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CoStar Group Q3 Earnings Beat Estimates, Revenues Increase Y/Y
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Key Takeaways
CSGP's Q3 earnings surged 65.2%, while revenues rose 14.1% to $952 million, beating estimates.
CoStar Group's adjusted EBITDA doubled to $229 million as cost cuts boosted margins.
CSGP raised its 2026 profit outlook despite softer bookings and weaker residential demand.
CoStar Group (CSGP - Free Report) reported adjusted earnings of 38 cents per share for the third quarter of 2026, up 65.2% year over year. The figure surpassed the Zacks Consensus Estimate by 11.77%.
Revenues increased 14.1% year over year to $952 million, beating the consensus estimate by 0.11%. The company recorded its 62nd consecutive quarter of double-digit revenue growth.
Disciplined cost management boosted profitability, while net new bookings totaled $37 million amid economic headwinds and slower sales-force expansion.
CSGP’s Commercial Business Maintains Steady Growth
Commercial Real Estate revenues increased 6.7% year over year to $492 million, which accounted for 51.7% of total revenues. Commercial adjusted EBITDA declined 1.6% to $180 million, reflecting investments in upcoming product launches and international expansion.
CoStar Group, Inc. Price, Consensus and EPS Surprise
Within the commercial portfolio, CoStar revenues rose 8.2% year over year to $344 million, supported by 17% subscriber growth and a 92% renewal rate. LoopNet revenues rose 12.7% year over year to $89 million, driven by sales-force expansion and stronger bookings. Other Commercial Real Estate revenues declined 7.8% year over year to $59 million, primarily due to weakness at Ten-X.
Residential Real Estate revenues climbed 23.3% year over year to $460 million, supported by organic growth and acquisition contributions. Residential adjusted EBITDA reached $49 million against a loss of $69 million in the year-ago quarter, improving from $12 million sequentially.
Apartments.com revenues increased 6% year over year to $320 million. Paid properties reached 91,155, up 5% year over year but down 2% sequentially. Monthly renewal rates declined to 98.4%, reflecting sales-capacity constraints and challenging multifamily conditions. Average revenue per property remained unchanged year over year.
CSGP Expands Digital Platforms and AI Capabilities
Homes.com revenues jumped 50% year over year to approximately $31 million. Membership exceeded 36,000, increasing 47% year over year. The introduction of Platinum premium advertising in September helped lift average sales pricing to $429 in October, up 58% from September.
CoStar continued expanding its AI capabilities, including AI-powered tenant research and Apartments.com AI. Matterport subscription revenues increased 11%, while enterprise customer additions grew 46% year over year. The company also announced an agreement to acquire Vexcel for approximately $730 million to strengthen its proprietary real estate data capabilities.
CoStar Expands Margins Through Expense Discipline
Operating expenses declined 7.9% year over year to $657 million. Selling and marketing expenses decreased 12.4% year over year to $366 million, while general and administrative expenses fell 12.1% to $138 million.
Software development expenses increased 2.8% year over year to $109 million, and customer-base amortization rose 37.5% to $44 million.
Adjusted EBITDA doubled to $229 million from $114 million. The adjusted EBITDA margin expanded approximately 1,000 basis points to 24%.
Operating income improved to $84 million from an operating loss of $51 million a year earlier.
CSGP Focuses on Sales Expansion and Efficiency
Net new bookings fell to $84 million from $135 million in the year-ago quarter, reflecting weaker residential demand and insufficient sales capacity. Management expects bookings to improve sequentially in the fourth quarter as recruitment initiatives gain traction.
The company now anticipates approximately $150 million in expense savings against its original 2026 guidance. Management identified another $200 million in efficiency opportunities over the next 12-18 months, spanning organizational restructuring, procurement, marketing and acquisition integration.
CoStar's Cash Position and Capital Allocation
Cash and cash equivalents totaled $500 million as of Sept. 30, 2026, compared with $1.27 billion as of June 30, 2026. Long-term debt remained broadly stable at $994 million.
Operating cash flow totaled $188 million during the quarter and $455 million in the first nine months of 2026.
CSGP repurchased $81 million of shares during the quarter, bringing year-to-date repurchases to $668 million. Management expects to complete its $700 million repurchase program in the fourth quarter.
For the fourth quarter of 2026, CoStar expects revenues of $976-$996 million, adjusted EBITDA of $275-$295 million and adjusted earnings of 46-50 cents per share. Commercial revenues are projected to be $490-$500 million, while Residential revenues are expected to be between $486 million and $496 million.
For 2026, CoStar updated its revenue outlook to $3.75-$3.77 billion, including approximately $60 million from Zonda. The company raised adjusted EBITDA guidance to $820-$840 million and adjusted EPS guidance to $1.38-$1.41.
The revised outlook reflects softer bookings and lower Domain transaction volumes, partially offset by acquisition contributions and stronger expense discipline. Management reaffirmed its target of $1.25 billion in adjusted EBITDA by 2028.
CSGP’s Zacks Rank & Other Stocks to Consider
CoStar Group currently carries a Zacks Rank #2 (Buy).
View the Zacks #1 Rank List
Image: Bigstock
CoStar Group Q3 Earnings Beat Estimates, Revenues Increase Y/Y
Key Takeaways
CoStar Group (CSGP - Free Report) reported adjusted earnings of 38 cents per share for the third quarter of 2026, up 65.2% year over year. The figure surpassed the Zacks Consensus Estimate by 11.77%.
