2Q25 Business Recap.

Revenue growth accelerated +15% y/y, up 300bps from last quarter. Net new bookings hit a record $93mn (+65% q/q), driven by broad strength across their segments. This marks the 57^th consecutive quarter of double digit growth.

While their commercial real estate marketplace continue to remain profitable with 43% margins, their growth initiatives are still masking their profitability. After adding back amortization, operating profit was essentially 0, a slight improvement y/y from -$6mn.

The company continues to ramp its sales engine by hiring a total of +400 sales reps since the beginning of the year. The total sales reps now exceed 1,800 (+43% y/y) as they focused on growing CoStar’s core sales team by 20% and tripling the Homes.com sales force to 750 by year-end. CoStar’s S&M remains elevated at ~50% of revenues, but that is largely driven by an elevated advertising expense for Homes.com.

Apartments.com is approaching a $1.2bn revenue run rate and traffic has been boosted from Homes.com cross-listings. Renewal rates hit 99% and unaided brand awareness reached 68%, far outpacing Zillow and Realtor.com. In the first half of 2025, CoStar added more new apartment communities than all of 2024. Expansion in Canada has been particularly notable (+300% y/y).

CEO Andy Florance emphasized the growing essential role Matterport is playing for CoStar. Listings with Matterport 3D tours receive 23x more leads, and consumers spent +71% more time on those pages. However, high up-front camera costs (~$6,500 for the first scan vs a 2nd costing just $3) have limited broader adoption. They plan to fix this by making Pro 3 and future Pro 4 cameras more accessible, expanding the salesforce, and embedding Matterport across its entire platform suite. While Matterport is not yet profitable and growth has slowed, CoStar sees it as an important differentiator. They’ve begun winding down non-core, loss-making segments like VHT photography and expect some revenue headwinds from this in 3Q25 (~$10mn impact). Still, they believe Matterport is a very under-penetrated service.

Homes.com revenues increased sequentially after contracting last quarter. As a reminder, last quarter they lapped a period of high churn due to integrating HomeSnap and ending an aggressive sales push where they refocused resources from Costar to Homes.com. While Homes.com still has far to go, they are gaining traction as a more selling agent and consumer friendly platform compared to Zillow.

Member listings are seeing 22x the reach of non-members, with boosted listings 25% more likely to go under contract within 10 days. Nearly 25% of Boost users are converting to full Homes.com memberships. Unaided brand awareness has jumped from 4% at launch to 36%. To capitalize on the momentum, CoStar is offering free boosts for listings banned by Zillow. (Zillow has been banning listings that are marketed publicly and not listed on MLS. They are doing this because for a seller to list on MLS they generally have to agree to split commissions with the buying agent. This is key to Zillow’s business model because buying agents bid on the right to engage a homeowner on a prospective buyers behalf knowing that they are guaranteed a commission if they do get the sale. This requirement of listing on MLS may get Zillow into anti-trust trouble).

In Europe, revenue grew +14% y/y, and bookings in the UK rose +257% y/y in 1H25. CoStar aims to launch in France by year-end, chasing the opportunity to create a pan-European CRE data & analytics platform. 50% of transactions are cross-border in Europe, but no unified platform exists. Despite CoStar starting on a CRE offering over 4 decades ago in the United States, there is nothing close to it being offered internationally. This is a big opportunity that will likely take decades to fully exploit.

Similar to the last couple quarters, CEO Andy Florance remains cautiously optimistic on the CRE environment. He mentioned that deal volume is picking up: 2Q25 saw office transactions rise +71%, retail +46%, multifamily +42%, and industrial +29%.

At a $93 stock price, CSGP is +31% YTD. This places them with a market cap just shy of $40bn or an EV of $36.9bn. After slightly increasing this year’s revenue guidance to ~$3.15bn, and applying a 40% mature margin, they are currently trading at 35x mature earnings. However, achieving a 40% mature margin will require a significant reduction in S&M from their current 50% of revenue level. An investor has to be comfortable assuming that a 20-30 point drop in S&M is feasible while they continue to grow at least high double digits.

