CoStar Group Third Quarter 2019 Revenue Grows 15% and Net Income Increases 34% Year-over-Year; Company Closes STR Acquisition
WASHINGTON--CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, announced today that revenue for the quarter ended September 30, 2019, was $353 million, an increase of 15% over revenue of $306 million for the third quarter of 2018. Net income for the third quarter of 2019 was $79 million, an increase of 34% over net income of $59 million for the third quarter of 2018.
EBITDA for the third quarter of 2019 was $113 million, an increase of 24% versus EBITDA of $91 million for the third quarter of 2018. Adjusted EBITDA (which excludes stock-based compensation, acquisition and integration related costs and other items as described below) for the third quarter of 2019 was $129 million, an increase of 18% compared to adjusted EBITDA of $110 million for the third quarter of 2018.
Earlier today, CoStar completed the previously announced acquisition of STR, Inc. and STR Global, Ltd. for an aggregate consideration of approximately $450 million in cash, subject to certain adjustments per the definitive agreements.
“We achieved very strong third quarter 2019 financial results,” said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. “We continue to deliver excellent results as we generated Company-wide net new bookings of $50 million in the third quarter, an increase of 27% year-over-year. Through the first three quarters of this year, our quarterly net new bookings average was $52 million, a 32% increase over the average quarterly bookings for the comparable period in 2018. We are also very pleased with the continued growth of Apartments.com, which generated 20% year-over year revenue growth in the third quarter of 2019 and is now at an annual revenue run rate of over $500 million.”
Florance continued, “We are very excited about closing our acquisition of STR so quickly. We believe that combining STR’s superior hospitality service offerings with CoStar will benefit all industry participants as we work together to create valuable new and improved tools.”
|
Year 2018-2019 Quarterly Results - Unaudited |
||||||||||||||||||||||||||||
|
(in millions, except per share data) |
||||||||||||||||||||||||||||
|
|
2018 |
|
2019 |
|||||||||||||||||||||||||
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Q3 |
|||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
Revenues |
$ |
274 |
|
$ |
297 |
|
$ |
306 |
|
$ |
316 |
|
|
$ |
328 |
|
$ |
344 |
|
$ |
353 |
|
||||||
|
Net income |
52 |
|
44 |
|
59 |
|
84 |
|
|
85 |
|
63 |
|
79 |
|
|||||||||||||
|
Net income per share - diluted |
1.44 |
|
1.20 |
|
1.61 |
|
2.29 |
|
|
2.33 |
|
1.73 |
|
2.15 |
|
|||||||||||||
|
Weighted average outstanding shares - diluted |
36.4 |
|
36.5 |
|
36.5 |
|
36.5 |
|
|
36.6 |
|
36.6 |
|
36.7 |
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||||
|
EBITDA |
70 |
|
64 |
|
91 |
|
125 |
|
|
113 |
|
94 |
|
113 |
|
|||||||||||||
|
Adjusted EBITDA |
84 |
|
85 |
|
110 |
|
139 |
|
|
125 |
|
110 |
|
129 |
|
|||||||||||||
|
Non-GAAP net income |
60 |
|
60 |
|
79 |
|
102 |
|
|
92 |
|
82 |
|
96 |
|
|||||||||||||
|
Non-GAAP net income per share - diluted |
1.65 |
|
1.66 |
|
2.16 |
|
2.81 |
|
|
2.53 |
|
2.23 |
|
2.61 |
|
|||||||||||||
“CoStar Group profitability continues to be exceptional with year-over-year growth in net income of 34% in the third quarter of 2019,” said Florance. “I am very pleased that we have grown net income while investing for the future growth of the business.”
Non-GAAP net income for the third quarter of 2019 (which excludes amortization of acquired intangible assets, stock-based compensation and other items as described below) was $96 million or $2.61 per diluted share, an increase of $17 million or 22% versus the third quarter of 2018.
2019 Outlook
The Company expects that STR will contribute between $3 million to $4 million in revenue in the fourth quarter of 2019. Due to the impact of integration costs and purchase accounting adjustments for deferred revenue, we expect STR adjusted EBITDA of negative $5 million to $6 million in the fourth quarter of 2019. These estimated results for STR are included in our revised outlook.
The Company is increasing revenue guidance to a range of $1.385 billion to $1.391 billion for the full year of 2019, an increase of $2 million at the midpoint of the range compared to the prior outlook. We expect revenue for the fourth quarter of 2019 in the range of $360 million to $366 million, representing revenue growth of 15% over the fourth quarter of 2018 at the midpoint of the range.
The Company expects adjusted EBITDA in a range of $494 million to $500 million for the full year of 2019, a decrease of $5 million at the midpoint of the range. For the fourth quarter of 2019, the Company expects adjusted EBITDA in a range of $129 million to $135 million.
