Business Wire | Jul 27, 2021 04:19PM EDT

CoStar Group Second Quarter 2021 Revenue Increases 21% Year-over-Year, Visitors to CoStar Group Marketplaces up over 45% Year-over-Year

Jul. 27, 2021

WASHINGTON--(BUSINESS WIRE)--Jul. 27, 2021--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 June 30, 2021 was $480 million, an increase of 21% over revenue of $397 million for the second quarter of 2020.

Net income for the second quarter of 2021 was $61 million, or $0.16 per diluted share. Non-GAAP net income for the second quarter of 2021 (which excludes amortization of acquired intangible assets, stock-based compensation, and other items as described below) was $103 million or $0.26 per diluted share, an increase of $15 million or 16% versus the second quarter of 2020.

EBITDA for the second quarter of 2021 was $133 million, an increase of 22% versus EBITDA of $109 million for the second quarter of 2020. Adjusted EBITDA (which excludes stock-based compensation, acquisition and integration related costs and other items as described below) for the second quarter of 2021 was $150 million, an increase of 17% compared to adjusted EBITDA of $129 million for the second quarter of 2020.

"We saw incredibly strong performance across all of our businesses in the second quarter, with total revenue and profit ahead of forecast and the total numbers of visitors to our platforms up over 45% year-over-year," said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. "CoStar Group net new bookings in the second quarter of 2021 increased 47% over the second quarter of 2020 to $51 million. CoStar Suite net new bookings were the strongest in years, up over 900% year-over-year and 19% quarter-over-quarter in the second quarter."

"Apartments.com set a new traffic record with network visitors up 30% year-over-year in the second quarter of 2021, which resulted in a 57% year-over-year increase in leads to our customers. Total leads generated by Apartments.com are up over 120% since 2018," continued Florance. "During the second quarter of 2021, our most economical ad packages generated more leads than our top-level packages were generating just a year ago. Without significant price increases during the pandemic, our effective price per lead dropped dramatically. This caused net new bookings in Apartments.com to fall from the record high levels achieved in the second quarter of 2020. Moving forward, we intend to adjust pricing to reflect the strength of our dramatically higher lead flows, which we believe will accelerate net new bookings."

"LoopNet Signature Ad revenue grew 71% year-over-year in the second quarter of 2021 while unique visitors to our LoopNet network increased 33%," stated Florance. "Ten-X revenue increased over 40% year-over-year on a proforma basis in the second quarter of 2021, as we are seeing increased volume of assets and higher value assets sold through our platform. Homesnap also performed very well in the second quarter of 2021, with total revenue growth up 50% year-over-year on a proforma basis, and total agent subscribers expanding 80% to over 63,000 at the end of the second quarter."

"With great momentum in our core business, we are focused on significantly expanding our total addressable market by leveraging our strengths into the digitization of residential real estate and into international markets. We are committed to accelerating future growth, as evidenced by the acquisition of Homes.com in May of this year; the steps we have taken to improve that experience for sellers, buyers and real estate agents; and our planned investment in residential technology and content in the second half of 2021," concluded Florance.

Year 2020-2021 Quarterly Results - Unaudited

(in millions, except per share data)

2020 2021

Q1 Q2 Q3 Q4 Q1 Q2



Revenues $392 $397 $426 $444 $458 $480

Net income 73 60 58 36 74 61

Net income per share - diluted^(1) 0.20 0.16 0.15 0.09 0.19 0.16

Weighted average outstanding shares - diluted^(1) 368 377 394 394 394 394



EBITDA 100 109 108 88 136 133

Adjusted EBITDA 124 129 134 167 160 150

Non-GAAP net income 90 88 89 112 108 103

Non-GAAP net income per share - diluted^(1) 0.24 0.23 0.23 0.29 0.27 0.26

__________________________ ^(1) Prior period amounts have been retroactively adjusted to reflect theten-for-one stock split effected in the form of a stock dividend in June 2021.

As of June 30, 2021, the Company had approximately $3.7 billion in cash, cash equivalents and long-term investments and outstanding debt of approximately $987 million.

