8-K: CoStar Group Reports Strong Q2 2025 Results with Double-Digit Revenue Growth and Record Bookings

CoStar Group announced robust second-quarter 2025 financial and operating results, featuring 15% year-over-year revenue growth and an all-time high in net new bookings.

Summary

• Revenue for the second quarter ended June 30, 2025, was $781 million, an increase of 15% over revenue of $678 million for the same period in 2024.
• Net income for Q2 2025 was $6 million, resulting in net income per diluted share of $0.01.
• Adjusted EBITDA reached $85 million in Q2 2025, marking a 108% increase from Q2 2024.
• Achieved an all-time high in quarterly net new bookings of $93 million, representing a 65% increase from the previous quarter.
• Apartments.com recorded its highest net new bookings quarter in two years.
• Homes.com added 6,300 Members in Q2, an increase of 56% from the end of Q1 2025, with its demo-to-close rate exceeding 50%.
• Commercial information and marketplace brands realized a 43% profit margin for Q2 2025.
• The Homes.com Network is the second largest in the United States, with 111 million average monthly unique visitors.
• Full-year 2025 revenue is now expected to be in the range of $3.135 billion to $3.155 billion, representing approximately 15% year-over-year growth at the midpoint.
• Full-year 2025 adjusted EBITDA guidance has been increased to a range of $370 million to $390 million, an increase of $10 million at the midpoint from previous guidance.

Sentiment

Score: 8

Explanation: The filing reports strong financial performance with double-digit revenue growth, record net new bookings, and significant adjusted EBITDA increase. The company also raised its full-year adjusted EBITDA guidance, indicating positive momentum and effective strategic investments, despite a net loss for the six-month period due to investments and acquisitions.

Positives

• Revenue increased 15% year-over-year to $781 million in Q2 2025, marking the 57th consecutive quarter of double-digit revenue growth.
• Adjusted EBITDA surged by 108% to $85 million in Q2 2025.
• Achieved an all-time high quarterly net new bookings of $93 million, a 65% increase from the prior quarter.
• Apartments.com recorded its highest net new bookings quarter in two years.
• Homes.com added 6,300 Members in Q2, a 56% increase from Q1 2025, and its demo-to-close rate exceeded 50%.
• Commercial information and marketplace brands achieved a strong 43% profit margin for Q2 2025.
• Homes.com Member agents are winning 62% more listings than comparable non-Member agents.
• Successfully launched 'Boost' on Homes.com, selling over 1,200 packages to agents and home sellers.
• The Homes.com Network is the second largest in the U.S. with 111 million average monthly unique visitors.
• Increased full-year 2025 adjusted EBITDA guidance by $10 million at the midpoint, reflecting strong performance and confidence.

Negatives

• Net income for the six months ended June 30, 2025, was a loss of $(8.6) million, compared to a profit of $25.9 million for the same period in 2024.
• Loss from operations for Q2 2025 was $(27.2) million, compared to $(16.1) million in Q2 2024, indicating increased operating expenses relative to gross profit.
• Loss from operations for the six months ended June 30, 2025, was $(70.0) million, compared to $(58.9) million for the same period in 2024.
• Cash and cash equivalents decreased from $4,681.0 million at December 31, 2024, to $3,628.6 million at June 30, 2025.
• Net cash used in investing activities was $(1,061.4) million for the six months ended June 30, 2025, primarily driven by cash paid for acquisitions ($750.1 million) and purchases of property/equipment for new campuses ($172.5 million).

Risks

• Inability to attract and retain new clients.
• Inability to successfully develop and introduce new or updated online marketplace services, information, and analytics.
• Inability to compete successfully against existing or future competitors in attracting advertisers and in general.
• Effects of fluctuations and market cyclicality.
• Effects of global economic uncertainties and downturns or a downturn or consolidation in the real estate industry.
• Inability to hire qualified persons for, or retain and continue to develop the sales force, or unproductivity of the sales force.
• Inability to retain and attract highly capable management and operating personnel.
• Downward pressure that internal and external investments may place on operating margins.
• Inability to increase brand awareness.
• Inability to maintain or increase internet traffic to marketplaces, and the risk that measurement methods (e.g., Google Analytics) may misstate actual unique visitors or differ from competitors' methods.
• Inability to attract new advertisers.
• Inability to successfully identify, finance, integrate, and/or manage costs related to acquisitions.
• Inability to complete certain strategic transactions if subject to regulatory review or approval.
• Inability to realize the benefits of the acquisition of Matterport.
• Effects of cyberattacks and security vulnerabilities, and technical problems or disruptions.
• Significant costs associated with undertaking a large infrastructure project (Richmond, Virginia campus).
• Inability to generate increased revenues from current or future geographic expansion plans.
• Risks related to acceptance of credit cards and debit cards and facilitation of other customer payments.
• Effects of climate-related events and other events beyond control.
• Effects related to attention to climate-related risks and opportunities.
• Inability to obtain and maintain accurate, comprehensive, or reliable data.
• Inability to obtain and maintain stable data feeds, or disruption of data feeds.
• Inability to enforce or defend ownership and use of intellectual property.
• Effects of use of new and evolving technologies, including artificial intelligence, on ability to protect data and intellectual property from misappropriation by third parties.
• Inability to defend against potential legal liability for collecting, displaying, or distributing information.
• Inability to obtain or retain listings from real estate brokers, agents, property owners, and apartment property managers.
• Inability to maintain or establish relationships with third-party listing providers.
• Inability to comply with the rules and compliance requirements of Multiple Listing Services.
• Risks related to international operations.
• Effects of foreign currency exchange rate fluctuations.
• Indebtedness.
• Effects of a lowering or withdrawal of debt securities ratings by rating agencies.
• Effects of any actual or perceived failure to comply with privacy laws and standards.
• Effects of changes in tax laws, regulations, or fiscal and tax policies.
• Effects of third-party claims, litigation, regulatory proceedings, or government investigations.
• Risks related to return on investment.
• Inability of third-party suppliers upon which Matterport relies to fulfill its needs.
• Risks related to equity investments.
• Risks associated with the ability to consummate the transaction to acquire Domain Holdings Australia Limited (the "Domain Transaction") and realize its benefits.
• Risks related to open source software.