We expect full-year 2019 non-GAAP net income per diluted share in a range of $9.90 to $10.02 based on 36.6 million shares, a decrease of $0.11 at the midpoint versus the previously provided outlook. For the fourth quarter of 2019, we expect non-GAAP net income per diluted share in a range of $2.52 to $2.64 based on 36.7 million shares. These ranges include a non-GAAP tax rate of 25%.
The preceding forward-looking statements reflect CoStar Group’s expectations as of October 22, 2019, including forward-looking non-GAAP financial measures on a consolidated basis. Given the risk factors, uncertainties and assumptions discussed above, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.
Reconciliation of EBITDA, adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share and other disclosed non-GAAP financial measures to their GAAP basis results are shown in detail below, along with definitions for those terms. A reconciliation of forward-looking non-GAAP guidance to the most directly comparable GAAP measure, net income, can be found within the tables included in this release.
Non-GAAP Financial Measures
For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the Company’s financial condition and results of operations, please refer to the Company’s latest periodic report.
EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before interest and other income (expense), loss on debt extinguishment, income taxes, depreciation and amortization.
Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before stock-based compensation expense, acquisition- and integration-related costs, restructuring costs and settlements and impairments incurred outside the Company’s normal course of business.
Non-GAAP net income is a non-GAAP financial measure determined by adjusting GAAP net income attributable to CoStar Group for stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, settlement and impairment costs incurred outside the Company's normal course of business and loss on debt extinguishment, as well as amortization of acquired intangible assets and other related costs, and then subtracting an assumed provision for income taxes. In 2019, the Company is assuming a 25% tax rate in order to approximate our statutory corporate tax rate excluding the impact of discrete items.
Non-GAAP net income per diluted share is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period used in the calculation of GAAP net income per diluted share. For periods with GAAP net losses and non-GAAP net income, the weighted average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.
Earnings Conference Call
Management will conduct a conference call at 5:00 PM EDT on Tuesday, October 22, 2019 to discuss earnings results for the third quarter and the Company’s outlook. The audio portion of the conference call will be broadcast live over the Internet at investors.costargroup.com. To join the conference call by telephone, please dial (800) 230-1059 (from the United States and Canada) or (612) 234-9959 (from all other countries) and refer to conference code 472986. An audio recording of the conference call will be available for replay approximately one hour after the call's completion and will remain available for a period of time following the call. To access the recorded conference call, please dial (800) 475-6701 (from the U.S. and Canada) or (320) 365-3844 (from all other countries) using access code 472986. The webcast replay will also be available in the Investors section of CoStar Group's website for a period of time following the call.
|
CoStar Group, Inc. |
||||||||||||||||
|
Condensed Consolidated Statements of Operations - Unaudited |
||||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Revenues |
|
$ |
352,808 |
|
|
$ |
305,525 |
|
|
$ |