2021 Outlook

The Company is increasing its revenue guidance for the full year of 2021 to a new range of $1.940 billion to $1.950 billion, representing growth of approximately 17% year-over-year at the midpoint of the range. Revenue for the third quarter of 2021 is expected to be in the range of $495 million to $500 million, representing revenue growth of approximately 17% over the third quarter of 2020 at the midpoint of the range.

The Company is lowering its adjusted EBITDA guidance for the full year of 2021 to a new range of $605 million to $615 million to reflect the expected negative EBITDA results of Homes.com and planned investments to integrate and develop the residential marketplace. The revised adjusted EBITDA guidance represents growth of approximately 10% year-over-year at the midpoint of the range. For the third quarter of 2021, the Company expects adjusted EBITDA in a range of $130 million to $135 million.

The Company is lowering its non-GAAP net income per diluted share guidance for full-year 2021 to a new range of $1.04 to $1.06 per share based on 395 million shares. For the third quarter of 2021, we expect non-GAAP net income per diluted share in a range of $0.22 to $0.23 per share based on 395 million shares. These ranges include an estimated non-GAAP tax rate of 25% for the full year and the third quarter of 2021.

The preceding forward-looking statements reflect CoStar Group's expectations as of July 27, 2021, including forward-looking non-GAAP financial measures on a consolidated basis, based on current estimates, expectations, observations, and trends. Given the risk factors, rapidly evolving economic environment, and uncertainties and assumptions discussed in this release and in our quarterly reports on Form 10-Q and annual reports on Form 10-K, including uncertainties as a result of the COVID-19 pandemic and responses to it by, and the impact on, global economies and the commercial real estate industry, 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 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 (expense) income and other (expense) income, 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 2021, 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 to discuss second quarter 2021 results and the Company's outlook at 5:00 PM EDT on Tuesday, July 27, 2021. A live audio webcast of the conference will be available in listen-only mode through the Investors section of the CoStar Group website: https://investors.costargroup.com. A replay of the webcast audio will also be available in the Investors section of our 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 Six Months Ended June 30, June 30,

2021 2020 2021 2020

Revenues $ 480,333 $ 397,159 $ 938,030 $ 789,006

Cost of revenues 89,566 74,040 178,314 152,949

Gross profit 390,767 323,119 759,716 636,057



Operating expenses:

Selling and marketing(excluding customer base 164,612 130,461 303,299 255,568 amortization)

Software development 48,573 39,001 95,357 80,611

General and administrative 58,226 57,403 122,076 116,276

Customer base amortization 18,345 14,935 36,764 26,419

289,756 241,800 557,496 478,874



Income from operations 101,011 81,319 202,220 157,183

Interest expense (7,877) (3,596) (15,755) (1,945)

Other income (expense) 847 (474) 797 367

Income before income taxes 93,981 77,249 187,262 155,605

Income tax expense 32,833 16,889 51,902 22,452

Net income $ 61,148 $ 60,360 $ 135,360 $ 133,153



Net income per share - $ 0.16 $ 0.16 $ 0.35 $ 0.36 basic^(1)

Net income per share - $ 0.16 $ 0.16 $ 0.34 $ 0.36 diluted^(1)



Weighted-averageoutstanding shares - basic 392,306 375,239 391,942 369,972 ^(1)

Weighted-averageoutstanding shares - 394,098 377,336 393,906 372,548 diluted^(1)

__________________________ ^(1) Prior period amounts have been retroactively adjusted to reflect theten-for-one stock split effected in the form of a stock dividend in June 2021.