Future Outlook

CoStar Group exceeded its Q2 revenue and adjusted EBITDA guidance and has increased its full-year 2025 adjusted EBITDA guidance by $10 million at the midpoint. The company expects full-year 2025 revenue between $3.135 billion and $3.155 billion, representing approximately 15% year-over-year growth, and Q3 2025 revenue between $800 million and $805 million. Full-year 2025 adjusted EBITDA is projected to be $370 million to $390 million, with Q3 2025 adjusted EBITDA expected between $75 million and $85 million. Non-GAAP net income per diluted share is guided to be $0.76 to $0.80 for the full year and $0.15 to $0.17 for Q3 2025. The company does not intend to update its forward-looking statements until its next quarterly results announcement.

Management Comments

• "We had an outstanding Q2 2025 as we delivered our 57th consecutive quarter of double-digit revenue growth with a 15% year-over-year increase in revenue." Andy Florance, Founder and Chief Executive Officer.
• "We achieved our all-time high net new bookings in Q2 of $93 million, a 65% increase from last quarter, powered by Apartments.coms highest net new bookings quarter in two years." Andy Florance, Founder and Chief Executive Officer.
• "Our dedicated Homes.com sales team turned in its best net new bookings in Q2 as we added 6,300 Members, an increase of 56% from the end of Q1 2025. Our demo-to-close rate exceeded 50%." Andy Florance, Founder and Chief Executive Officer.
• "The investments in our sales force, mission critical products, and marketplaces are driving these outstanding results as our commercial information and marketplace brands realized a 43% profit margin for Q2 2025." Andy Florance, Founder and Chief Executive Officer.
• "Member agents are winning 62% more listings than comparable non-Member agents." Andy Florance, Founder and Chief Executive Officer.
• "We exceeded the top-end of our revenue and adjusted EBITDA guidance in Q2 delivering strong revenue growth, exceptional net new bookings and continued cost discipline while we invest throughout the business." Christian Lown, CFO.

Industry Context

CoStar Group operates in the highly competitive and evolving real estate information and online marketplace industry. Its strong revenue growth and record bookings, particularly in Apartments.com and Homes.com, indicate successful execution of its strategy to capture market share and monetize its platforms. The significant investment in sales force and product development, alongside the expansion of Homes.com's network and new offerings like 'Boost,' positions CoStar to capitalize on digital transformation in real estate. The comparison of Homes.com's unique visitors to competitors like Realtor.com, Redfin, and Zillow Group highlights its competitive standing as the second-largest network in the U.S.

Comparison to Industry Standards

• The Homes.com Network (which includes Homes.com, the Apartments Network, and the Land Network) recorded 111 million average monthly unique visitors for Q2 2025, making it the second largest in the U.S. This compares to Realtor.com's 66 million average monthly unique users (Q1 2025), Redfin's 45.66 million monthly average visitors (Q1 2025), and Zillow Group's 227 million average monthly unique users (Q1 2025).
• Homes.com Member agents are winning 62% more listings than comparable non-Member agents, indicating a strong value proposition and competitive advantage for its platform users.

Legal Proceedings

• The filing mentions 'effects of third-party claims, litigation, regulatory proceedings, or government investigations' as a potential risk factor.
• A 'Litigation accrual' of $96.7 million is listed on the Condensed Consolidated Balance Sheets as of June 30, 2025.

Stakeholder Impact

• Shareholders: Positive impact due to strong financial performance, increased guidance, and potential for continued growth and market leadership.
• Employees: Continued investment in sales force and product development suggests stable or growing employment opportunities and strategic focus on human capital.
• Customers (Agents/Brokers/Property Owners): Enhanced value proposition through platforms like Homes.com, with features like 'Boost' and demonstrated success in winning listings for member agents.
• Creditors: Strong operational performance and increased EBITDA guidance generally support the company's creditworthiness, despite existing indebtedness mentioned as a risk.

Next Steps

• Management will conduct a conference call to discuss the second quarter 2025 results and the Company’s outlook at 5:00 PM ET on Tuesday, July 22, 2025.
• A live audio webcast of the conference will be available in listen-only mode through the Investors section of the CoStar Group website.
• A replay of the webcast audio will also be available in the Investors section of the website for a period of time following the call.
• The Company does not intend to update its forward-looking statements until its next quarterly results announcement.

Key Dates

Recommendation

CoStar Group delivered exceptional Q2 2025 results, marked by robust revenue growth, record net new bookings, and a significant surge in Adjusted EBITDA. The company's strategic investments in Homes.com and Apartments.com are clearly yielding strong returns, as evidenced by increased member adoption and market share gains. The upward revision of full-year Adjusted EBITDA guidance signals management's confidence in sustained performance. While net income remains modest due to ongoing investments, the underlying operational strength and market leadership in key segments position CoStar Group for continued long-term growth, making it a compelling "strong buy" for investors.

Keywords

Real Estate, Online Marketplaces, Commercial Real Estate, Residential Real Estate, Property Technology, PropTech, Financial Results, Earnings, CoStar, Apartments.com, Homes.com, LoopNet, Matterport, STR, Ten-X, OnTheMarket, SEC Filing, Q2 2025, Revenue, EBITDA, Bookings