1,024,993 |
|
|
$ |
876,261 |
|
|
Cost of revenues |
|
71,172 |
|
|
72,072 |
|
|
214,243 |
|
|
201,685 |
|
||||
|
Gross profit |
|
281,636 |
|
|
233,453 |
|
|
810,750 |
|
|
674,576 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Operating expenses: |
|
|
|
|
|
|
|
|
||||||||
|
Selling and marketing (excluding customer base amortization) |
|
101,582 |
|
|
89,251 |
|
|
308,751 |
|
|
290,706 |
|
||||
|
Software development |
|
32,639 |
|
|
26,173 |
|
|
89,022 |
|
|
75,357 |
|
||||
|
General and administrative |
|
45,530 |
|
|
39,012 |
|
|
127,943 |
|
|
117,658 |
|
||||
|
Customer base amortization |
|
7,616 |
|
|
8,329 |
|
|
22,473 |
|
|
22,948 |
|
||||
|
|
|
187,367 |
|
|
162,765 |
|
|
548,189 |
|
|
506,669 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Income from operations |
|
94,269 |
|
|
70,688 |
|
|
262,561 |
|
|
167,907 |
|
||||
|
Interest and other income |
|
5,358 |
|
|
3,035 |
|
|
16,216 |
|
|
8,674 |
|
||||
|
Interest and other expense |
|
(704 |
) |
|
(717 |
) |
|
(2,133 |
) |
|
(2,135 |
) |
||||
|
Income before income taxes |
|
98,923 |
|
|
73,006 |
|
|
276,644 |
|
|
174,446 |
|
||||
|
Income tax expense |
|
20,304 |
|
|
14,247 |
|
|
49,608 |
|
|
19,621 |
|
||||
|
Net income |
|
$ |
78,619 |
|
|
$ |
58,759 |
|
|
$ |
227,036 |
|
|
$ |
154,825 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net income per share - basic |
|
$ |
2.16 |
|
|
$ |
1.63 |
|
|
$ |
6.26 |
|
|
$ |
4.30 |
|
|
Net income per share - diluted |
|
$ |
2.15 |
|
|
$ |
1.61 |
|
|
$ |
6.20 |
|
|
$ |
4.25 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average outstanding shares - basic |
|
36,333 |
|
|
36,129 |
|
|
36,293 |
|
|
36,032 |
|
||||
|
Weighted average outstanding shares - diluted |
|
36,652 |
|
|
36,518 |
|
|
36,615 |
|
|
36,439 |
|
||||
|
CoStar Group, Inc. |
||||||||||||||||
|
Reconciliation of Non-GAAP Financial Measures - Unaudited |
||||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Reconciliation of Net Income to Non-GAAP Net Income |
||||||||||||||||
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
Net income |
|
$ |
78,619 |
|
|
$ |
58,759 |
|
|
$ |
227,036 |
|
|
$ |
154,825 |
|
|
Income tax expense |
|
20,304 |
|
|
14,247 |
|
|
49,608 |
|
|
19,621 |
|
||||
|
Income before income taxes |
|
98,923 |
|
|
73,006 |
|
|
276,644 |
|
|
174,446 |
|
||||
|
Amortization of acquired intangible assets |
|
12,543 |
|
|
13,639 |
|
|
37,946 |
|
|
38,190 |
|
||||
|
Stock-based compensation expense |
|
13,139 |
|
|
8,953 |
|
|
38,984 |
|
|
30,593 |
|
||||
|
Acquisition and integration related costs |
|
2,287 |
|
|
7,171 |
|
|
3,028 |
|
|
20,199 |
|
||||
|
Restructuring and related costs |
|
806 |
|
|
2,314 |
|
|
3,054 |
|
|
2,314 |
|
||||
|
Non-GAAP income before income taxes |
|
127,698 |
|
|
105,083 |
|
|
359,656 |
|
|
265,742 |
|
||||
|
Assumed rate for income tax expense * |
|
25 |
% |
|
25 |
% |
|
25 |
% |
|
25 |
% |
||||
|
Assumed provision for income tax expense |
|
(31,925 |
) |
|
(26,271 |
) |
|
(89,914 |
) |
|
(66,436 |
) |
||||
|
Non-GAAP net income |
|
$ |
95,773 |
|
|
$ |
78,812 |
|
|
$ |
269,742 |
|
|
$ |
199,306 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Net income per share - diluted |
|
$ |
2.15 |
|
|
$ |
1.61 |
|
|
$ |
6.20 |
|
|
$ |
4.25 |
|
|
Non-GAAP net income per share - diluted |
|
$ |
2.61 |
|
|
$ |
2.16 |
|
|
$ |
7.37 |
|
|
$ |
5.47 |
|
|
|
|
|
|
|
|
|
|
|
||||||||
|
Weighted average outstanding shares - basic |
|
36,333 |
|
|
36,129 |
|
|
36,293 |
|
|
36,032 |
|
||||
|
Weighted average outstanding shares - diluted |
|
36,652 |
|
|
36,518 |
|
|
36,615 |
|
|
36,439 |
|
||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
* A 25% tax rate is assumed for 2019 and 2018, which approximates our statutory corporate tax rate. |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||