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 June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Net income

$

61,148

$

60,360

$

135,360

$

133,153

Income tax expense

32,833

16,889

51,902

22,452

Income before income taxes

93,981

77,249

187,262

155,605

Amortization of acquired intangible assets

25,293

20,989

51,120

38,478

Stock-based compensation expense

15,144

9,527

30,689

24,707

Acquisition and integration related costs

2,001

10,031

10,463

18,744

Other expense

786

-

1,857

-

Non-GAAP income before income taxes

137,205

117,796

281,391

237,534

Assumed rate for income tax expense *

25

%

25

%

25

%

25

%

Assumed provision for income tax expense

(34,301)

(29,449)

(70,348)

(59,384)

Non-GAAP net income

$

102,904

$

88,347

$

211,043

$

178,150

Net income per share - diluted(1)

$

0.16

$

0.16

$

0.34

$

0.36

Non-GAAP net income per share - diluted(1)

$

0.26

$

0.23

$

0.54

$

0.48

Weighted average outstanding shares - basic(1)

392,306

375,239

391,942

369,972

Weighted average outstanding shares - diluted(1)

394,098

377,336

393,906

372,548

__________________________

* A 25% tax rate is assumed for 2021 and 2020, which approximates our statutory federal and state corporate tax rate.

(1) Prior period amounts have been retroactively adjusted to reflect the ten-for-one stock split effected in the form of a stock dividend in June 2021.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

Net income

$

61,148

$

60,360

$

135,360

$

133,153

Amortization of acquired intangible assets in cost of revenues

6,948

6,054

14,356

12,059

Amortization of acquired intangible assets in operating expenses

18,345

14,935

36,764

26,419

Depreciation and other amortization

7,028

6,990

15,528

13,757

Interest expense

7,877

3,596

15,755

1,945

Other (income) expense

(847)

474

(797)

(367)

Income tax expense

32,833

16,889

51,902

22,452

EBITDA

$

133,332

$

109,298

$

268,868

$

209,418

Stock-based compensation expense

15,144

9,527

30,689

24,707

Acquisition and integration related costs

2,001

10,031

10,463

18,744

Adjusted EBITDA

$

150,477

$

128,856

$

310,020

$

252,869

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 Six Months Ended June 30, June 30,

2021 2020 2021 2020

Net income $ 61,148 $ 60,360 $ 135,360 $ 133,153

Income tax expense 32,833 16,889 51,902 22,452

Income before income taxes 93,981 77,249 187,262 155,605

Amortization of acquired 25,293 20,989 51,120 38,478 intangible assets

Stock-based compensation 15,144 9,527 30,689 24,707 expense

Acquisition and 2,001 10,031 10,463 18,744 integration related costs

Other expense 786 - 1,857 -

Non-GAAP income before 137,205 117,796 281,391 237,534 income taxes

Assumed rate for income 25 % 25 % 25 % 25 %tax expense *

Assumed provision for (34,301) (29,449) (70,348) (59,384) income tax expense

Non-GAAP net income $ 102,904 $ 88,347 $ 211,043 $ 178,150



Net income per share - $ 0.16 $ 0.16 $ 0.34 $ 0.36 diluted^(1)

Non-GAAP net income per $ 0.26 $ 0.23 $ 0.54 $ 0.48 share - diluted^(1)



Weighted averageoutstanding shares - basic 392,306 375,239 391,942 369,972 ^(1)

Weighted averageoutstanding shares - 394,098 377,336 393,906 372,548 diluted^(1)

__________________________

* A 25% tax rate is assumed for 2021 and 2020, which approximates our statutoryfederal and state corporate tax rate.

^(1) Prior period amounts have been retroactively adjusted to reflect theten-for-one stock split effected in the form of a stock dividend in June 2021.



Reconciliation of Net Income to EBITDA and Adjusted EBITDA



Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020

Net income $ 61,148 $ 60,360 $ 135,360 $ 133,153

Amortization of acquiredintangible assets in cost 6,948 6,054 14,356 12,059 of revenues

Amortization of acquiredintangible assets in 18,345 14,935 36,764 26,419 operating expenses

Depreciation and other 7,028 6,990 15,528 13,757 amortization

Interest expense 7,877 3,596 15,755 1,945

Other (income) expense (847) 474 (797) (367)

Income tax expense 32,833 16,889 51,902 22,452

EBITDA $ 133,332 $ 109,298 $ 268,868 $ 209,418

Stock-based compensation 15,144 9,527 30,689 24,707 expense

Acquisition and 2,001 10,031 10,463 18,744 integration related costs

Adjusted EBITDA $ 150,477 $ 128,856 $ 310,020 $ 252,869

CoStar Group, Inc.

