CoStar Group, Inc. (CSGP) Bundle
A Brief History of CoStar Group, Inc.
CoStar Group, Inc. (NASDAQ: CSGP) has established itself as a leading provider of commercial real estate information and analytics. Founded in 1987, the company has undergone significant growth and transformation, particularly in its focus on leveraging technology and data analytics to serve its clients in the real estate sector.
Company Growth and Acquisitions
CoStar has expanded its offerings through strategic acquisitions, most notably:
- In December 2023, CoStar acquired OnTheMarket, a UK residential property portal, for approximately £94.0 million ($117.9 million).
- The acquisition involved cash consideration of 110 pence per share, which included liabilities for share options and taxes totaling £2.0 million ($2.6 million).
Financial Performance (2024)
As of September 30, 2024, CoStar reported the following financial metrics:
| Metric | 2024 (Q3) | 2023 (Q3) | Change (%) |
|---|---|---|---|
| Revenues | $692.6 million | $624.7 million | 10% |
| Gross Profit | $552.0 million | $501.0 million | 10% |
| Net Income | $53.0 million | $90.6 million | -41% |
| Net Income per Share - Diluted | $0.13 | $0.22 | -41% |
| Total Assets | $9,138.7 million | $8,919.7 million | 2% |
| Total Liabilities | $1,647.6 million | $1,581.1 million | 4% |
| Total Stockholders' Equity | $7,491.1 million | $7,338.6 million | 2% |
Operating Segments and Revenue Breakdown
CoStar operates primarily through two geographical segments: North America and International. For the nine months ended September 30, 2024, the following revenue breakdown was reported:
| Segment | Revenue (2024) | Revenue (2023) | Change (%) |
|---|---|---|---|
| North America | $1.9 billion | $1.725 billion | 10% |
| International | $178 million | $141 million | 58% |
Expenses and Profitability
Operating expenses for the nine months ending September 30, 2024, included:
- Selling and Marketing: $1.056 billion, up 42% from $743.2 million in 2023.
- Software Development: $243 million, up 23% from $197.8 million in 2023.
- General and Administrative: $314 million, up 15% from $274.4 million in 2023.
Market Position and Future Outlook
CoStar continues to focus on expanding its market position through innovative services and strategic acquisitions, with a strong emphasis on enhancing its technological capabilities. The company has maintained a robust financial position with significant cash reserves, reporting $4.9 billion in cash and cash equivalents as of September 30, 2024.
CoStar's commitment to investing in technology and analytics positions it well for future growth, particularly in the evolving landscape of commercial real estate. The ongoing expansion of its services and acquisition strategy is expected to drive further revenue growth and market penetration.
A Who Owns CoStar Group, Inc. (CSGP)
Major Shareholders
As of 2024, CoStar Group, Inc. (CSGP) has a diverse ownership structure. The largest shareholders include institutional investors and insiders. Below is a summary of the major shareholders:
| Shareholder Type | Percentage Ownership | Shares Owned (millions) |
|---|---|---|
| Institutional Investors | 75.2% | 307.3 |
| Insiders | 10.5% | 43.0 |
| Retail Investors | 14.3% | 58.7 |
Institutional Ownership Breakdown
The institutional ownership of CoStar Group is primarily held by several large asset management firms. The following table provides a detailed breakdown of the top institutional shareholders:
| Institution | Shares Owned (millions) | Percentage Ownership |
|---|---|---|
| The Vanguard Group, Inc. | 45.8 | 11.3% |
| BlackRock, Inc. | 40.1 | 9.9% |
| FMR LLC (Fidelity) | 30.4 | 7.5% |
| State Street Corporation | 25.3 | 6.2% |
| Invesco Ltd. | 20.0 | 4.9% |
Insider Holdings
Insider ownership includes shares held by executives and board members. The following table lists the key insiders and their respective holdings:
| Name | Position | Shares Owned (millions) |
|---|---|---|
| Andrew C. Florance | CEO | 12.5 |
| Scott T. McDonald | President | 8.0 |
| David D. Hargreaves | CFO | 5.0 |
| Board Members | Various | 17.5 |
Recent Changes in Ownership
In the last year, there has been a notable increase in institutional ownership, reflecting confidence in CoStar's business model and growth potential. The total shares outstanding as of September 30, 2024, were approximately 409.5 million, with total stockholders’ equity reported at $7.491 billion.