|
Reconciliation of Net Income to EBITDA and Adjusted EBITDA |
||||||||||||||||
|
|
|
Three Months Ended |
|
Nine Months Ended |
||||||||||||
|
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
||||||||
|
Net income |
|
$ |
78,619 |
|
|
$ |
58,759 |
|
|
$ |
227,036 |
|
|
$ |
154,825 |
|
|
Amortization of acquired intangible assets in cost of revenues |
|
4,957 |
|
|
5,310 |
|
|
15,503 |
|
|
15,242 |
|
||||
|
Amortization of acquired intangible assets in operating expenses |
|
7,586 |
|
|
8,329 |
|
|
22,443 |
|
|
22,948 |
|
||||
|
Depreciation and other amortization |
|
6,279 |
|
|
6,794 |
|
|
19,289 |
|
|
19,810 |
|
||||
|
Interest and other income |
|
(5,358 |
) |
|
(3,035 |
) |
|
(16,216 |
) |
|
(8,674 |
) |
||||
|
Interest and other expense |
|
704 |
|
|
717 |
|
|
2,133 |
|
|
2,135 |
|
||||
|
Income tax expense |
|
20,304 |
|
|
14,247 |
|
|
49,608 |
|
|
19,621 |
|
||||
|
EBITDA |
|
$ |
113,091 |
|
|
$ |
91,121 |
|
|
$ |
319,796 |
|
|
$ |
225,907 |
|
|
Stock-based compensation expense |
|
13,139 |
|
|
8,953 |
|
|
38,984 |
|
|
30,593 |
|
||||
|
Acquisition and integration related costs |
|
2,287 |
|
|
7,171 |
|
|
3,028 |
|
|
20,199 |
|
||||
|
Restructuring and related costs |
|
806 |
|
|
2,314 |
|
|
3,054 |
|
|
2,314 |
|
||||
|
Adjusted EBITDA |
|
$ |
129,323 |
|
|
$ |
109,559 |
|
|
$ |
364,862 |
|
|
$ |
279,013 |
|
|
CoStar Group, Inc. |
||||||||
|
Condensed Consolidated Balance Sheets - Unaudited |
||||||||
|
(in thousands) |
||||||||
|
|
|
|
|
|
||||
|
|
|
September 30, |
|
December 31, |
||||
|
ASSETS |
|
|
|
|
||||
|
Current assets: |
|
|
|
|
||||
|
Cash and cash equivalents |
|
$ |
1,389,619 |
|
|
$ |
1,100,416 |
|
|
Accounts receivable, less allowance of $4,858 and $5,709 as of September 30, 2019 and December 31, 2018, respectively |
|
91,325 |
|
|
89,192 |
|
||
|
Prepaid expenses and other current assets |
|
23,778 |
|
|
23,690 |
|
||
|
Total current assets |
|
1,504,722 |
|
|
1,213,298 |
|
||
|
|
|
|
|
|
||||
|
Long-term investments |
|
10,070 |
|
|
10,070 |
|
||
|
Deferred income taxes, net |
|
4,426 |
|
|
7,469 |
|
||
|
Property and equipment, net |
|
107,989 |
|
|
83,303 |
|
||
|
Lease right-of-use assets |
|
105,516 |
|
|
— |
|
||
|
Goodwill |
|
1,616,538 |
|
|
1,611,535 |
|
||
|
Intangible assets, net |
|
259,444 |
|
|
288,911 |
|
||
|
Deferred commission costs, net |
|
85,623 |
|
|
76,031 |
|
||
|
Deposits and other assets |
|
6,155 |
|
|
7,432 |
|
||
|
Income tax receivable |
|
14,908 |
|
|
14,908 |
|
||
|
Total assets |
|
$ |
3,715,391 |
|
|
$ |
3,312,957 |
|
|
|
|
|
|
|
||||
|
LIABILITIES AND STOCKHOLDERS' EQUITY |
|
|
|
|
||||
|
Current liabilities: |
|
|
|
|
||||
|
Accounts payable |
|
$ |
8,082 |
|
|
$ |
6,327 |
|
|
Accrued wages and commissions |
|
51,557 |
|
|
45,588 |
|
||
|
Accrued expenses |
|
41,816 |
|
|
29,821 |
|
||
|
Deferred gain on the sale of building |
|
— |
|
|
2,523 |
|
||
|
Income taxes payable |
|
9,116 |
|
|
14,288 |
|
||
|
Deferred rent |
|
— |
|
|
4,153 |
|
||
|
Lease liabilities |
|
27,137 |
|
|
— |
|
||
|
Deferred revenue |
|
60,328 |
|
|
51,459 |
|
||
|
Total current liabilities |
|
198,036 |
|
|
154,159 |
|
||
|
|
|
|
|
|
||||
|
Deferred gain on the sale of building |
|
— |
|
|
13,669 |
|
||
|
Deferred rent |
|
— |
|
|
31,944 |
|
||
|
Deferred income taxes, net |
|
83,120 |
|
|
69,857 |
|
||
|
Income taxes payable |
|
17,172 |
|
|
17,386 |
|
||
|
Lease and other long-term liabilities |
|
117,897 |
|
|
4,000 |
|
||
|
Total liabilities |
|
$ |
416,225 |
|
|
$ |
291,015 |
|
|
|
|
|
|
|
||||
|
Total stockholders’ equity |
|
3,299,166 |
|
|
3,021,942 |
|
||
|
Total liabilities and stockholders’ equity |
|
$ |
3,715,391 |
|
|
$ |
3,312,957 |
|
|
CoStar Group, Inc. |
||||||||
|
Condensed Consolidated Statements of Cash Flows - Unaudited |
||||||||
|
(in thousands) |