Condensed Consolidated Balance Sheets - Unaudited

(in thousands)

June 30, 2021

December 31, 2020

ASSETS

Current assets:

Cash, cash equivalents and restricted cash

$

3,674,909

$

3,755,912

Accounts receivable

122,702

119,059

Less: Allowance for credit losses

(14,433)

(15,110)

Accounts receivable, net

108,269

103,949

Prepaid expenses and other current assets

34,753

28,651

Total current assets

3,817,931

3,888,512

Deferred income taxes, net

3,034

4,983

Property and equipment, net

239,125

126,325

Lease right-of-use assets

119,290

108,740

Goodwill

2,294,452

2,235,999

Intangible assets, net

476,179

426,745

Deferred commission costs, net

94,387

93,274

Deposits and other assets

16,230

15,856

Income tax receivable

14,986

14,986

Total assets

$

7,075,614

$

6,915,420

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

16,376

$

15,732

Accrued wages and commissions

76,014

80,998

Accrued expenses

89,284

110,305

Income taxes payable

25,527

16,316

Lease liabilities

28,779

32,648

Deferred revenue

92,698

74,851

Total current liabilities

328,678

330,850

Long-term debt, net

987,325

986,715

Deferred income taxes, net

76,979

72,991

Income taxes payable

25,480

25,282

Lease and other long-term liabilities

129,925

124,223

Total liabilities

$

1,548,387

$

1,540,061

Total stockholders' equity

5,527,227

5,375,359

Total liabilities and stockholders' equity

$

7,075,614

$

6,915,420

CoStar Group, Inc.

Condensed Consolidated Balance Sheets - Unaudited

(in thousands)



June 30, December 31, 2021 2020

ASSETS

Current assets:

Cash, cash equivalents and restricted cash $ 3,674,909 $ 3,755,912

Accounts receivable 122,702 119,059

Less: Allowance for credit losses (14,433) (15,110)

Accounts receivable, net 108,269 103,949

Prepaid expenses and other current assets 34,753 28,651

Total current assets 3,817,931 3,888,512



Deferred income taxes, net 3,034 4,983

Property and equipment, net 239,125 126,325

Lease right-of-use assets 119,290 108,740

Goodwill 2,294,452 2,235,999

Intangible assets, net 476,179 426,745

Deferred commission costs, net 94,387 93,274

Deposits and other assets 16,230 15,856

Income tax receivable 14,986 14,986

Total assets $ 7,075,614 $ 6,915,420

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable $ 16,376 $ 15,732

Accrued wages and commissions 76,014 80,998

Accrued expenses 89,284 110,305

Income taxes payable 25,527 16,316

Lease liabilities 28,779 32,648

Deferred revenue 92,698 74,851

Total current liabilities 328,678 330,850



Long-term debt, net 987,325 986,715

Deferred income taxes, net 76,979 72,991

Income taxes payable 25,480 25,282

Lease and other long-term liabilities 129,925 124,223

Total liabilities $ 1,548,387 $ 1,540,061



Total stockholders' equity 5,527,227 5,375,359

Total liabilities and stockholders' equity $ 7,075,614 $ 6,915,420

CoStar Group, Inc.

Condensed Consolidated Statements of Cash Flows - Unaudited

(in thousands)

Six Months Ended June 30,

2021

2020

Operating activities:

Net income

$

135,360

$

133,153

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

68,516

52,235

Amortization of deferred commissions costs

30,847

29,662

Amortization of Senior Notes discount and issuance costs

1,159

508

Realized loss on investments

-

541

Non-cash lease expense

13,136

12,400

Stock-based compensation expense

30,689

24,053

Deferred income taxes, net

9,929

3,569

Credit loss expense

6,086

15,688

Other operating activities, net

(24)

(789)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(8,526)

(37,364)

Prepaid expenses and other current assets

(14,567)

4,371

Deferred commissions

(31,922)

