The paragraph is an introduction to the CoStar Group's Q4 2024 Earnings Conference Call. It begins with the operator explaining the conference setup, including that all participants are in listen-only mode and the call is being recorded. Rich Simonelli, Head of Investor Relations, then introduces the discussion of CoStar Group's fourth quarter and full year 2024 results. He mentions that CEO Andy Florance and CFO Chris Lown will also speak. Simonelli reviews the safe harbor statement, noting the presence of forward-looking statements regarding the company's future outlook, which are subject to various risks and uncertainties outlined in CoStar Group's press release and SEC filings. The company is under no obligation to update these statements unless legally required.

In the second paragraph of the article, CoStar Group's Founder and CEO, Andy Florance, discusses the company's robust financial performance in the fourth quarter and full year of 2024. The company achieved a full-year revenue of $2.74 billion, marking an 11% increase over the previous year and maintaining their record of 55 consecutive quarters of double-digit revenue growth. In the fourth quarter alone, revenue reached $709 million, also an 11% year-over-year increase. The company successfully improved its net income, EBITDA, and adjusted EBITDA each quarter in 2024, with net income rising from $7 million in the first quarter to $60 million in the fourth quarter. EBITDA increased from negative $13 million to $73 million, and adjusted EBITDA climbed from $12 million to $112 million in the same period. The adjusted EBITDA for the fourth quarter significantly surpassed the forecasted range of $76 million to $86 million, highlighting the company's profitable growth amidst continued investments, particularly in ventures like Homes.com.

In the fourth quarter of 2024, the company's global websites saw a 17% year-over-year increase in monthly unique visitors, reaching $134 million, as reported by Google Analytics. The company's net new bookings rose to $53 million, a 21% increase from the previous quarter, driven by optimized sales forces focusing on core product offerings. The Homes.com sales team expanded significantly from 41 to 277 professionals over the past year, with a goal to reach 500 by the end of 2025. These dedicated salespeople have enhanced service quality, higher NPS scores, and improved renewal rates. The CoStar product generated $1.02 billion in revenue with a 10% growth rate, proving to be a primary industry resource despite challenging market conditions. December 2024 marked the highest month of net CoStar bookings in nearly two years, contributing to surpassing $1 billion in CoStar revenue for the year, with continued sales acceleration anticipated.

The CoStar subscriber base has grown substantially, with strong renewal rates at 92% and improved Net Promoter Scores (NPS) across its markets. In the U.K., CoStar's NPS improvements have notably coincided with the announcement by competitor EG (part of RELX) that it will withdraw its products and services from the U.K. by 2025, ending a 166-year presence. CoStar, which has competed with EG since entering the U.K. market in 2004, attributes part of its competitive success to the quality of its research and services. Despite EG's closure due to industry challenges, CoStar acknowledges the historical significance and contributions of EG in the commercial property information sector.

The paragraph discusses the positive outlook for CoStar and the office real estate market, which is expected to recover and experience strong growth in the coming years after enduring economic challenges, particularly in Syria. It notes improvements in office space demand, declining vacancy rates, and rising rents. The author anticipates rent growth and capital appreciation, driven by corporations requiring more office space for in-person work. The CoStar for Lenders product also performed well, achieving significant revenue growth in the past quarter. Overall, CoStar is poised to benefit from these favorable market conditions.

The paragraph highlights CoStar's significant growth and market influence in the commercial real estate (CRE) industry. The company has secured 370 institutional clients managing over $1 trillion in CRE debt, demonstrating strong client adoption and platform integration into lending cycles. CoStar's platform is increasingly preferred for CECL and stress test solutions, capturing market share despite economic challenges. Corporate real estate departments are also adopting CoStar to optimize costs and lease management, with new corporate subscribers like Amazon and Visa. The platform is valued for its essential and accurate rent information, addressing a long-standing challenge in CRE.

The paragraph discusses CoStar's strategy to integrate CoStar Real Estate Manager with its newly acquired Visual Lease to create a next-generation corporate real estate digital solution. This integration aims to provide anonymized, aggregated lease information similar to CoStar STR's model for the hospitality industry, enabling corporate clients to make informed decisions on transactions, valuations, and investments. CoStar plans to build precise rent indices as a top priority for 2025, expanding its market presence, especially in Europe, with CoStar France expected to launch by the end of that year. The company also aims to grow its sales team by 20% this year.