||||||||
|
|
|
|||||||
|
|
Nine Months Ended |
|||||||
|
|
2019 |
|
2018 |
|||||
|
Operating activities: |
|
|
|
|||||
|
Net income |
$ |
227,036 |
|
|
$ |
154,825 |
|
|
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|
|
|
|||||
|
Depreciation and amortization |
57,235 |
|
|
58,000 |
|
|||
|
Amortization of deferred commissions costs |
39,189 |
|
|
36,242 |
|
|||
|
Amortization of debt issuance costs |
657 |
|
|
657 |
|
|||
|
Stock-based compensation expense |
38,984 |
|
|
30,593 |
|
|||
|
Deferred income taxes, net |
13,288 |
|
|
7,644 |
|
|||
|
Bad debt expense |
7,458 |
|
|
4,519 |
|
|||
|
Changes in operating assets and liabilities, net of acquisitions: |
|
|
|
|||||
|
Accounts receivable |
(8,797 |
) |
|
(19,038 |
) |
|||
|
Prepaid expenses and other current assets |
(754 |
) |
|
(2,952 |
) |
|||
|
Deferred commissions |
(48,791 |
) |
|
(41,421 |
) |
|||
|
Lease right-of-use and other assets |
16,326 |
|
|
(1,396 |
) |
|||
|
Accounts payable and other liabilities |
(4,339 |
) |
|
(13,443 |
) |
|||
|
Deferred revenue |
12,525 |
|
|
6,454 |
|
|||
|
Net cash provided by operating activities |
350,017 |
|
|
220,684 |
|
|||
|
|
|
|
|
|||||
|
Investing activities: |
|
|
|
|||||
|
Purchases of property and equipment and other assets |
(44,162 |
) |
|
(21,801 |
) |
|||
|
Cash paid for acquisitions, net of cash acquired |
(13,721 |
) |
|
(340,074 |
) |
|||
|
Net cash used in investing activities |
(57,883 |
) |
|
(361,875 |
) |
|||
|
|
|
|
|
|||||
|
Financing activities: |
|
|
|
|||||
|
Repurchase of restricted stock to satisfy tax withholding obligations |
(25,040 |
) |
|
(23,666 |
) |
|||
|
Proceeds from exercise of stock options and employee stock purchase plan |
22,970 |
|
|
25,768 |
|
|||
|
Other financing activities |
(123 |
) |
|
— |
|
|||
|
Net cash (used in) provided by financing activities |
(2,193 |
) |
|
2,102 |
|
|||
|
|
|
|
|
|||||
|
Effect of foreign currency exchange rates on cash and cash equivalents |
(738 |
) |
|
(588 |
) |
|||
|
Net increase (decrease) in cash and cash equivalents |
289,203 |
|
|
(139,677 |
) |
|||
|
Cash and cash equivalents at the beginning of period |
1,100,416 |
|
|
1,211,463 |
|
|||
|
Cash and cash equivalents at the end of period |
$ |
1,389,619 |
|
|
$ |
1,071,786 |
|
|
|
CoStar Group, Inc. |
||||||||||||||||||||||||
|
Disaggregated Revenues - Unaudited |
||||||||||||||||||||||||
|
(in thousands) |
||||||||||||||||||||||||
|
|
|
|||||||||||||||||||||||
|
|
Three Months Ended September 30, |
|||||||||||||||||||||||
|
|
2019 |
|
2018 |
|||||||||||||||||||||
|
|
North America |
|
International |
|
Total |
|
North America |
|
International |
|
Total |
|||||||||||||
|
Information and analytics |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
CoStar Suite |
$ |
149,187 |
|
|
$ |
6,826 |
|
|
$ |
156,013 |
|
|
$ |
132,700 |
|
|
$ |
6,384 |
|
|
$ |
139,084 |
|
|
|
Information services |
17,382 |
|
|
2,089 |
|
|
19,471 |
|
|
15,310 |
|
|
2,225 |
|
|
17,535 |
|
|||||||
|
Online marketplaces |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Multifamily |
125,707 |
|
|
— |
|
|
125,707 |
|
|
104,778 |
|
|
— |
|
|
104,778 |
|
|||||||
|
Commercial property and land |
51,508 |
|
|
109 |
|
|
51,617 |
|
|
44,128 |
|
|
— |
|
|
44,128 |
|
|||||||
|
Total revenues |
$ |
343,784 |
|
|
$ |
9,024 |
|
|
$ |
352,808 |
|
|
$ |
296,916 |
|
|
$ |
8,609 |
|
|
$ |
305,525 |
|
|
|
|
|
|||||||||||||||||||||||
|
|
Nine Months Ended September 30, |
|||||||||||||||||||||||
|
|
2019 |
|
2018 |
|||||||||||||||||||||
|
|
North America |
|
International |
|
Total |
|
North America |
|
International |
|
Total |
|||||||||||||
|
Information and analytics |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
CoStar Suite |
$ |
436,070 |
|
|
$ |
20,469 |
|
|
$ |
456,539 |
|
|
$ |
383,876 |
|
|
$ |