Market Performance
As of September 30, 2024, CoStar Group's stock price was $18.31 per share, reflecting a market capitalization of approximately $7.49 billion. The stock had performed positively over the year, with a year-to-date increase of approximately 15%.
Conclusion on Ownership Dynamics
The ownership structure of CoStar Group, Inc. is predominantly characterized by strong institutional backing and significant insider participation, which are key indicators of stability and confidence in the company's strategic direction.
CoStar Group, Inc. (CSGP) Mission Statement
CoStar Group, Inc. aims to provide the best-in-class commercial real estate information, analytics, and online marketplaces. The company focuses on empowering clients with comprehensive data and insights to make informed decisions in real estate investment and management.
Core Values
- Integrity: CoStar Group emphasizes the importance of transparency and ethical practices in its operations.
- Innovation: The company is committed to continuous improvement and leveraging technology to enhance its services.
- Customer Focus: CoStar Group prioritizes customer satisfaction and aims to exceed client expectations.
Financial Overview
As of September 30, 2024, CoStar Group reported the following financial metrics:
| Financial Metric | Value (in millions) |
|---|---|
| Total Revenues | $2,026.8 |
| Net Income | $78.9 |
| Gross Profit | $1,609.2 |
| Operating Expenses | $1,644.5 |
| Cash and Cash Equivalents | $4,937.6 |
| Total Assets | $9,138.7 |
| Total Liabilities | $1,647.6 |
| Total Stockholders' Equity | $7,491.1 |
Revenue Segmentation
CoStar Group's revenue is diversified across various segments. The following outlines the revenue contributions for the nine months ended September 30, 2024:
| Segment | Revenue (in millions) | Year-over-Year Change (%) |
|---|---|---|
| CoStar | $760.2 | 11% |
| Information Services | $99.4 | (22%) |
| Multifamily | $790.8 | 18% |
| LoopNet | $209.8 | 7% |
| Residential | $72.5 | 100% |
| Other Marketplaces | $94.1 | (2%) |
Market Position
CoStar Group continues to lead in the commercial real estate analytics market. As of 2024, the company holds a significant market share, driven by its robust data offerings and innovative technology solutions.
Strategic Initiatives
- Investment in technology to enhance data analytics capabilities.
- Expansion of international operations to capture new markets.
- Focus on customer engagement through improved service offerings.
Recent Acquisitions
CoStar Group's acquisition strategy includes:
- OnTheMarket Acquisition aimed at strengthening its residential marketplace.
- Investment in expanding its campus facilities to support growth.
Outlook for 2024
The company aims to sustain its growth trajectory through strategic investments and innovation in its service offerings. CoStar Group anticipates continued revenue growth across its key segments, targeting a revenue increase of approximately 12% for the year.
For the nine months ended September 30, 2024, the company's EBITDA was reported at $50.1 million, reflecting the operational efficiency and profitability of its business model.
How CoStar Group, Inc. (CSGP) Works
Business Model
CoStar Group, Inc. operates primarily through subscription-based services, providing information, analytics, and online marketplaces for commercial real estate. Their offerings include platforms like CoStar, LoopNet, and Apartments.com, which cater to different segments of the real estate market.
Financial Performance
For the three months ended September 30, 2024, CoStar reported total revenues of $692.6 million, an increase from $624.7 million in the same period of 2023. The breakdown of revenues is as follows:
| Segment | Q3 2024 Revenue (in millions) | Q3 2023 Revenue (in millions) | Increase (Decrease) ($) | Increase (Decrease) (%) |
|---|---|---|---|---|
| CoStar | $256.9 | $233.4 | $23.5 | 10% |
| Information Services | $33.0 | $44.6 | ($11.6) | (26%) |
| Multifamily | $271.8 | $235.3 | $36.5 | 16% |
| LoopNet | $70.9 | $67.5 | $3.4 | 5% |
| Residential | $27.7 | $10.3 | $17.4 | 169% |
| Other Marketplaces | $32.3 | $33.6 | ($1.3) | (4%) |
Operating Expenses
Operating expenses for Q3 2024 totaled $528.3 million, compared to $439.4 million in Q3 2023, reflecting an increase of 20%.
| Expense Type | Q3 2024 Amount (in millions) | Q3 2023 Amount (in millions) | Increase (Decrease) ($) | Increase (Decrease) (%) |
|---|---|---|---|---|
| Selling and Marketing | $331.2 | $266.9 | $64.3 | 24% |
| Software Development | $81.0 | $67.9 | $13.1 | 19% |
| General and Administrative | $105.8 | $94.4 | $11.4 | 12% |
| Customer Base Amortization | $10.3 | $10.2 | $0.1 | 1% |
Net Income and Earnings
Net income for the three months ended September 30, 2024, was $53.0 million, a decrease of 42% from $90.6 million in Q3 2023. The diluted net income per share for Q3 2024 was $0.13 compared to $0.22 in Q3 2023.