The paragraph discusses LoopNet's plans to shift to asset-based pricing, where marketing costs are based on property value, potentially expanding the market by lowering prices for lower-value properties. This strategy has seen a high contract renewal rate. LoopNet aims to increase revenue by selling more lower-tier ads while still offering premium options. Concurrently, Apartments.com reported strong revenue and customer satisfaction in 2024, with plans for extensive marketing in 2025, including new advertisements featuring Jeff Goldblum.

Apartments.com leads the apartment rental industry with impressive metrics, including 1 billion annual impressions, 1.4 million leads, and 1.5 times more leases than competitors in 2024. It dominates both organic and paid search results, achieving high brand awareness among apartment seekers, nearly double that of Zillow. With 35 million average monthly unique visitors, Apartments.com surpasses competitors in traffic and visits, according to SimilarWeb. The platform boasts over 75,000 paying apartment communities, a 7% increase year-over-year, with significant growth in small unit properties and condo/townhouse page activity.

The paragraph discusses several developments in the rental listings market. The number of single-family rental listings increased significantly, and paid listings rose by 59% in 2024. With over $5 billion in rental payments processed, Apartments.com has expanded successfully into Canada. The company sees a $9 billion market opportunity in multifamily rentals and plans to expand its sales force in 2025. It also mentions Redfin’s acquisition of RentPath, which has underperformed since the purchase. Recently, Redfin transferred its apartment business to Zillow, a move likely intended to avoid regulatory scrutiny, though the author doubts the FTC will forgo reviewing the deal.

The paragraph discusses a potential transaction where Zillow would pay Redfin $100 million upfront, leading to the termination of most of Rent.com's staff and transferring apartment property management clients to Zillow. Rent.com would then function solely as a syndication site for Zillow leads. The author suggests the FTC would likely block such a deal due to reduced competition and speculates Zillow might eventually pay Redfin up to $1 billion for low-converting leads. CoStar Group sees an opportunity to attract former Redfin clients without the high costs, highlighting the success of its Homes.com portal, which has rapidly become the second largest real estate portal in the U.S. with 110 million average monthly unique visitors, surpassing Realtor.com's 62 million.

In its relaunch year, Homes.com surpassed Realtor.com in traffic and increased unaided awareness from single digits to 33%, aiming for 50% this year. The sales team grew from 41 to 275, with plans for 50 more hires in March and a target of 500 by year-end. Despite being mostly new, the team effectively sold net new monthly revenue averaging $1,636 in January, totaling $3.73 million in annualized net revenue. The dedicated sales team is more effective in servicing and renewing clients compared to the initial broader sales effort.

The paragraph discusses the launch and evolution of Homes.com's new membership model, which offers real estate agents a unique marketing solution aimed at securing more seller listings, in contrast to the legacy model of selling agency leads. Initially, agents misunderstood Homes.com's model, leading to a negative Net Promoter Score (NPS) of -40. However, after establishing a dedicated sales team that effectively communicated their value proposition, the NPS improved significantly to 28 within a year. This reflects a shift from negative perceptions toward a positive reception, resembling the successful trajectory of CoStar Group's apartments division over the years.

In the past year, Homes.com achieved significant growth, with their MPS climbing 68 points and many sales reps earning MPS scores of 80 or above. The relaunch of the Homes.com site introduced numerous new features, such as valuation tools and search by commuting distance. The company is excited about its product roadmap for 2025, which includes three major initiatives to add new revenue streams. The U.K. real estate portal also saw impressive growth, increasing advertisers by 23%, properties listed by over 40%, and total visits by 75%, resulting in 42% more leads for agents.

Homes.com has experienced eight consecutive months of net revenue growth and launched its second year with two new Super Bowl ads featuring celebrities like Morgan Freeman. The company's marketing campaign emphasizes its clean, user-friendly design and comprehensive content, though legal constraints prevent them from claiming to be the best outright. The ads, widely seen across high-profile media platforms, garnered nearly 19 million impressions in 2024, with a strong presence on TV, streaming services, and social media. Homes.com claims significant exposure, with 90% of Americans likely having seen their ads, and asserts that its platform leads to quicker, more profitable sales for its users.

The paragraph discusses the achievements and future plans of CoStar Group. The company has seen success with Homes.com, achieving significant listing wins and aims to further grow its market share, potentially building a third $1 billion business. The pending acquisition of Matterport is progressing, with expectations for a first-quarter close. In 2025, CoStar plans to increase its sales force by 35% to drive revenue growth. CFO Christian Lown reports that 2024 revenue exceeded expectations, with full-year revenue growing by 11% and an adjusted EBITDA of $241 million. CoStar's commercial information and marketplace brands achieved 43% profit margins, and the company saw a 10% revenue increase in the fourth quarter and full year of 2024, aided by the integration of STR benchmarking.