19,381 |
|
|
$ |
403,257 |
|
|
|
Information services |
52,632 |
|
|
6,466 |
|
|
59,098 |
|
|
41,544 |
|
|
6,881 |
|
|
48,425 |
|
|||||||
|
Online marketplaces |
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
|
Multifamily |
360,463 |
|
|
— |
|
|
360,463 |
|
|
297,254 |
|
|
— |
|
|
297,254 |
|
|||||||
|
Commercial property and land |
148,418 |
|
|
475 |
|
|
148,893 |
|
|
127,325 |
|
|
— |
|
|
127,325 |
|
|||||||
|
Total revenues |
$ |
997,583 |
|
|
$ |
27,410 |
|
|
$ |
1,024,993 |
|
|
$ |
849,999 |
|
|
$ |
26,262 |
|
|
$ |
876,261 |
|
|
|
CoStar Group, Inc. |
||||||||||||||||
|
Results of Segments - Unaudited |
||||||||||||||||
|
(in thousands) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
|
Three Months Ended |
|
Nine Months Ended |
|||||||||||||
|
|
2019 |
|
2018 |
|
2019 |
|
2018 |
|||||||||
|
EBITDA |
|
|
|
|
|
|
|
|||||||||
|
North America |
$ |
115,973 |
|
|
$ |
94,088 |
|
|
$ |
326,648 |
|
|
$ |
229,905 |
|
|
|
International |
(2,882 |
) |
|
(2,967 |
) |
|
(6,852 |
) |
|
(3,998 |
) |
|||||
|
Total EBITDA |
$ |
113,091 |
|
|
$ |
91,121 |
|
|
$ |
319,796 |
|
|
$ |
225,907 |
|
|
|
CoStar Group, Inc. |
||||||||||||||||||||||||||||
|
Reconciliation of Non-GAAP Financial Measures with 2018-2019 Quarterly Results - Unaudited |
||||||||||||||||||||||||||||
|
(in millions, except per share data) |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
Reconciliation of Net Income to Non-GAAP Net Income |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
2018 |
|
2019 |
||||||||||||||||||||||||
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Q3 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Net income |
|
$52.2 |
|
$43.8 |
|
$58.8 |
|
$83.5 |
|
$85.2 |
|
$63.2 |
|
$78.6 |
||||||||||||||
|
Income tax expense |
|
3.5 |
|
1.9 |
|
14.2 |
|
26.1 |
|
12.5 |
|
16.8 |
|
20.3 |
||||||||||||||
|
Income before income taxes |
|
55.7 |
|
45.7 |
|
73.0 |
|
109.6 |
|
97.7 |
|
80.0 |
|
98.9 |
||||||||||||||
|
Amortization of acquired intangible assets |
|
10.4 |
|
14.1 |
|
13.6 |
|
13.3 |
|
13.2 |
|
12.2 |
|
12.5 |
||||||||||||||
|
Stock-based compensation expense |
|
10.4 |
|
11.2 |
|
9.0 |
|
12.1 |
|
12.0 |
|
13.8 |
|
13.1 |
||||||||||||||
|
Acquisition and integration related costs |
|
3.5 |
|
9.5 |
|
7.2 |
|
1.5 |
|
0.2 |
|
0.5 |
|
2.3 |
||||||||||||||
|
Restructuring and related costs |
|
— |
|
— |
|
2.3 |
|
— |
|
0.1 |
|
2.2 |
|
0.8 |
||||||||||||||
|
Non-GAAP income before income taxes |
|
80.1 |
|
80.6 |
|
105.1 |
|
136.5 |
|
123.2 |
|
108.7 |
|
127.6 |
||||||||||||||
|
Assumed rate for income tax expense * |
|
25% |
|
25% |
|
25% |
|
25% |
|
25% |
|
25% |
|
25% |
||||||||||||||
|
Assumed provision for income tax expense |
|
(20.0) |
|
(20.1) |
|
(26.3) |
|
(34.1) |
|
(30.8) |
|
(27.2) |
|
(31.9) |
||||||||||||||
|
Non-GAAP net income |
|
$60.1 |
|
$60.4 |
|
$78.8 |
|
$102.3 |
|
$92.4 |
|
$81.5 |
|
$95.7 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Non-GAAP net income per share - diluted |
|
$1.65 |
|
$1.66 |
|
$2.16 |
|
$2.81 |
|
$2.53 |
|
$2.23 |
|
$2.61 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
Weighted average outstanding shares - basic |
|
35.9 |
|
36.1 |
|
36.1 |
|
36.1 |
|
36.2 |
|
36.3 |
|
36.3 |
||||||||||||||
|
Weighted average outstanding shares - diluted |
|
36.4 |
|
36.5 |
|
36.5 |
|
36.5 |
|
36.6 |
|
36.6 |
|
36.7 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
* A 25% tax rate is assumed for 2019 and 2018, which approximates our statutory corporate tax rate. |
||||||||||||||||||||||||||||
|
|
|
|
||||||||||||||||||||||||||
|
Reconciliation of Net Income to EBITDA and Adjusted EBITDA |
||||||||||||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
|
|
2018 |
|
2019 |
||||||||||||||||||||||||
|
|
|
Q1 |
|
Q2 |
|
Q3 |
|
Q4 |
|
Q1 |
|
Q2 |
|
Q3 |
