Will CoStar’s Earnings & Revenue Beat in Q4 Drive the Stock Price?

CoStar Group (CSGP Quick QuoteCSGP – Free Report) reported non-GAAP earnings of 26 cents per share in fourth-quarter 2024, which surpassed the Zacks Consensus Estimate by 18.18%. The company had registered earnings of 33 cents in the year-ago quarter, decreasing 21.2% year over year.

Find the latest EPS estimates and surprises on Zacks Earnings Calendar.

Revenues of $709.4 million beat the Zacks Consensus Estimate by 1.20% and increased 10.8% year over year. This represents the company’s 55th consecutive quarter of double-digit revenue growth.

Following the results, CSGP shares fell 4.25% in the after-hours trading on Feb. 18, as the initial reaction reflected concerns over rising expenses.

However, in the fourth quarter, CoStar Group benefited from strong performance across its digital platforms, driven by increased customer engagement, expanded market reach and solid top-line growth, driven by robust performances in key segments, which could drive the stock performance.

CSGP’s Top-Line Details

CoStar’s revenues (36.7% of revenues) of $260.3 million missed the consensus estimate by 0.15% and increased 9.5% year over year.

Apartments.com’s revenues increased 17% year over year. Net new bookings in the fourth quarter amounted to $53 million, up 21% sequentially.

Information Services’ revenues (5.1% of revenues) of $36.5 million beat the consensus mark by 17.04% but declined 14.5% year over year.

Multifamily revenues (39% of revenues) of $276.5 million missed the consensus estimate by 0.29% but increased 13.4% year over year.

LoopNet’s revenues (10.1% of revenues) of $71.9 million exceed the consensus mark by 0.26% and increased 5% year over year.

Fourth-quarter residential revenues (4% of revenues) were $28.1 million, which missed the consensus mark by 1.40% and increased 181% year over year.

In the fourth quarter of 2024, Homes.com became the second-largest residential real estate marketplace in the United States, attracting an average of 110 million unique monthly visitors, marking an 11% year-over-year increase.

Other marketplace revenues (5.1% of revenues) of $36.1 million beat the consensus mark by 12.46% but declined 3.5% year over year.

Per Google Analytics, CoStar’s global websites reached a record 134 million average monthly unique visitors, a 17% year-over-year increase.

CoStar’s Operating Details

In the reported quarter, selling and marketing expenses increased 25.1% year over year to $308.5 million. As a percentage of revenues, selling and marketing expenses were 43.5% compared with 38.5% in the year-ago quarter.

General and administrative expenses, as a percentage of revenues, expanded 90 basis points (bps) on a year-over-year basis to 16.6%.

Software development expenses, as a percentage of revenues, expanded 70 bps, while Customer base amortization expenses rose 10 basis points year over year.

Operating expenses increased 21.6% year over year to $528.5 million. As a percentage of revenues, operating expenses rose 660 bps year over year to 74.5%.

Adjusted EBITDA was $112 million compared with the year-ago quarter’s $130 million. The adjusted EBITDA margin contracted 450 bps to 15.8%.

CSGP’s Balance Sheet & Cash Flow Statement

CoStar reported cash and cash equivalents of $4.68 billion as of Dec. 31 compared with $4.93 billion as of Sept. 30, 2024.

The company had a long-term debt of $991.9 million as of Dec. 31 compared with $991.5 million as of Sept. 30, 2024.

Cash generated by operating activities was $392.6 million in the reported quarter compared with $298 million in the previous quarter.

CSGP Initiates Q1 & 2025 Guidance

For the first quarter of 2025, the company expects revenues between $711 million and $716 million, indicating year-over-year growth of 9% at the mid-point.

The company anticipates adjusted EBITDA between $25 million and $35 million for the first quarter of 2025.

For 2025, revenues are expected between $2.99 billion and $3.02 billion, indicating year-over-year growth of 10% at the mid-point. 

The company anticipates adjusted EBITDA between $375 million and $405 million for 2025.

CSGP’s Zacks Rank & Stocks to Consider

CoStar currently carries a Zacks Rank #3 (Hold).

Akamai Technologies (AKAM Quick QuoteAKAM – Free Report) , BWX Technologies (BWXT Quick QuoteBWXT – Free Report) and Salesforce (CRM Quick QuoteCRM – Free Report) are some better-ranked stocks in the broader sector. Each of these three stocks presently carries a Zacks Rank of 2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Akamai Technologies shares have returned 3.8% year to date. AKAM is set to report fourth-quarter 2024 results on Feb.20.

BWX Technologies shares have lost 4.2% year to date. BWXT is set to report fourth-quarter 2024 results on Feb. 24.

Salesforce shares have lost 1.7% year to date. CRM is set to report fourth-quarter fiscal 2025 results on Feb. 26.