CoStar revenue — and Homes.com push — beats expectations 

CoStar Group beat expectations in the final three months of 2023 and posted a 13% increase in annual revenue.

The company's $640 million in revenue for the fourth quarter was above analyst estimates of $633.3 million. CoStar has also remained profitable throughout the year, an indication that the company has been able to navigate a challenging commercial and residential real estate market. 

Founder and CEO Andy Florance continued to highlight the growth of Homes.com, which the company has been investing heavily in as it looks to dethrone leading portals Zillow and Realtor.com.

What CoStar had to say

Florance noted that the exceptional results coincide with the company's major time and marketing investment in Homes.com, including a significant Super Bowl ad buy. Homes.com began selling subscriptions to residential real estate agents the day after the Super Bowl, generating $4.5 million in net new bookings during the first week, Florance said.

Following the earnings release, Florance told investors he is pleased with the initial results coming out of that initial marketing push, noting that it is "exceeding expectations."

Florance also touted Homes.com as "the fastest-growing residential property site in the United States," stating that traffic to CoStar's residential network reached 95 million monthly average unique visitors during the quarter. The network includes more than a dozen brands, including Homes.com and Apartments.com. 

"I believe we will be able to report even stronger traffic numbers in the near future," Florance said.

Key numbers

Revenue: $640 million in the fourth quarter, up 12% from a year ago, and an increase of $15 million from Q3. For the year, revenue came in at $2.46 billion, up 13% from $2.18 billion in 2022.

Cash and cash equivalents: $5.22 billion at the end of 2023, up from $4.97 billion at the end of 2022.

Gross profit: $503.8 million, up from $464.1 million a year ago.

Net income: $96.4 million in Q4, down from $124.4 million at the end of 2022, but up from $91 million the previous quarter.

EBITDA (earnings before interest, taxes, depreciation and amortization): $98 million in the fourth quarter, down from $155 million a year ago, but an improvement over $88.7 in Q3.

Non-GAAP net income per share: 33 cents in the fourth quarter, down from 38 cents a year ago.

2024 Outlook: The company expects revenue to be around $2.75 billion in 2024, representing year-over-year growth of around 12%.

Notable moves

Florance announced during the earnings call that Chief Financial Officer Scott Wheeler is retiring in June after eight years in that position. Florance said Wheeler has done a fantastic job at the helm of the finance department and that he leaves with no disagreements. "He simply wants to enjoy the fruits of his labor," Florance said.

In December, CoStar closed on its acquisition of OnTheMarket.com, the third-most visited residential property portal in the UK, for approximately £99 million.

In February, the company announced the purchase of a 552,000-square-foot office building in Arlington, Virginia, and plans to relocate its headquarters from Washington D.C. CoStar Group has more than 500 employees at its current headquarters.