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
|
Net income |
|
$ |
52.2 |
|
$ |
43.8 |
|
$ |
58.8 |
|
$ |
83.5 |
|
|
$ |
85.2 |
|
$ |
63.2 |
|
$ |
78.6 |
|
|||||
|
Amortization of acquired intangible assets |
|
10.4 |
|
14.1 |
|
13.6 |
|
13.3 |
|
|
13.2 |
|
12.2 |
|
12.5 |
|
||||||||||||
|
Depreciation and other amortization |
|
6.6 |
|
6.4 |
|
6.8 |
|
6.5 |
|
|
6.5 |
|
6.5 |
|
6.3 |
|
||||||||||||
|
Interest and other income |
|
(3.0 |
) |
(2.6 |
) |
(3.0 |
) |
(4.6 |
) |
|
(4.9 |
) |
(5.9 |
) |
(5.4 |
) |
||||||||||||
|
Interest and other expense |
|
0.7 |
|
0.7 |
|
0.7 |
|
0.7 |
|
|
0.7 |
|
0.7 |
|
0.7 |
|
||||||||||||
|
Income tax expense |
|
3.5 |
|
1.9 |
|
14.2 |
|
26.1 |
|
|
12.5 |
|
16.8 |
|
20.3 |
|
||||||||||||
|
EBITDA |
|
$ |
70.4 |
|
$ |
64.3 |
|
$ |
91.1 |
|
$ |
125.5 |
|
|
$ |
113.2 |
|
$ |
93.5 |
|
$ |
113.0 |
|
|||||
|
Stock-based compensation expense |
|
10.4 |
|
11.2 |
|
9.0 |
|
12.1 |
|
|
12.0 |
|
13.8 |
|
13.1 |
|
||||||||||||
|
Acquisition and integration related costs |
|
3.5 |
|
9.5 |
|
7.2 |
|
1.5 |
|
|
0.2 |
|
0.5 |
|
2.3 |
|
||||||||||||
|
Restructuring and related costs |
|
— |
|
— |
|
2.3 |
|
— |
|
|
0.1 |
|
2.2 |
|
0.8 |
|
||||||||||||
|
Adjusted EBITDA |
|
$ |
84.4 |
|
$ |
85.1 |
|
$ |
109.6 |
|
$ |
139.0 |
|
|
$ |
125.5 |
|
$ |
110.0 |
|
$ |
129.2 |
|
|||||
|
CoStar Group, Inc. |
||||||||||||||||
|
Reconciliation of Forward-Looking Guidance - Unaudited |
||||||||||||||||
|
(in thousands, except per share data) |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income |
||||||||||||||||
|
|
Guidance Range |
|
Guidance Range |
|||||||||||||
|
|
For the Three Months |
|
For the Twelve Months |
|||||||||||||
|
|
Ended December 31, 2019 |
|
Ended December 31, 2019 |
|||||||||||||
|
|
Low |
|
High |
|
Low |
|
High |
|||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Net income |
$ |
65,000 |
|
|
$ |
71,000 |
|
|
$ |
292,000 |
|
|
$ |
298,000 |
|
|
|
Income tax expense |
22,000 |
|
|
24,000 |
|
|
72,000 |
|
|
74,000 |
|
|||||
|
Income before income taxes |
87,000 |
|
|
95,000 |
|
|
364,000 |
|
|
372,000 |
|
|||||
|
Amortization of acquired intangible assets |
16,000 |
|
|
16,000 |
|
|
54,000 |
|
|
54,000 |
|
|||||
|
Stock-based compensation expense |
15,000 |
|
|
14,000 |
|
|
54,000 |
|
|
53,000 |
|
|||||
|
Acquisition and integration related costs |
5,000 |
|
|
4,000 |
|
|
8,000 |
|
|
7,000 |
|
|||||
|
Restructuring and related costs |
— |
|
|
— |
|
|
3,000 |
|
|
3,000 |
|
|||||
|
Non-GAAP income before income taxes |
123,000 |
|
|
129,000 |
|
|
483,000 |
|
|
489,000 |
|
|||||
|
Assumed rate for income tax expense * |
25 |
% |
|
25 |
% |
|
25 |
% |
|
25 |
% |
|||||
|
Assumed provision for income tax expense |
(30,600 |
) |
|
(32,100 |
) |
|
(120,800 |
) |
|
(122,300 |
) |
|||||
|
Non-GAAP net income |
$ |
92,400 |
|
|
$ |
96,900 |
|
|
$ |
362,200 |
|
|
$ |
366,700 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Net income per share - diluted |
$ |
1.77 |
|
|
$ |
1.93 |
|
|
$ |
7.98 |
|
|
$ |
8.14 |
|
|
|
Non-GAAP net income per share - diluted |
$ |
2.52 |
|
|
$ |
2.64 |
|
|
$ |
9.90 |
|
|
$ |
10.02 |
|
|
|
|
|
|
|
|
|
|
|
|||||||||
|
Weighted average outstanding shares - diluted |
36,700 |
|
|
36,700 |
|
|
36,600 |
|
|
36,600 |
|
|||||
|
|
|
|
|
|
|
|
|
|||||||||
|
* A 25% tax rate is assumed, which approximates our statutory corporate tax rate. |
||||||||||||||||
|
|
|
|
|
|
|
|
|
|||||||||
|
Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA |
|
|||||||||||||||
|
|
|
|
|
|||||||||||||
|
|
Guidance Range |
|
Guidance Range |
|||||||||||||
|
|
For the Three Months |
|
For the Twelve Months |
|||||||||||||
|
|
Ended December 31, 2019 |
|
Ended December 31, 2019 |
|||||||||||||
|
|
Low |
|
High |
|
Low |
|
High |
|||||||||
|
Net income |
$ |
65,000 |
|
|
$ |
71,000 |
|
|
$ |
292,000 |
