The paragraph introduces the CoStar Group's Q1 2025 earnings conference call. The Operator opens the call, explaining that participants are in listen-only mode and the session is being recorded. Rich Simonelli, Head of Investor Relations, takes over to discuss the quarter's results and introduces CoStar's CEO and CFO. He reviews the Safe Harbor statement, noting that the discussion may include forward-looking statements about the company's outlook, which involve risks and uncertainties. These statements are based on current information and CoStar is not obligated to update them unless legally required. The factors that could cause actual results to differ are detailed in the company's press release and SEC filings.

In CoStar Group's first quarter 2025 earnings call, Founder and CEO Andy Florance reported strong financial results, with Q1 revenue reaching $732 million, marking a 12% year-over-year increase and the company's 56th consecutive quarter of double-digit growth. Adjusted EBITDA saw a significant rise to $66 million, a 429% increase from Q1 2024. The profit margin for their commercial real estate and information marketplace businesses was 43%. Net new bookings were $56 million, a 6% increase from the previous quarter. The international business segment achieved record net new bookings for three consecutive quarters, with $5 million in annual recurring revenue, reflecting 56% growth year-over-year. CoStar's websites had 130 million average unique visitors, and the segment contributed $265 million in revenue for Q1 2025.

The paragraph reports on CoStar's financial performance, highlighting a 6% year-over-year revenue increase and a 68% growth in annualized net new bookings, marking four consecutive quarters of growth. STR's integration with CoStar resulted in a 17% rise in net new bookings, primarily from owner operators. CoStar subscribers grew by 17%, driven by STR's migration. CoStar for lenders, under Mr. John Vecchione, saw a 116% rise in net new bookings. The lender tool, now used by 385 institutions managing $1 trillion CRE debt, achieved an $80 million annual revenue rate in under three years, with a potential market exceeding $1 billion. CoStar remains essential for its clients, with log-ins up 21% and 100 million monthly activities, marking peak engagement. Despite strong performance, the commercial real estate sector faces challenges, with historic high vacancy rates, low asking rents and sales prices, and high market cap rates, although sales volume is recovering.

The paragraph discusses the current state and positive outlook for the industrial and retail real estate markets, highlighting a decline in real asking rents and improving vacancy and availability rates. It emphasizes CoStar's expectation of a transition from market headwinds to tailwinds, leading to double-digit growth. LoopNet achieved a significant increase in annualized net new bookings by changing its sales strategy to focus on selling broad subscription packages for property owners and brokers. This strategy aims to increase the number of paid properties on the platform, offering more choices to consumers and enabling future upselling opportunities. Additionally, LoopNet is implementing asset-based pricing for ad renewals, maintaining a strong renewal rate of 97%.

The paragraph discusses CoStar's pricing strategy, which will reflect the value differences between high-end and lower-end real estate properties. CoStar aims to implement asset-based pricing across various ad tiers and is working on integrating its leases businesses within its broader data offerings, achieving significant EBITDA growth. The leases product team is focusing on combining portfolio management with CoStar's data and analytics. CoStar is developing a comprehensive data set to offer transparency on rent concessions and tenant improvements. Meanwhile, Land.com experienced a 58% increase in new bookings as it integrates with Homes.com, and a new collaboration with Farmer Mac resulted in the Farmer Mac Farmland Price Index using AcreValue's data.

The paragraph highlights several business achievements and growth strategies. Farmer Mac introduced the FPI to enhance farmland price trend tracking. BizBuySell saw significant growth, with revenue reaching $8.7 million, a 10% year-over-year increase, and substantial gains in subscriptions and buyer demand. Apartments.com also experienced strong growth, with a revenue increase of 11%, driven by increased client interactions and targeting properties previously listed with Redfin's now-closed rent period business. They added a record number of new communities and maintain a high Net Promoter Score. With plans to expand their sales team by 23%, they aim to capitalize on a $2.6 billion opportunity in the multifamily building space. Since 2019, apartments revenue has grown by 118%, while the sales team has expanded by 56%.

