during a conference call with analysts.
All told, adjusted EBITDA -- which excludes stock-based compensation, acquisition-related charges, and certain other items -- climbed 57% to $85.1 million. Adjusted (non-GAAP) net income soared 113% to $60.4 million. And non-GAAP earnings per share surged 93% to $1.66.
Looking forward
CoStar Group expects third-quarter revenue to rise by approximately 23% to between $304 million and $307 million. The company also guided for adjusted third-quarter EBITDA of $102 million to $106 million, and non-GAAP EPS of $2.02 to $2.10.
In addition, CoStar Group raised its full-year financial forecast, which now includes:
- Revenue of $1.180 billion to $1.192 billion, representing growth of 23% at the midpoint, and up from a previous forecast of $1.174 billion to $1.190 billion.
- Adjusted EBITDA of $395 million to $405 million, up from $380 million to $390 million.
- Non-GAAP EPS of $7.75 to $7.95, up from $7.44 to $7.64.
CFO Scott Wheeler said: "Given our strong revenue and profit performance in the first half of the year, we are once again raising our guidance for the full year of 2018. With only six months left in 2018, we are confident we will meet or exceed our goal of 40% adjusted EBITDA margin for the fourth quarter of 2018."