Revenues increased 14.1% year over year to $952 million, beating the consensus estimate by 0.11%. The company recorded its 62nd consecutive quarter of double-digit revenue growth.
Disciplined cost management boosted profitability, while net new bookings totaled $37 million amid economic headwinds and slower sales-force expansion.
CSGP’s Commercial Business Maintains Steady Growth
Commercial Real Estate revenues increased 6.7% year over year to $492 million, which accounted for 51.7% of total revenues. Commercial adjusted EBITDA declined 1.6% to $180 million, reflecting investments in upcoming product launches and international expansion.
CoStar Group, Inc. Price, Consensus and EPS Surprise
CoStar Group, Inc. price-consensus-eps-surprise-chart | CoStar Group, Inc. Quote
Within the commercial portfolio, CoStar revenues rose 8.2% year over year to $344 million, supported by 17% subscriber growth and a 92% renewal rate. LoopNet revenues rose 12.7% year over year to $89 million, driven by sales-force expansion and stronger bookings. Other Commercial Real Estate revenues declined 7.8% year over year to $59 million, primarily due to weakness at Ten-X.
CoStar’s Residential Segment Extends Profitability Gains
Residential Real Estate revenues climbed 23.3% year over year to $460 million, supported by organic growth and acquisition contributions. Residential adjusted EBITDA reached $49 million against a loss of $69 million in the year-ago quarter, improving from $12 million sequentially.
Apartments.com revenues increased 6% year over year to $320 million. Paid properties reached 91,155, up 5% year over year but down 2% sequentially. Monthly renewal rates declined to 98.4%, reflecting sales-capacity constraints and challenging multifamily conditions. Average revenue per property remained unchanged year over year.
CSGP Expands Digital Platforms and AI Capabilities
Homes.com revenues jumped 50% year over year to approximately $31 million. Membership exceeded 36,000, increasing 47% year over year. The introduction of Platinum premium advertising in September helped lift average sales pricing to $429 in October, up 58% from September.
CoStar continued expanding its AI capabilities, including AI-powered tenant research and Apartments.com AI. Matterport subscription revenues increased 11%, while enterprise customer additions grew 46% year over year. The company also announced an agreement to acquire Vexcel for approximately $730 million to strengthen its proprietary real estate data capabilities.
CoStar Expands Margins Through Expense Discipline
Operating expenses declined 7.9% year over year to $657 million. Selling and marketing expenses decreased 12.4% year over year to $366 million, while general and administrative expenses fell 12.1% to $138 million.
Software development expenses increased 2.8% year over year to $109 million, and customer-base amortization rose 37.5% to $44 million.
Adjusted EBITDA doubled to $229 million from $114 million. The adjusted EBITDA margin expanded approximately 1,000 basis points to 24%.
Operating income improved to $84 million from an operating loss of $51 million a year earlier.
CSGP Focuses on Sales Expansion and Efficiency
Net new bookings fell to $84 million from $135 million in the year-ago quarter, reflecting weaker residential demand and insufficient sales capacity. Management expects bookings to improve sequentially in the fourth quarter as recruitment initiatives gain traction.
The company now anticipates approximately $150 million in expense savings against its original 2026 guidance. Management identified another $200 million in efficiency opportunities over the next 12-18 months, spanning organizational restructuring, procurement, marketing and acquisition integration.
CoStar's Cash Position and Capital Allocation
Cash and cash equivalents totaled $500 million as of Sept. 30, 2026, compared with $1.27 billion as of June 30, 2026. Long-term debt remained broadly stable at $994 million.
Operating cash flow totaled $188 million during the quarter and $455 million in the first nine months of 2026.
CSGP repurchased $81 million of shares during the quarter, bringing year-to-date repurchases to $668 million. Management expects to complete its $700 million repurchase program in the fourth quarter.
CSGP Raises Profit Outlook, Updates Revenue Guidance
For the fourth quarter of 2026, CoStar expects revenues of $976-$996 million, adjusted EBITDA of $275-$295 million and adjusted earnings of 46-50 cents per share. Commercial revenues are projected to be $490-$500 million, while Residential revenues are expected to be between $486 million and $496 million.
For 2026, CoStar updated its revenue outlook to $3.75-$3.77 billion, including approximately $60 million from Zonda. The company raised adjusted EBITDA guidance to $820-$840 million and adjusted EPS guidance to $1.38-$1.41.
The revised outlook reflects softer bookings and lower Domain transaction volumes, partially offset by acquisition contributions and stronger expense discipline. Management reaffirmed its target of $1.25 billion in adjusted EBITDA by 2028.
CSGP’s Zacks Rank & Other Stocks to Consider
CoStar Group currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader Zacks Computer and Technology sector include ACI Worldwide (ACIW - Free Report) , Affirm (AFRM - Free Report) and AMETEK (AME - Free Report) . While AFRM and AME sport a Zacks Rank #1 (Strong Buy), ACI Worldwide carries a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
ACI Worldwide shares have gained 14.3% in the year-to-date period. ACI Worldwide is set to report third-quarter 2026 results on Nov. 5.
Shares of Affirm have plunged 2.3% year to date. Affirm is set to report first-quarter fiscal 2027 results on Nov. 5.
Shares of AMETEK have rallied 19.9% year to date. AMETEK is slated to report third-quarter 2026 results on Nov. 3.