The company is accelerating its sales force growth, adding 56 sales professionals this year and 24 more in training, including 37 former RentPeriod members. With an average of 10 years of experience, these new hires are already producing impressive results. Their 2025 Apartments.com marketing campaign is robust, featuring extensive TV spots during major sports events and increased paid search efforts, resulting in generating five times more number 1 positions in the top 50 U.S. rental markets than Zillow. The company's unaided brand awareness among apartment seekers and industry professionals is at an all-time high, significantly outpacing competitors like Zillow and RentPeriod. A GovX brand study shows that 47% of owners and operators find Apartments.com to have a highly effective lead-to-lease conversion rate, far exceeding competitors.

In the first quarter, the Apartments.com network reported significant growth, with 38 million average monthly unique visitors and a 7% year-over-year increase in visits, outperforming Zillow by 5% in March. The platform generated 1.8 times more leads than competitors and leads that convert 2.7 times better, delivering 5.1 times more leases. High-converting "Apply now" leads surged by 814%. The platform added 142,000 single-family rentals and processed $1.4 billion in rental payments. Matterport's utilization grew, enhancing viewer engagement by 71%. Apartments.com also benefited from integration with Homes.com and saw Canadian revenue increase by 350% year-over-year. The CoStar Group's 14-month-old Homes.com, launched with a Super Bowl marketing campaign, continues to adopt a unique business model compared to U.S. residential portals.

The new Homes.com focuses on marketing properties for sale rather than generating leads for agents, aligning with successful international models. Unlike U.S. portals that use lead diversion models, Homes.com prioritizes selling homes by offering valuable content like school information. The site aims to provide a superior user experience based on consumer and agent feedback. To build its audience, Homes.com launched a large marketing campaign featuring celebrities and has garnered substantial brand impressions, including during major American events like the Super Bowl. The platform's success hinges on raising awareness and usage among home shoppers.

In just 14 months since launching, Homes.com has significantly increased its unaided awareness from 4% to 36%, surpassing competitors like Trulia, Redfin, and Realtor.com. The company's unaided intent has also risen to 26%. Although still trailing Zillow, the gap has narrowed from 64 to 24 points. Homes.com has attracted 104 million average monthly unique visitors in Q1 2024, positioning itself as one of the top two residential portals based on traffic. This growth allows the company to shift its strategy from merely increasing volume to focusing on quality, engaged traffic, with an aim to secure a leadership position in the industry within the next few years.

The paragraph outlines the significant improvements and benefits offered by Homes.com for real estate agents through their membership program. The enhancements include better bounce rates, increased session durations, and more page visits. By providing priority placements for listings, members gain more visibility, leads, and quicker sales at higher prices. Homes.com boasts 1 billion visits annually, allowing unique insights into potential buyers, while retargeting listings across various platforms ensures they remain prominent. Membership also includes advantages like Matterport tours and floor plans. These marketing benefits help agents win more listing presentations, increasing their win rate by 61%. Given the high return on investment with membership costs under $500 and significant listing value, Homes.com claims it effectively supports agents, especially in challenging market conditions.

At launch, Homes.com faced challenges with a negative Net Promoter Score (NPS) of -42 and high early cancellation rates, as their value proposition was misunderstood by real estate agents. Initially having only 50 sales reps, the company expanded its team under the leadership of SVP Andy Stearns to 314 reps, achieving a substantial improvement in customer satisfaction and loyalty. By late summer to early fall 2024, their NPS turned positive and cancellation rates dropped. Currently, Homes.com boasts a strong NPS of 43, a low early cancellation rate, and impressive sales performance, projecting significant annual billings per rep.