|
|
$ |
298,000 |
|
|
|
Amortization of acquired intangible assets |
16,000 |
|
|
16,000 |
|
|
54,000 |
|
|
54,000 |
|
|||||
|
Depreciation and other amortization |
8,000 |
|
|
8,000 |
|
|
27,000 |
|
|
27,000 |
|
|||||
|
Interest and other expense, net |
(2,000 |
) |
|
(2,000 |
) |
|
(16,000 |
) |
|
(16,000 |
) |
|||||
|
Income tax expense |
22,000 |
|
|
24,000 |
|
|
72,000 |
|
|
74,000 |
|
|||||
|
Stock-based compensation expense |
15,000 |
|
|
14,000 |
|
|
54,000 |
|
|
53,000 |
|
|||||
|
Acquisition and integration related costs |
5,000 |
|
|
4,000 |
|
|
8,000 |
|
|
7,000 |
|
|||||
|
Restructuring and related costs |
— |
|
|
— |
|
|
3,000 |
|
|
3,000 |
|
|||||
|
Adjusted EBITDA |
$ |
129,000 |
|
|
$ |
135,000 |
|
|
$ |
494,000 |
|
|
$ |
500,000 |
|
|
Contacts
Scott Wheeler
Chief Financial Officer
(202) 336-6920
swheeler@costar.com
Richard Simonelli
Investor Relations
(202) 346-6394
rsimonelli@costar.com
About CoStar Group, Inc.
CoStar Group, Inc. (NASDAQ: CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. LoopNet is the most heavily trafficked commercial real estate marketplace online with over 6 million monthly unique visitors. Realla is the UK’s most comprehensive commercial property digital marketplace. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. CoStar Group’s websites attracted an average of over 51 million unique monthly visitors in aggregate in the third quarter of 2019. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of over 3,900 worldwide, including the industry’s largest professional research organization. For more information, visit www.costargroup.com.
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group's financial expectations, the Company's plans, objectives, expectations and intentions and other statements including words such as “hope,” "anticipate," "may," "believe," "expect," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar Group and are subject to significant risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the risk that the trends stated or implied by this release cannot or will not be sustained at the current pace, including trends related to revenue, net income, non-GAAP net income, EBITDA, adjusted EBITDA, and sales bookings; the risk that the Company is unable to sustain current revenue, earnings and bookings growth rates or increase them; the risk that CoStar and STR cannot be combined successfully or that the acquisition does not produce the expected results, including creation of valuable new and improved tools; the risk that the Company’s estimated results for STR, including fourth quarter revenue and adjusted EBITDA, will not be as expected and stated in this release; the risk that revenues for the fourth quarter and full year 2019 will not be as stated in this press release; the risk that net income for the fourth quarter and full year 2019 will not be as stated in this press release; the risk that adjusted EBITDA for the fourth quarter and full year 2019 will not be as stated in this press release; the risk that non-GAAP net income and non-GAAP net income per diluted share for the fourth quarter and full year 2019 will not be as stated in this press release; and the risk that the tax rate estimates stated in this press release are incorrect or may change. Additional factors that could cause results to differ materially from those anticipated in the forward-looking statements can be found in CoStar’s Annual Report on Form 10-K for the year ended December 31, 2018, and CoStar’s Quarterly Report on Form 10-Q for the period ended June 30, 2019, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, and the Company’s other filings with the SEC available at the SEC’s website (www.sec.gov). CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
