CoStar Group Q3 2024: Florance Hails 54th Consecutive Quarter of Double-Digit Revenue Growth

CoStar Group has released its financial statement for the third quarter of 2024, continuing its unprecedented record of increasing revenues by at least 10% every quarter for more than ten years straight.

Meanwhile, the Group has also closed the acquisition of Visual Lease, a leading lease administration and accounting platform.

Highlights from the financial quarter include:

• Quarterly revenues of $693 million were up 11% year-on-year, and 2% quarter-on-quarter
• Net income was $53 million, up significantly from Q2's $19 million
• EBITDA increased 320% from Q2
• Adjusted EBITDA hit $75.9 million for the quarter
• Cash and cash equivalents of $5 billion
• CEO Andy Florance hints at renewed mission of expanding Homes.com globally

Regarding Homes.com—which CoStar only monetized and relaunched earlier this year—the biggest takeaway from CoStar's earnings call was a short, but telling statement by Group CEO Andy Florance, who said:

"We are still in the bottom of the first inning when it comes to launching the new Homes.com. We effectively launched the Homes.com site in mid-February of this year, so we are now seven months into building this mega new product area for the company.

"Thousands of our talented staff have have put tremendous effort into creating the best residential real estate portal to win over hundreds of millions of homebuyers and sellers, so that ultimately we can monetize with a million agents.

"With success in the US, our mission will be to expand globally."

Florance's comment about global expansion isn't a blustering PR move; he has been clear in his intentions to take market share in international markets ever since he told Online Marketplaces' Chairman Simon Baker that CoStar intended to put a much heavier proportion of the Group's investments in European real estate marketplaces in October 2023.

Within weeks, CoStar had snapped up British challenger OnTheMarket for circa $110 million, and in a follow-up interview with OnlineMarketplaces in October 2024, Florance again outlined the Group's opportunity to take on "vulnerable" market leaders in several European markets.

The next revenue goal for the Group is to hit $100 billion, Florance told CNBC in November 2023.

Returning to the Group's performance in Q3, Florance said:

"We achieved another strong quarter of results with our 54th consecutive quarter of double-digit revenue growth.

"CoStar Group revenue grew 11% year-over-year, as our two billion-dollar run rate businesses, Apartments.com and CoStar, continue to deliver double-digit revenue growth. Net income, EBITDA and Adjusted EBITDA increased significantly versus each of the first and second quarters of 2024. Our commercial information and marketplace businesses1 continue to perform very well and delivered 43% profit margins in the third quarter of 2024.

"Our marketing investment continues to deliver strong results as we lay the groundwork for sustained long-term growth as interest rates move down, transaction volume increases and our brands gain even more traction. CoStar Group had a 28% increase year-over-year in average monthly unique visitors to 163 million in the third quarter 2024. In the U.S., the Homes.com network had 130 million average monthly unique visitors as unaided awareness increased to 33% in September 2024, up from 4% before the marketing campaign launch in February 2024.

For Homes.com, we delivered 15 billion impressions year-to-date and nearly 5 billion impressions in Q3. In the U.K., just 10 months after our acquisition of OnTheMarket, we have grown year-over-year traffic by 212%, unique visitors by 348%, listing agents by 27%, sales leads by 76% and total stock by 45%."

As is typical for the Group, revenues weighed heavily in favour of CoStar's North American commercial and data businesses ($257 million for the quarter) and its North American Multifamily operations ($272 million). By way of comparison, CoStar's international residential segment, which includes the British portal OntheMarket, generated revenues of $10.7 million for the quarter.

The Group retains cash and cash equivalents of just under $5 billion ($4.94Bn), down on 2023's $5.2 billion, after the Group forked over circa $500 million in investment activities, presumably tied to OnTheMarket and Matterport—which the Group has agreed to buy for $1.6 billion.

Meanwhile, CoStar has announced the strategic acquisition of Visual Lease, with the terms of the deal undisclosed.

Visual Lease will be integrated into CoStar's Real Estate Manager product—which offers industry-leading automation for audit controls, accounting compliance and portfolio evaluation.

CoStar says the integration will "enhance functionality for businesses of all sizes by providing industry-leading lease management and accounting solutions coupled with the power of CoStar’s data and analytics".

'A complete lease optimization solution', Visual Lease offers lease management, lease accounting, integrations, sustainability reporting and AI-powered workflows and automated data abstraction.

Florance commented:

"Visual Lease and CoStar Real Estate Manager are driven by the same mission of integrating all lease management portfolio functions into one user-friendly platform.

"By combining CoStar Group’s industry expertise with Visual Lease’s diverse customer base, deep lease portfolio management expertise, and leading sustainability solutions, we are well positioned to offer a more comprehensive service offering and continue growing both nationally and internationally."

Robert Michlewicz, Chief Executive Officer at Visual Lease, said:

"From its inception, Visual Lease has focused on helping companies optimize the value of their lease portfolios. This moment and next step forward with CoStar Group is a testament to our team’s dedication to this mission. Joining forces with CoStar Group will accelerate our growth, expand our offerings, and even further enhance how we serve our customers."

"I am incredibly proud of everything we have achieved since we began on this journey almost 30 years ago and am excited for all that is ahead," added Marc Betesh, Founder & Executive Chairman at Visual Lease.