Please ensure Javascript is enabled for purposes of website accessibility Growth Drives CoStar Group, Inc. Earnings Sharply Higher

By Joe Tenebruso - Mar 2, 2016 at 10:11AM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

The commercial real estate information provider is investing aggressively to strengthen its position in the apartment rental arena.

Image source: CoStar Group.

In CoStar Group's (CSGP 5.84%) fourth-quarter results on Feb. 24, the leading provider of commercial real estate information, analytics, and online marketplaces showed that it is successfully integrating its online apartments sites -- and that is delivering significant cost savings and sizable profits.

CoStar Group results: The raw numbers


Q4 2015

Q4 2014

Growth (YOY)


$193 million

$156.1 million


Net Income

$23 million

$13.9 million


Earnings Per Share




Data source: CoStar Group Q4 2015 earnings press release.

What happened with CoStar Group this quarter?
CoStar Group spent much of 2015 "building the premier marketplace for renting an apartment in the United States," said Founder and CEO Andrew Florance in a press release. CoStar appears to have done just that, as enjoyed more visitor traffic in 2015 than any other apartment rental website, according to comScore. In addition, revenue from jumped 30% year over year in the fourth quarter.

The company is also investing heavily to integrate CoStar,, and Apartment Finder. Those investments are beginning to bear fruit, with fourth-quarter EBITDA (earnings before interest, taxes, depreciation, and amortization) rising to $55 million, a 29% year-over-year increase and a nearly 150% sequential increase from the third quarter of 2015. Adjusted EBITDA -- which excludes stock-based compensation, restructuring charges, acquisition-related costs, and other special items -- also rose 20% year over year to $65 million.

All told, adjusted (non-GAAP) net income grew 17% to $35 million, and adjusted earnings per share increased 18% to $1.10.

Looking forward
For the first quarter, Costar expects revenue of approximately $196 million to $198 million and non-GAAP net income per share between $0.66 and $0.70.

Management also anticipates full-year 2016 revenue of $830 million to $840 million, and non-GAAP net income per share in a range of $3.62 to $3.72 -- an increase of approximately 80% at the midpoint over 2015.

"We believe our investments in and Apartment Finder in 2015 provide a strong platform for future revenue growth, and are additive to the consistent double-digit revenue growth contribution from our core business," said CFO Scott Wheeler. "We expect the success of our integration and cost management efforts will deliver continued profit improvements in 2016."

Looking even further ahead, management reiterated its long-term revenue and margin guidance.

"EBITDA more than doubled from the third quarter to the fourth quarter of 2015 while EBITDA margin for the fourth quarter of 2015 expanded to 29%," said Florance. "We believe these strong results plainly demonstrate that we are on target to achieve our goal of $1 billion in revenue and 40% margin exiting 2018."

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

CoStar Group, Inc. Stock Quote
CoStar Group, Inc.
$62.85 (5.84%) $3.47

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 06/26/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.