CoStar Group Inc. Revenue Rises as Increases its Dominance

Source: CoStar

CoStar Group reported second quarter results after the market close today. The commercial real estate information provider delivered solid top-line growth and earnings that topped Wall Street's expectations, and also raised its revenue and profit outlook for 2015.

Second-quarter revenue rose 16% year over year to $170.7 million.

"Our strategic investments in the relaunch, our national advertising campaign and the National Apartment Association exposition in June have clearly paid off by fueling a dramatic acceleration of sales in the second quarter 2015," said Founder and CEO Andrew Florance in a press release.

Yet EBITDA (earnings before interest, taxes, amortization, and depreciation) declined to a loss of $1.5 million in the second quarter, compared to a $37.6 million gain in the year ago period, as CoStar continues to invest heavily in marketing

Adjusted EBITDA, which excludes share-based compensation as well as certain acquisition-related and restructuring costs, declined 75% to $11.3 million. Adjusted net income also fell, declining to $2.4 million, or $0.08 per share, compared to $23.5 million, or $0.80 per share, in the second quarter of 2014. The $0.08 of EPS was, however, better than the $0.04 Wall Street was expecting.

Fortunately, these investments appear to be paying off, with sales growing at an annualized pace of 58% over the last four months. In addition, experienced a 70% year-over-year increase in unique visitors during the second quarter, making it the most visited apartment listings site during that time by a wide margin. In fact, for the month of June, had more than three times the number of page views and 50% higher total time spent on its site than its next closest apartment site competitor.

CoStar's recent acquisition of Apartment Finder is also helping to widen its lead in multifamily listings.

"We have already increased visits to that site by 135% year-over-year according to comScore," stated Florance in the earnings release. "Apartment Finder is benefiting from our advertising campaign as we retarget visitors to, initiate aggressive digital marketing, and cross-sell our apartment listing sites --, and -- along with our information service CoStar Market Analytics."

On a company-wide basis, net bookings in the second quarter surged to $34 million, up 66% compared to first quarter of 2015 and 95% from the year-ago period.

Looking aheadManagementexpects adjusted earnings per share of approximately $0.42 to $0.45 for the third quarter and $0.79 to $0.84 for the fourth quarter of 2015. That compares to analysts' estimates for $0.49 in Q3 and $0.78 in Q4, as per S&P Capital IQ.

More importantly, CoStar raised its full-year revenue and earnings guidance.2015 revenue is now expected to be in the range of $707 million to $712 million, with the top end of the range now $52 million higher than management's initial 2015 guidance forecast. And adjusted earnings per share are now projected to be in a range of $1.62 to $1.70, an increase of $0.03 at the midpoint compared to the CoStar's prior guidance.

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