Below we provide notes from the call. For more on CSGP, check out our last update here.

Call Notes.

Bookings

• “Net new bookings totaled $93 million, a remarkable 65% increase over the previous quarter. This sets a new record as the highest quarterly net new bookings in CoStar Group’s history.”

Sales

• “growing our core sales team by 20%”
• “tripling our homes.com sales force from 230 representatives at the end of 2024 to about 750 by the end of 2025, all this to capture additional growth opportunities.”
• “We have made great progress on bolstering our sales force, which has reached 1,800 reps at quarter end. This is an increase of more than 400 salespeople since the beginning of the year and a 43% increase in reps year-over-year.”

Apartments.com

• “During the second quarter, our sales team had over 171,000 quality interactions with clients and prospects, maintaining an outstanding Net Promoter Score of 94%.”
  • “These interactions resulted in a 99% monthly renewal rate, the addition of 3,263 new rooftops for nearly 83,000 multifamily communities advertising on our platform.”
• “ In the first half of 2025, we’ve already added 7,600 new apartment communities more than we added throughout all of 2024, and we did it without steep discounting or paying hundreds of millions of dollars for inorganic revenue as our main competitor did. “
  • Growing sales reps to 500 in 2025
• The latest comScore data shows that all of the rental portals traffic declined Q2 ’25 over Q2 ’24
  • “Apartments.com network doing the best with a business only down 11%, while Zillow rental network was down 13%, and apartment guide was down 21% and Rent.com was down dramatically, down 39%.”
  • “A Market research indicates that our unaided awareness among apartment seekers remain best-in-class at 68%, significantly higher than all competitors combined, all primary competitors combined.”
• “To further enhance exposure, we also feature Apartments.com listings on the Homes.com rental area, where traffic increased 26% year-over-year due to Homes.com’s robust marketing efforts.”

Matterport

• “Consumers love the Matterport experience on Apartments.com. In Q2, they viewed Matterports 67 million times, up 193% over the same period last year, spending 71% more time on listing detailed pages with the Matterport 3D tour. Listings with the Matterport 3D tour received 23x more leads than those without.”
• The Matterport Pro 3 camera delivers a superior capture experience and a very superior display experience compared to mobile devices. Customers using the Pro 3 camera have an 85% renewal rate for our SaaS services while those using an Android phone only have a 40% renewal rate
  • The first matter port taken with the Pro 3 effectively costs a photograph or 6,500, the first picture costs you 6,500. The second cost $3, the third, the fourth or fifth, each cost $3. As a result, many potential users never get to the second Matterport or the first Matterport. This is easy enough to profitably change and solve for.
• Matterport revenue was $44 million in the second quarter beating our guidance estimate and contributing to our outperformance in the second quarter
• Many of Matterport’s most promising revenue opportunities have never been contacted by a Matterport salesperson. That will change. We plan to significantly expand Matterport sales force and market its integrated solutions through the thousands of CoStar sales representatives at Homes.com, LoopNet, Domain, Real Estate Manager Land, Apartments.com and other platforms.