(32,122)

Accounts payable and other liabilities

(32,474)

37,793

Lease liabilities

(15,674)

(14,126)

Income taxes payable

9,415

12,328

Deferred revenue

16,148

13,503

Other assets

2,191

(6,757)

Net cash provided by operating activities

220,289

248,646

Investing activities:

Proceeds from sale and settlement of investments

-

10,259

Proceeds from sale of property and equipment and other assets

201

-

Purchase of Richmond assets and other intangibles

(123,623)

-

Purchases of property and equipment and other assets

(13,093)

(12,782)

Cash paid for acquisitions, net of cash acquired

(148,275)

(184,502)

Net cash used in investing activities

(284,790)

(187,025)

Financing activities:

Proceeds from long-term debt

-

745,000

Repurchase of restricted stock to satisfy tax withholding obligations

(28,405)

(33,653)

Proceeds from equity offering, net of transaction costs

-

1,690,148

Proceeds from exercise of stock options and employee stock purchase plan

12,324

16,513

Other financing activities

(57)

(1,650)

Net cash (used in) provided by financing activities

(16,138)

2,416,358

Effect of foreign currency exchange rates on cash and cash equivalents

(364)

(305)

Net (decrease) increase in cash, cash equivalents and restricted cash

(81,003)

2,477,674

Cash, cash equivalents and restricted cash at the beginning of period

3,755,912

1,070,731

Cash, cash equivalents and restricted cash at the end of period

$

3,674,909

$

3,548,405

CoStar Group, Inc.

Condensed Consolidated Statements of Cash Flows - Unaudited

(in thousands)



Six Months Ended June 30,

2021 2020

Operating activities:

Net income $ 135,360 $ 133,153

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 68,516 52,235

Amortization of deferred commissions costs 30,847 29,662

Amortization of Senior Notes discount and 1,159 508 issuance costs

Realized loss on investments - 541

Non-cash lease expense 13,136 12,400

Stock-based compensation expense 30,689 24,053

Deferred income taxes, net 9,929 3,569

Credit loss expense 6,086 15,688

Other operating activities, net (24) (789)



Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable (8,526) (37,364)

Prepaid expenses and other current assets (14,567) 4,371

Deferred commissions (31,922) (32,122)

Accounts payable and other liabilities (32,474) 37,793

Lease liabilities (15,674) (14,126)

Income taxes payable 9,415 12,328

Deferred revenue 16,148 13,503

Other assets 2,191 (6,757)

Net cash provided by operating activities 220,289 248,646



Investing activities:

Proceeds from sale and settlement of investments - 10,259

Proceeds from sale of property and equipment and 201 - other assets

Purchase of Richmond assets and other intangibles (123,623) -

Purchases of property and equipment and other (13,093) (12,782) assets

Cash paid for acquisitions, net of cash acquired (148,275) (184,502)

Net cash used in investing activities (284,790) (187,025)



Financing activities:

Proceeds from long-term debt - 745,000

Repurchase of restricted stock to satisfy tax (28,405) (33,653) withholding obligations

Proceeds from equity offering, net of transaction - 1,690,148 costs

Proceeds from exercise of stock options and 12,324 16,513 employee stock purchase plan

Other financing activities (57) (1,650)

Net cash (used in) provided by financing (16,138) 2,416,358 activities



Effect of foreign currency exchange rates on cash (364) (305) and cash equivalents

Net (decrease) increase in cash, cash equivalents (81,003) 2,477,674 and restricted cash

Cash, cash equivalents and restricted cash at the 3,755,912 1,070,731 beginning of period

Cash, cash equivalents and restricted cash at the $ 3,674,909 $ 3,548,405 end of period

CoStar Group, Inc.