The paragraph provides an overview of expected revenue growth and performance for CoStar and its associated platforms in 2024 and 2025. In 2024, CoStar experienced a revenue growth boost due to STR integration, and it anticipates 6% revenue growth for the first quarter of 2025 and 6-7% for the full year, despite challenging commercial real estate markets. Apartments.com saw a 17% revenue increase in 2024, with an 11-12% growth forecasted for 2025, reflecting increased scale and the launch of Homes.com. LoopNet's revenue growth matched guidance at 5% for Q4 and 6% for 2024, with similar performance expected in 2025. Information services earned $136 million in 2024, with anticipated growth of 18-20% in 2025, partly due to $40 million from visual lease. Other marketplaces earned $130 million in 2024, with projected mid to high-single digit growth in 2025, and an increase in 10x transaction volumes is expected.

The paragraph outlines CoStar Group's financial performance and future growth plans. In 2024, the company reported $28 million in fourth-quarter residential revenue and $101 million for the full year, with a growth outlook for 2025 in the high-teens to low-20% range, and a projected first-quarter revenue growth of about 40%. Net income for the fourth quarter and full year stood at $60 million and $139 million, respectively, while net investment income was $213 million on $4.7 billion cash reserves. The sales force grew to 1,390 by year's end, focusing mainly on the Homes.com residential business, which is expected to have over 500 sales representatives by the end of 2025. The contract renewal rate was strong, particularly among long-term subscribers, and subscription revenue on annual contracts was 80%. Net new bookings rose by 21% sequentially in the fourth quarter. CoStar plans to expand sales forces for CoStar apartments and LoopNet and has announced a $500 million share buyback program, expecting $150 million in annual repurchase. Company revenue for 2025 is projected to be $2.985 billion to $3.015 billion, implying a 9% to 10% growth rate.

The article discusses CoStar's financial expectations for 2025, including anticipated first-quarter revenue of $711 million to $716 million, indicating a 9% year-over-year growth at the midpoint. Adjusted EBITDA for the year is projected between $375 million and $405 million, with a margin of approximately 13%. The first quarter's adjusted EBITDA is expected to range from $25 million to $35 million. Capital expenditures are forecasted between $400 million and $450 million, largely for the Richmond campus, with completion anticipated in the first half of 2026. Operating capital expenses, excluding the Richmond project, will increase to around $90 million due to plans for the Arlington, Virginia headquarters. Net interest income for 2025 is predicted to be approximately $170 million. The company has withdrawn its previously set five-year revenue and EBITDA targets due to an unexpected and enduring downturn in its commercial and residential sectors. However, CoStar remains optimistic about future growth opportunities, especially through CoStar Suite and Apartments.com, given various untapped markets and product expansions in the U.S. and Europe.

The paragraph expresses optimism about capturing significant opportunities through continued investment in the platform, particularly with LoopNet, which is expected to experience double-digit growth due to an expanded footprint and revised pricing. Despite LoopNet's growth from $50 million to nearly $300 million, further growth is anticipated. The other businesses, such as real estate manager, Visual Lease, Lands.com, and BizBuySell, are also expected to have long-term double-digit growth opportunities. Homes.com is highlighted as a significant future business for CoStar, with scaling efforts and an increased sales force expected to boost revenue by 2025, leading to strong growth from 2026 onwards. The speaker expresses pride in 2024 results despite challenges like high interest rates, inflation, and economic volatility, focusing on strategic investments and record profits. The paragraph concludes as the speaker turns the call back to the operator for questions.

John Campbell asks Andrew Florance about CoStar's progress in international data collection and client partnerships, as well as the potential for international efforts to significantly impact CoStar's financial results. Florance explains that they are working on improving financial efficiency in Europe by consolidating operations to avoid duplicative costs. He mentions that they are transitioning to a unified CoStar LoopNet platform, with France launching soon and Spain to follow, aiming to have all European marketplaces on LoopNet by 2025.

