COSTAR GROUP, INC. (CSGP)·Q2 2025 Earnings Summary

Executive Summary

• Q2 2025 revenue grew 15% year over year to $781.3M and exceeded the high end of guidance; adjusted EBITDA was $85.0M (11% margin), up 108% y/y, with record net new bookings of $93M, driven by Apartments.com and momentum at Homes.com .
• CoStar beat Wall Street consensus on revenue ($781.3M vs $772.1M*) and on non‑GAAP/“Primary” EPS ($0.17 vs $0.138*); GAAP diluted EPS was $0.01 as operating loss and higher amortization offset interest income . Values retrieved from S&P Global*.
• Guidance raised: FY25 revenue to $3.135–$3.155B (midpoint up), FY25 adjusted EBITDA to $370–$390M (midpoint +$10M), and Q3 revenue guided to $800–$805M with adjusted EBITDA of $75–$85M .
• Key catalysts: accelerating product bookings and Homes.com traction (6,300 new members; demo‑to‑close >50%); Domain Holdings binding agreement (AU portal scale) and intensified product innovation (Matterport integration, AI voice search) .

What Went Well and What Went Wrong

• What Went Well
  • Record quarterly net new bookings of $93M (+65% q/q), with Apartments.com’s strongest net new in two years; Homes.com added 6,300 members with demo‑to‑close exceeding 50% .
  • Adjusted EBITDA surged to $85.0M (11% margin), above the high end of guidance, on stronger revenue and cost timing; “commercial information and marketplace brands” delivered a 43% profit margin .
  • Strategic progress: binding agreement to acquire Domain Holdings (AU), expanding global marketplaces; AI voice search slated for Apartments.com/Homes.com; deepening Matterport integration .
• What Went Wrong
  • GAAP profitability modest: operating loss of $(27.2)M and net income of $6.2M, down vs $19.2M y/y; elevated amortization ($43.6M) and lower net interest income weighed on GAAP EPS ($0.01) .
  • International remains loss‑making at EBITDA level (Q2: $(14.7)M), though improving vs prior year; overall EBITDA $28.6M reflects continued investment .
  • FY “Other revenue” top‑end trimmed to $270–$275M as non‑core Matterport revenue is discontinued; subscription revenue mix dipped to 78% with Matterport (−2 ppt) .

Financial Results

Q2 2025 vs S&P Global consensus (actuals vs estimates)

Segment revenue (product) – Q2 2025 vs Q2 2024 ($M)

KPIs and operating metrics

Guidance Changes

Earnings Call Themes & Trends

Management Commentary

• “We achieved our all-time high net new bookings in Q2 of $93 million… Apartments.com’s highest net new bookings quarter in two years… Homes.com sales team… added 6,300 Members… demo-to-close rate exceeded 50%.” — Andy Florance, CEO .
• “We exceeded the top-end of our revenue and adjusted EBITDA guidance… increasing [FY25] adjusted EBITDA guidance… [and] expect Q3 revenue of $800M–$805M.” — Christian Lown, CFO .
• “The Homes.com Network is the second largest in the industry in the United States, with 111 million average monthly unique visitors.” — Andy Florance .
• “We’re pleased to have reached an agreement with Domain… we see a tremendous opportunity to enhance the Australian property market.” — Andy Florance on Domain .

Q&A Highlights

• Apartments.com competitive dynamics: Management sees no evidence of share loss or pricing pressure despite competitor activity; focus remains on selling leases, not leads, and tapping a large greenfield TAM .
• Homes.com pricing/strategy: Prioritizing profitable penetration over ASP maximization; pricing aligned to listings value/volume with growing conversion, and Boost acts as a membership funnel .
• EBITDA outlook cadence: Q3 margin lower mainly due to timing of growth investments; Q2 beat plus Q3 guide reflects phasing .
• Seasonality: Apartments typically strongest in Q2; CoStar bookings stable, often stronger in Q4; LoopNet’s revamped model expected to reduce prior seasonality .

Estimates Context

• Q2 2025 results beat consensus on revenue and non‑GAAP EPS: $781.3M vs $772.1M* and $0.17 vs $0.138*, respectively . Values retrieved from S&P Global*.
• FY 2025 context: Company raised revenue guidance to $3.135–$3.155B, while S&P Global consensus stands at ~$3.239B*, implying guidance below current Street expectations even as momentum improves . Values retrieved from S&P Global*.
• Outlook: Management’s higher adjusted EBITDA guidance and Q3 revenue outlook suggest sell‑side estimates may need upward revisions to near‑term profitability, while full‑year revenue consensus may require reassessment against company’s range . Values retrieved from S&P Global*.

Key Takeaways for Investors

• Execution accelerating: Broad-based bookings strength (record $93M), double-digit revenue growth, and Homes.com traction (members, UVs, conversion) support sustained operating momentum .
• Quality beat: Revenue and non‑GAAP EPS both beat Street; adjusted EBITDA margin hit 11% on cost discipline and revenue upside . Values retrieved from S&P Global*.
• Guidance reset higher: FY25 adjusted EBITDA midpoint raised; Q3 guide signals continued top‑line growth with investment phasing into 2H .
• Portfolio optionality: Domain acquisition expands global scale; Matterport integration and AI features can enhance marketplace engagement and retention over time .
• Watch GAAP optics: Elevated amortization and investment keep GAAP operating income constrained near term; non‑GAAP remains the key performance lens .
• Mix considerations: “Other” revenue guidance trimmed due to pruning low‑margin Matterport lines; subscription mix modestly diluted by Matterport but core renewal metrics remain strong .
• Near-term trading setup: Positive revision bias on profitability vs revenue for FY25; Homes.com momentum and Domain progress are potential catalysts into Q3/Q4 .

Notes:

• All figures are as reported unless noted as consensus. Values retrieved from S&P Global* for consensus metrics.