Homes.com / Residential

• “Homes.com delivered a strong second quarter, achieving solidly positive sales growth after overcoming Q1 churn from the initial sales last year.”
• “Our expanding sales force drove consistent monthly growth with May sales increasing 5% over April and June sales increasing 15% over May. Revenue for Q2 compared — grew by 8% compared to Q2 of 2024. We signed 6,300 net new members representing a 56% increase in membership during the quarter.”
• Awareness
  • “Our marketing campaign has successfully boosted unaided awareness intent among users. One awareness has grown dramatically from 4% at the launch in 2024 and to over 36% today or in Q2. On aid intent has risen 6 points since April to reach 25%, signaling a major breakthrough in user engagement. “
• Zillow
  • “Zillow demands agents listing immediately to avoid losing the opportunity to divert and sell leads from those listings. Given the recent relaxations and clear cooperation no co-mingling rules, Zillow appears concerned that agents may opt for more agent-friendly platforms like Homes.com which do not divert leads. By demanding immediate listings and simultaneously offering Zillow exclusive listing, Zillow risks weakening the relative value of the MLSs a major brokerage has informed us that Zillow now seeks direct feeds from brokers, bypassing MLSs suggesting MLSs may soon recognize Zillow as an existential  threat”
• Domain Holdings
  • “We are in the final stages of acquiring Domain Holdings, one of Australia’s 2 largest real estate portals and among the top 10 real estate marketplaces globally. We anticipate the transaction will close in the third quarter of this year.”
  • “Recently, a new dynamic has emerged in the Australian market. The country’s antitrust regulator, the ACCC, has announced an investigation in the REA Group, which is Domain’s primary competitor. In July, numerous real estate agents in Australia reported that REA Group increased their monthly subscription fees by up to 78%, likely prompting that investigation. We believe the situation creates an excellent opportunity for Domain to position itself as the more reasonable and stable service provider.”
• TAM
  • “In reality, you probably have 500,000 to 750,000 who are really viable candidates. And you have — you need to look at these folks, these 700,000 some prospects. Not as a onetime sale. You’re not just selling them something on day 1 and then never talking to them again. You want to sell them something and develop a relationship with them. You want to communicate with them about the value they are receiving from their membership, continue to educate them on the value they’re receiving. Keeping in mind that in models around the world and in commercial, state in the United States, these client relationships grow and you are able to sell them more and more products and services. So if you get to 750 salespeople, you’re talking about roughly 1,000 clients or prospects per salesperson, which is a pretty aggressive load. I mean it’s one of the beauties of this space is that it is a huge market opportunity. One of the beauties of our business model. is that unlike our competitors that can only really sell to 5% of the market, our business model can sell to 60%, 70%, 80% of the market, which is why we love it and why investors should too.“

Costar Suite

• “Q2. Net new bookings from our CoStar product accelerated from last quarter as we achieved our highest quarter of cost or net new bookings since Q3 2023. STR had its best quarter for net new bookings, up 24% year-over-year as compared to Q2 ’24.”
• “on track to increase the CoStar product sales force by 20% in 2025, and reaching a total of 400 sales representatives to position us to capture the substantial and growing total addressable market there.”
• quarterly CoStar renewal rate increased to 93%
• NPS for the U.S. sales team reached an outstanding 70%. That was a major first for us and been a solid progression for a couple of years there

LoopNet

• “selling LoopNet packages that enable advertisers to promote their entire portfolio rather than a selected few properties. “
• The rollout of asset-based pricing continues to yield positive outcomes

BizBuySell

• “brokers reported 2,342 sold business transactions on the platform, totaling nearly $2 billion in enterprise value.”

Repurchases

• We repurchased 585,000 shares in the second quarter for $45 million, bringing our year-to-date total to 825,000 shares repurchased for $64 million. In 2025, we anticipate repurchasing at least $150 million of the $500 million share repurchase authorized.

Guidance

• First half of 2025 results are broadly in line with expectations. — and we remain on track to achieve the 11% to 12% full year revenue growth guidance we provided last quarter. Third quarter revenue growth is also expected to be 11% to 12%
• we are increasing the midpoint of our 2025 revenue guidance. We are now providing a range of $3.15 billion to $3.155 billion, implying an annual growth rate of 15%.

---

For more on CoStar Group, check out our Extensive Research Report.

---

The Synopsis Podcast.

Follow our Podcast below. We have four episode formats: “company” episodes that breakdown in-depth each business we write a report on, “dialogue” episodes that cover various business and investing topics, “article” episodes where we read our weekly memos, and “interviews”.

---

Speedwell Research Reports.

Become a Speedwell Research Member to receive our Airbnb report and all of our other in-depth research reports, shorter exploratory reports, updates, and Plus members also receive Excels.

(Many members have gotten their memberships expensed. If you need us to talk with your compliance department to become an approved vendor, please reach out at info@speedwellresearch.com).

*At the time of this writing, one or more contributors to this report has a position in CoStar Group. Furthermore, accounts one or more contributors advise on may also have a position in CoStar Group. This may change without notice.