Disaggregated Revenues - Unaudited

(in thousands)

Three Months Ended June 30,

2021

2020

North America

International

Total

North America

International

Total

Information and analytics

CoStar

$

167,845

$

9,134

$

176,979

$

157,793

$

7,260

$

165,053

Information services

28,096

7,061

35,157

25,022

5,514

30,536

Online marketplaces

Multifamily

171,357

-

171,357

145,541

-

145,541

Commercial property and land

96,476

364

96,840

56,006

23

56,029

Total revenues

$

463,774

$

16,559

$

480,333

$

384,362

$

12,797

$

397,159

Six Months Ended June 30,

2021

2020

North America

International

Total

North America

International

Total

Information and analytics

CoStar

$

331,399

$

17,764

$

349,163

$

315,128

$

14,881

$

330,009

Information services

55,782

14,071

69,853

50,712

12,206

62,918

Online marketplaces

Multifamily

337,504

-

337,504

283,001

-

283,001

Commercial property and land

180,852

658

181,510

112,968

110

113,078

Total revenues

$

905,537

$

32,493

$

938,030

$

761,809

$

27,197

$

789,006

CoStar Group, Inc.

Disaggregated Revenues - Unaudited

(in thousands)



Three Months Ended June 30,

2021 2020

North International Total North International Total America America

Information and analytics

CoStar $ 167,845 $ 9,134 $ 176,979 $ 157,793 $ 7,260 $ 165,053

Information 28,096 7,061 35,157 25,022 5,514 30,536 services

Online marketplaces

Multifamily 171,357 - 171,357 145,541 - 145,541

Commercialproperty and 96,476 364 96,840 56,006 23 56,029 land

Total $ 463,774 $ 16,559 $ 480,333 $ 384,362 $ 12,797 $ 397,159 revenues





Six Months Ended June 30,

2021 2020

North International Total North International Total America America

Information and analytics

CoStar $ 331,399 $ 17,764 $ 349,163 $ 315,128 $ 14,881 $ 330,009

Information 55,782 14,071 69,853 50,712 12,206 62,918 services

Online marketplaces

Multifamily 337,504 - 337,504 283,001 - 283,001

Commercialproperty and 180,852 658 181,510 112,968 110 113,078 land

Total $ 905,537 $ 32,493 $ 938,030 $ 761,809 $ 27,197 $ 789,006 revenues

CoStar Group, Inc.

Results of Segments - Unaudited

(in thousands)

Three Months Ended June 30,

Six Months Ended June 30,

2021

2020

2021

2020

EBITDA

North America

$

130,176

$

112,292

$

266,034

$

214,705

International

3,156

(2,994)

2,834

(5,287)

Total EBITDA

$

133,332

$

109,298

$

268,868

$

209,418

CoStar Group, Inc.

Results of Segments - Unaudited

(in thousands)



Three Months Ended Six Months Ended June 30, June 30,

2021 2020 2021 2020

EBITDA

North America $ 130,176 $ 112,292 $ 266,034 $ 214,705

International 3,156 (2,994) 2,834 (5,287)

Total EBITDA $ 133,332 $ 109,298 $ 268,868 $ 209,418

CoStar Group, Inc.

Reconciliation of Non-GAAP Financial Measures with 2020-2021 Quarterly Results - Unaudited

(in millions, except per share data)

Reconciliation of Net Income to Non-GAAP Net Income

2020

2021

Q1

Q2

Q3

Q4

Q1

Q2

Net income

$72.8

$60.4

$58.2

$35.8

$74.2

$61.1

Income tax expense

5.6

16.9

10.7

10.7

19.1

32.8

Income before income taxes

78.4

77.3

68.9

46.4

93.3

93.9

Amortization of acquired intangible assets

17.5

21.0

24.9

24.8

25.8

25.3

Stock-based compensation expense

15.2

9.5

16.7

12.7

15.5

15.1

Acquisition and integration related costs

8.7

10.0

7.9

65.9

8.5

2.0

Restructuring and related costs

-

-

0.4

-

-

-

Other expense

-

-

0.1

-

1.1

0.8

Non-GAAP income before income taxes

119.8

117.8

118.9

149.8

144.2

137.1

Assumed rate for income tax expense *

25%

25%

25%

25%

25%

25%

Assumed provision for income tax expense

(30.0)

(29.5)

(29.7)

(37.5)

(36.0)

(34.3)

Non-GAAP net income

$89.8

$88.3

$89.2

$112.3

$108.2

$102.8

Non-GAAP net income per share - diluted(1)

$0.24

$0.23

$0.23

$0.29

$0.27

$0.26

Weighted average outstanding shares - basic(1)

364.7

375.2

391.6

391.4

391.6

392.3

Weighted average outstanding shares - diluted(1)

367.8

377.3

394.0

394.0

393.7

394.1

__________________________

* A 25% tax rate is assumed for 2021 and 2020, which approximates our statutory federal and state corporate tax rate.