The sales force for Homes.com is rapidly expanding, with 64 individuals currently in training and offers extended to an additional 214 prospective salespeople. By the fourth quarter, the company anticipates having 500 experienced salespeople, potentially adding over $800,000 in new monthly billing. Pricing strategy has been optimized to better reflect the value offered to listing and rental agents, largely basing prices on seller listings. The demo to close rate in April is at a high of 56%, with expectations to close $240,000 in monthly net new bookings, marking a $420,000 improvement from the previous month. Projected cancellations for May are decreasing by 70%, while gross sales are rising. The Homes.com sales team is expected to become CoStar Group's largest, delivering significant new revenue, with consistent million-dollar net new months. A new marketing option called Boost offers agents the ability to market a single listing without committing to an annual membership.

The paragraph discusses a service called "Boost" offered to real estate agents and home sellers that enhances listing visibility online, which agents only pay for once they secure a listing. The service has been positively received in focus groups, suggesting its potential success in the market. Additionally, Homes.com is planning to launch a new marketing platform targeting homebuilders, aiming to capture a portion of the $3 billion marketing spend and showcasing new homes for sale. They have already secured 60% of inventory listings for this initiative.

The paragraph discusses positive feedback from builders on a new home search portal, Homes.com, which is achieving significant cost savings and reduced headcount. The text criticizes Zillow for banning privately marketed homes after 24 hours, suggesting this move is anticompetitive and driven by desperation. As Zillow enforces stricter rules, industry professionals may seek alternative platforms like Homes.com to avoid Zillow's control. An open letter criticizing Zillow's actions garnered significant attention and positive responses from agents who are frustrated with Zillow's practices and welcome alternatives.

The paragraph discusses the strong performance and future potential of Homes.com, suggesting it may soon surpass Zillow, as it shows excellent sales momentum and impressive EBITDA opportunities. The comparison is made with successful international real estate portals, highlighting a potential range for U.S. EBITDA between $1 billion and $9 billion, vastly exceeding a competitor's $79 million adjusted EBITDA in 2024. Additionally, the United Kingdom market has experienced 11 consecutive months of growth with increased revenues, lead volumes, and engagement metrics. The paragraph also mentions an all-cash offer made in February 2025 for Domain Holdings, a leading Australian real estate portal, emphasizing its profitability and favorable market conditions.

The paragraph discusses the differences between Australian and U.S. real estate portals, highlighting that Australian platforms like Domain and REA use vendor-paid advertising models, while U.S. portals focus on lead generation for buyer agents. Domain offers multi-tiered advertising options to increase home sellers' online exposure. The writer plans to apply Domain's advertising strategies to the U.S. and UK markets to enhance the Homes.com platform. Domain is seen as a strong entry into Australia's commercial real estate market through its commercialrealestate.com.au site. The potential acquisition of Domain by a certain company, backed by Domain's majority shareholder Nine Entertainment, is in progress, with aims to integrate Domain's capabilities into broader operations like LoopNet for multinational clients.

The article paragraph discusses the acquisition of Matterport by CoStar Group and the positive outlook for both companies as they combine their technologies and scale. Matterport's technology, particularly its ability to create digital twins for vast amounts of space, is seen as a valuable asset. CoStar aims for ambitious growth in this area. The paragraph also acknowledges the contributions of Board members Mike Klein, Chris Nassetta, and others, noting their valuable counsel in building CoStar Group into a significant global entity. It concludes with the announcement of Louise Sams as the new Chair of the CoStar Board, marking an ongoing refreshment of its leadership.

The paragraph highlights the extensive experience of several board members, including Louise, who has held significant leadership roles and is currently the Board Chair of Princeton University. It also introduces John Berisford, Rachel Glaser, and Christine McCarthy as board members with strong business and finance backgrounds, mentioning their former roles at major companies. A new Capital Allocation Committee is being chaired by the speaker, who will work alongside John, Christine, and Robert Musslewhite. This committee is tasked with reviewing and recommending the company’s capital structure and financial targets, contributing to its impressive capital allocation track record. The paragraph concludes with a brief remark from Christian Lown about the company's first quarter 2025 revenue growth, which includes contributions from Matterport.