The paragraph discusses the relative ease of using LoopNet compared to CoStar for commercial real estate listings, highlighting LoopNet's flexibility in gathering non-comprehensive groups of listings for cross-border leasing and sales. The speaker mentions that there isn't a significant financial impact expected from this expansion in 2025 but acknowledges opportunities for international growth. The conversation then shifts to discussing apartment market growth, with questions from Peter Christiansen and responses from Christian Lown highlighting significant revenue growth and expectations for increased units and pricing. There's a focus on capitalizing on the total addressable market (TAM) and prioritizing unit growth over price increases in the coming year.

The paragraph discusses the potential opportunities in various property markets, particularly emphasizing the significant Total Addressable Market (TAM) in the 1 to 19 property segment, despite stable unit and pricing dynamics in recent years. Andrew Florance highlights the company's strong Net Promoter Score (NPS) of 94, indicating high customer satisfaction and loyalty, which has contributed to revenue growth through existing clients purchasing more exposure. The company plans to expand its sales force in 2025 to reach more potential customers, particularly smaller properties. Additionally, the mid-market sales team, based in Richmond, Virginia, has shown increased productivity in selling to smaller apartment communities this year.

In the paragraph, several individuals discuss the growth and productivity of different market segments and strategies for managing margins. Peter Christiansen notes the significant potential in the individual property market, while Christian Lown highlights the fixed cost nature of the commercial business, which allows for consistent margin improvement. He mentions a projected annual increase of 1-2% in commercial margins, with ongoing organic investment and minimal capital requirements. For the Homes.com segment, Lown describes its recent launch and expects the sales team to continue expanding throughout the year. Meanwhile, Ryan Tomasello from KBW inquires about structural growth targets and the timeline for improving Residential segment margins towards breakeven.

The paragraph discusses expectations for Homes.com and its business outlook. Despite having a clear value proposition and a focused sales team, cancellations are expected initially due to expiring 12-month contracts from early 2024. The situation is projected to improve after the first quarter, with better productivity, fewer cancellations, and increased satisfaction and sales force. The company's 2025 spending is expected to remain similar to 2024, with close attention to capital allocation. On the international front, particularly in the U.K., there has been significant growth, which is anticipated to be capitalized on in 2025.

The paragraph discusses a company's strategic financial and business actions. It mentions that despite anticipated lower margins due to investments in acquisitions, there is a strategic focus on tapping into the U.K. market for potential opportunities. Andrew Florance highlights a shift in spending towards increasing sales headcount over production, with cost reductions in other areas being reinvested into revenue generation. During a humorous exchange, Alexei Gogolev reassures Florance he is attentive during the conference call. The conversation also touches on significant investments planned for 2025, focusing on salespeople and growing brand awareness, which has seen progress from low-single-digit to 33%, partly through efforts like Super Bowl advertisements.

The paragraph discusses the strategic shift in pricing and sales focus for LoopNet, with emphasis on the transition to an asset-based pricing model and promoting silver advertising packages. Stephen Sheldon inquires about the potential impact of these changes on revenue growth. Andrew Florance notes that a significant portion of new sales shifted to the silver ads, and early 2024 sales are tracking positively, suggesting that the strategy is working. He acknowledges the gradual nature of the change, as LoopNet is a large operation. Christian Lown adds that while 2024's overall growth will resemble 2025's, they anticipate quarterly growth momentum, setting up LoopNet for a strong start in 2026.

In this discussion, Stephen Sheldon inquires about the early 2025 net new bookings activity and whether the positive trends from the previous quarters are continuing. Christian Lown mentions that while they are not providing guidance, they feel confident about their first-quarter guidance. Jeff Meuler then asks about Apartments.com and their competitive standing, particularly focusing on whether their sales challenges are due to sales capacity issues or a declining win rate amid competition. Christian Lown responds by highlighting Apartments.com's strong performance and numbers compared to competitors, noting that despite distractions and sales force issues affecting early 2024, they still significantly outpaced competition in revenue and property listings. He remains optimistic about the company's growth opportunities in 2025.

The paragraph discusses the exciting growth opportunities for two businesses, emphasizing the potential to double their revenue within their core target addressable market (TAM). The expansion of the sales force into mid-market and lower-level TAMs is expected to further penetrate these markets, with attractive growth prospects and higher margins. The speaker acknowledges competition as beneficial and underscores the business's size, growth, and margin profile as reasons for optimism. Andy Florance thanks the team for a strong 2024 performance and expresses enthusiasm for continuing success in 2025, highlighting contributions from various departments. The conference concludes with gratitude to participants.

This summary was generated with AI and may contain some inaccuracies.