(1) Prior period amounts have been retroactively adjusted to reflect the ten-for-one stock split effected in the form of a stock dividend in June 2021.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

2020

2021

Q1

Q2

Q3

Q4

Q1

Q2

Net income

$72.8

$60.4

$58.2

$35.8

$74.2

$61.1

Amortization of acquired intangible assets

17.5

21.0

24.9

24.8

25.8

25.3

Depreciation and other amortization

6.8

7.0

6.8

8.2

8.5

7.0

Interest (income) expense

(1.7)

3.6

7.5

7.9

7.9

7.9

Other (income) expense

(0.8)

0.4

0.3

0.9

0.1

(0.8)

Income tax expense

5.6

16.9

10.7

10.7

19.1

32.8

EBITDA

$100.2

$109.3

$108.4

$88.3

$135.6

$133.3

Stock-based compensation expense

15.1

9.5

16.7

12.7

15.5

15.1

Acquisition and integration related costs

8.7

10.0

7.9

65.9

8.5

2.0

Restructuring and related costs

-

-

0.4

-

-

-

Adjusted EBITDA

$124.0

$128.8

$133.4

$166.9

$159.6

$150.4

CoStar Group, Inc.

Reconciliation of Non-GAAP Financial Measures with 2020-2021 Quarterly Results- Unaudited

(in millions, except per share data)



Reconciliation of Net Income to Non-GAAP Net Income



2020 2021

Q1 Q2 Q3 Q4 Q1 Q2



Net income $72.8 $60.4 $58.2 $35.8 $74.2 $61.1

Income tax expense 5.6 16.9 10.7 10.7 19.1 32.8

Income before income taxes 78.4 77.3 68.9 46.4 93.3 93.9

Amortization of acquired 17.5 21.0 24.9 24.8 25.8 25.3intangible assets

Stock-based compensation expense 15.2 9.5 16.7 12.7 15.5 15.1

Acquisition and integration 8.7 10.0 7.9 65.9 8.5 2.0related costs

Restructuring and related costs - - 0.4 - - -

Other expense - - 0.1 - 1.1 0.8

Non-GAAP income before income 119.8 117.8 118.9 149.8 144.2 137.1taxes

Assumed rate for income tax 25% 25% 25% 25% 25% 25%expense *

Assumed provision for income tax (30.0) (29.5) (29.7) (37.5) (36.0) (34.3)expense

Non-GAAP net income $89.8 $88.3 $89.2 $112.3 $108.2 $102.8



Non-GAAP net income per share - $0.24 $0.23 $0.23 $0.29 $0.27 $0.26diluted^(1)



Weighted average outstanding 364.7 375.2 391.6 391.4 391.6 392.3shares - basic^(1)

Weighted average outstanding 367.8 377.3 394.0 394.0 393.7 394.1shares - diluted^(1)

__________________________

* A 25% tax rate is assumed for 2021 and 2020, which approximates our statutoryfederal and state corporate tax rate.

^(1) Prior period amounts have been retroactively adjusted to reflect theten-for-one stock split effected in the form of a stock dividend in June 2021.