In the first quarter, CoStar reported an adjusted EBITDA of $66 million with a 9% margin, surpassing expectations. This was due to timing of marketing expenses, cost-saving initiatives, and hiring timing. Matterport recorded a $2.7 million adjusted EBITDA loss, while commercial information and marketplace brands achieved a 43% profit margin. CoStar's revenue grew 6%, aligned with guidance, despite a challenging real estate market. The company anticipates minor government contract cancellations in 2025 but expects revenue growth to stay at 6% in the second quarter, maintaining a 6%-7% growth forecast for the year. Apartments.com revenue rose 11% year-over-year in Q1, with a focus on smaller properties leading to a 19% increase in listings within the under 100-unit segment. The full-year revenue guidance for Apartments.com remains at 11%-12%, and multifamily revenue is expected to grow by 10% in Q2 2025. LoopNet's Q1 revenue increased by 5%, aligning with projections.

The paragraph discusses the positive momentum at LoopNet, highlighting its highest net new bookings in nearly three years and anticipated revenue growth acceleration throughout 2025. The company raises its revenue growth guidance for the second quarter and full year to 7%-8%. Information Services revenue hit $40 million in Q1, with expected growth of 18%-20% for Q2 and the full year. Visual Lease's integration with Real Estate Manager and a new lease benchmarking product are also underway. Other revenue, including Matterport, was $45 million in Q1, with projections for a Q2 rise to $70 million and a full-year increase to $270-$280 million. Residential revenue was $27 million in Q1, with expected growth acceleration in the latter half of 2025, despite early cancellations. Homes.com's brand awareness has increased significantly, making it the second most visited U.S. residential portal.

In the first quarter of 2025, CoStar Group experienced a $15 million net loss due to one-time expenses from acquiring Matterport, while generating $38.5 million in net investment income from $3.8 billion in cash. The company expanded its sales force to 1,600, focusing on Homes.com, and achieved a contract renewal rate of 89%, with 94% for long-term subscribers. Subscription revenue on annual contracts made up 80% of total revenue, and net new bookings increased to $56 million, likely rising to $60 million without Homes.com cancellations. Commercial bookings saw a 14% year-over-year increase. CoStar repurchased 240,000 shares for $18.5 million, planning $150 million in total repurchases for 2025. CoStar also made a nonbinding offer of AUD 4.43 per share to acquire Domain Group, acquiring 16.9% of its shares for approximately USD 290 million, and secured a 2-week extension for due diligence until May 12.

The paragraph discusses financial projections for the company in 2025, expecting revenue to range from $3.115 billion to $3.155 billion with a 14% to 15% annual growth rate, including a 4 to 5 percentage point contribution from the Matterport acquisition. Second quarter revenue is projected at $770 million to $775 million, indicating a 14% year-over-year growth at the midpoint. Adjusted EBITDA for 2025 is anticipated to be between $355 million to $385 million with a 12% margin, but the inclusion of Matterport is expected to reduce EBITDA by $30 million, though excluding Matterport, projections remain in line with initial targets. Second quarter adjusted EBITDA is projected at $50 million to $60 million with a 7% margin. Additionally, Alexei Gogolev from JPMorgan asks about the market listing exemption discussed by NAR and the reaction from Zillow. Andrew Florance comments that the response from agents has been predominantly negative, expressing concern that Zillow's requirement for early listings aims to monetize them before reaching the market, indicating perceived weakness.

The paragraph features a discussion among executives regarding their company's financial performance and strategic plans. Christian Lown notes that the commercial EBITDA margin was 43% for Q1, with a focus on reducing costs, especially for Homes.com. Next, Peter Christiansen from Citi asks about Matterport's integration into the CoStar platform. Andrew Florance explains that Matterport will be used globally by various industries for digitizing spaces and will also be integrated across CoStar's platforms like LoopNet, apartments, homes, and potentially Domain.

