Image source: CoStar Group.

In CoStar Group's (NASDAQ:CSGP) 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."

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