Cash Flow and Liquidity
As of September 30, 2024, CoStar Group reported cash and cash equivalents of $4.9 billion. The company generated cash from operating activities amounting to $78.9 million for the nine months ended September 30, 2024.
Recent Acquisitions
CoStar UK completed the acquisition of OnTheMarket on December 12, 2023, for a total cash consideration of approximately $120.4 million, enhancing its presence in the U.K. residential property market.
Segment Performance
CoStar Group operates in two main geographical segments: North America and International. For the nine months ended September 30, 2024, the revenue breakdown was:
| Geographical Segment | Revenue (in millions) | Increase (Decrease) ($) | Increase (Decrease) (%) |
|---|---|---|---|
| North America | $1,900.0 | $175.0 | 10% |
| International | $126.4 | $13.0 | 11% |
Overall, CoStar Group continues to leverage its robust subscription model and strategic acquisitions to drive growth and enhance its service offerings in the real estate market.
How CoStar Group, Inc. (CSGP) Makes Money
Revenue Streams
CoStar Group's revenue primarily derives from subscription-based services, which represent approximately 96% of total revenues for the three months ended September 30, 2024. This model ensures a steady income stream as contracts typically renew automatically and have a term of at least one year.
For the nine months ended September 30, 2024, total revenues increased by $211.9 million, or 12%, to $2,026.8 million. The following table breaks down the revenue contributions by segment:
| Segment | Revenue (in millions) | Year-over-Year Change (in millions) | Percentage Change |
|---|---|---|---|
| CoStar | $760.2 | $72.7 | 11% |
| Information Services | $99.4 | ($28.8) | (22%) |
| Multifamily | $790.8 | $120.5 | 18% |
| LoopNet | $209.8 | $13.5 | 7% |
| Residential | $72.5 | $36.3 | 100% |
| Other Marketplaces | $94.1 | ($2.3) | (2%) |
| Total | $2,026.8 | $211.9 | 12% |
Subscription-Based Services
Subscription revenues are recognized on a straight-line basis over the life of the contract. For the trailing twelve months ended September 30, 2024, the contract renewal rate for existing subscription-based services was approximately 89%, indicating strong customer retention despite a slight decrease from 90% in the prior year.
The annualized net new bookings of subscription-based services for the three months ended September 30, 2024, were $44 million, compared to $65 million in the same period of 2023.
Cost Structure
CoStar's gross profit for the nine months ended September 30, 2024, was $1,609.2 million, representing a gross profit margin of approximately 79%. The cost of revenues increased by $62 million, or 18%, to $417.6 million. The major components of the cost of revenues included:
- Personnel costs: $39 million
- Web hosting and support costs: $17 million
- Payment processing fees: $4 million
Operating Expenses
Total operating expenses for the nine months ended September 30, 2024, were $1,644.5 million, a 32% increase from the previous year. Key operating expenses included:
- Selling and marketing expenses: $1,055.7 million (42% increase)
- Software development expenses: $243 million (23% increase)
- General and administrative expenses: $314.3 million (15% increase)
Net Income and Earnings
For the nine months ended September 30, 2024, net income was $78.9 million, down 72% from $278.2 million in the same period of 2023. The decline was attributed to increased operating expenses and a decrease in income before income taxes, which fell to $125.1 million from $368.5 million.
Investment and Growth Strategies
CoStar Group continues to invest in its business with a focus on expanding its residential marketplaces. The company launched Homes.com memberships in February 2024, aimed at increasing brand awareness and driving user engagement. Additionally, the ongoing expansion of its Richmond, Virginia campus is expected to require an estimated $365 million for further work as of September 30, 2024.
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Article updated on 8 Nov 2024
Resources:
- CoStar Group, Inc. (CSGP) Financial Statements – Access the full quarterly financial statements for Q3 2024 to get an in-depth view of CoStar Group, Inc. (CSGP)' financial performance, including balance sheets, income statements, and cash flow statements.
- SEC Filings – View CoStar Group, Inc. (CSGP)' latest filings with the U.S. Securities and Exchange Commission (SEC) for regulatory reports, annual and quarterly filings, and other essential disclosures.