The paragraph discusses Matterport's plans to enhance its presence and capabilities by embedding its technology deeply across various product areas, aiming to add value through unique features and exciting R&D projects. The speaker notes the widespread applicability of Matterport's technology, such as in construction sites in Europe, and highlights the opportunity for growth by investing in R&D and expanding the sales force beyond the current five salespeople covering regions outside the United States. The potential benefits include reduced cancellations, increased on-site usage, and less need for physical travel, which could yield financial gains. Additionally, embedding Matterport's application across platforms is expected to improve both operational and financial outcomes.

In the paragraph, George Tong asks Christian Lown about investment spending and the $900 million originally targeted for the year. Lown replies that the $900 million investment remains unchanged, explaining that $500 million was reallocated from Homes.com to the growing sales force. This reallocation aligns with their plan, and no changes are expected. John Campbell then inquires about the positioning of Homes.com related to private listings and the Clear Cooperation Policy (CCP). Andrew Florance responds that off-market listings have always been a part of real estate, hinting at strategic considerations without revealing specific competitive details.

The paragraph discusses the trend of marketing real estate properties privately or off-market, noting that about 20% of listings globally are sold this way. It highlights a shift in how listings are managed, with more flexibility in clear cooperation and changes in MLS rules. There's mention of dissatisfaction with lead diversion models, common in some regions, but not in others where sellers prefer to maintain control over their listings. The speaker emphasizes that their approach aligns with client preferences, presenting listings with original names without altering or regulating them. The speaker avoids engaging in debates about different firms' approaches to marketing and concludes by briefly transitioning to a question from Ryan Tomasello regarding growth in the multifamily segment and expectations for the year's second half.

The paragraph discusses several financial dynamics related to Apartments.com, particularly in relation to sales forces and bookings. It mentions that the second quarter is significant for Apartments.com due to a major conference in June, which impacts the third and fourth quarters. The company is experiencing an acceleration in sales activity due to an experienced sales team now working for them. They are confident about future growth in both rooftop count and pricing. Additionally, although they did not explicitly provide a new net number for apartment bookings, they suggest expecting a mid-20s million range for net new bookings. The conversation then shifts to a question from Stephen Sheldon regarding pricing increases for the suite, noting the typical 3% to 5% annual uplift.

In the paragraph, Andrew Florance discusses the resilience of CoStar in a challenging commercial real estate market, noting the company's consistent growth despite tough conditions. He mentions CoStar's strategy of moderating pricing increases during difficult times to aid clients, and being more aggressive with pricing in stronger markets, which they perceive are approaching. Christian Lown highlights the evolution of CoStar's business model, which has expanded beyond its original broker product to include additional services like a lease benchmark product with STR, thus creating more revenue streams and expanding their total addressable market (TAM). The paragraph concludes with the operator announcing the next question from Jeff Meuler with Baird.

In this paragraph, Jeff Meuler asks about the renewal and retention rates of clients who signed on to Homes.com last fall with 6-month contracts and whether their experience aligns with the company's value proposition. Andrew Florance responds by acknowledging the lack of specific data on 6-month renewals but notes that the in-period cancellation rate has dramatically decreased, currently standing at a low 0.25%. Initially, there was confusion around the company's offering, which was thought to be lead diversion, but it is actually digital marketing for real estate. He mentions the improvement in Net Promoter Score (NPS) to around 40, indicating strong future renewal rates. Christian Lown adds that most contracts are for 12 months, and suggests revisiting the question in a few months for more conclusive data.

Andrew Florance expressed appreciation to outgoing and incoming Board members and highlighted the company's positive start to 2025, noting progress with Homes.com and strong performance across product areas. He thanked participants and concluded the call, looking forward to the next update. The operator ended the conference, inviting participants to disconnect.

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