Reconciliation of Net Income to EBITDA and Adjusted EBITDA



2020 2021

Q1 Q2 Q3 Q4 Q1 Q2



Net income $72.8 $60.4 $58.2 $35.8 $74.2 $61.1

Amortization of acquired 17.5 21.0 24.9 24.8 25.8 25.3intangible assets

Depreciation and other 6.8 7.0 6.8 8.2 8.5 7.0amortization

Interest (income) expense (1.7) 3.6 7.5 7.9 7.9 7.9

Other (income) expense (0.8) 0.4 0.3 0.9 0.1 (0.8)

Income tax expense 5.6 16.9 10.7 10.7 19.1 32.8

EBITDA $100.2 $109.3 $108.4 $88.3 $135.6 $133.3

Stock-based compensation expense 15.1 9.5 16.7 12.7 15.5 15.1

Acquisition and integration 8.7 10.0 7.9 65.9 8.5 2.0related costs

Restructuring and related costs - - 0.4 - - -

Adjusted EBITDA $124.0 $128.8 $133.4 $166.9 $159.6 $150.4

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 Year Ending

Ending September 30, 2021

December 31, 2021

Low

High

Low

High

Net income

$

49,000

$

56,000

$

264,000

$

275,000

Income tax expense

17,000

19,000

95,000

98,000

Income before income taxes

66,000

75,000

359,000

373,000

Amortization of acquired intangible assets

26,000

26,000

103,000

103,000

Stock-based compensation expense

18,000

16,000

66,000

64,000

Acquisition and integration related costs

6,000

4,000

18,000

16,000

Other expense

1,000

1,000

4,000

4,000

Non-GAAP income before income taxes

117,000

122,000

550,000

560,000

Assumed rate for income tax expense *

25

%

25

%

25

%

25

%

Assumed provision for income tax expense

(29,300)

(30,500)

(138,000)

(140,000)

Non-GAAP net income

$

87,700

$

91,500

$

412,000

$

420,000

Net income per share - diluted(1)

$

0.12

$

0.14

$

0.67

$

0.70

Non-GAAP net income per share - diluted(1)

$

0.22

$

0.23

$

1.04

$

1.06

Weighted average outstanding shares - diluted(1)

394,700

394,700

394,500

394,500

__________________________

* A 25% tax rate is assumed, which approximates our statutory federal and state corporate tax rate.

(1) Prior period amounts have been retroactively adjusted to reflect the ten-for-one stock split effected in the form of a stock dividend in June 2021.

Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA

Guidance Range

Guidance Range

For the Three Months

For the Year Ending

Ending September 30, 2021

December 31, 2021

Low

High

Low

High

Net income

$

49,000

$

56,000

$

264,000

$

275,000

Amortization of acquired intangible assets

26,000

26,000

103,000

103,000

Depreciation and other amortization

7,000

7,000

30,000

30,000

Interest expense

8,000

8,000

32,000

32,000

Other (income)

(1,000)

(1,000)

(3,000)

(3,000)

Income tax expense

17,000

19,000

95,000

98,000

Stock-based compensation expense

18,000

16,000

66,000

64,000

Acquisition and integration related costs

6,000

4,000

18,000

16,000

Adjusted EBITDA

$

130,000

$

135,000

$

605,000

$

615,000

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. STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality sector. Ten-X provides a leading platform for conducting commercial real estate online auctions and negotiated bids. LoopNet is the most heavily trafficked commercial real estate marketplace online. 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. Homesnap is an industry-leading online and mobile software platform that provides user-friendly applications to optimize residential real estate agent workflow and reinforce the agent-client relationship. Homes.com offers real estate professionals advertising and marketing services for residential properties. CoStar Group's websites attract tens of millions of unique monthly visitors. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe, Canada and Asia with a staff of approximately 4,900 worldwide, including the industry's largest professional research organization. For more information, visit www.costargroup.com.

This news release and the Company's earnings conference call contain "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 plans, objectives, expectations, beliefs 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 many risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements and the assumptions and estimates used as a basis for 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 or in the earnings conference call cannot or will not be sustained at the current pace or may increase or decrease or expectations are not met, including trends and expectations related to revenue, net income, non-GAAP net income, EBITDA, adjusted EBITDA, adjusted EBITDA margin, gross margin, site traffic and visitors, sales, renewal rates, leads, the volume and value of assets sold through the Ten-X auction platform, and the number of Homesnap agent subscribers; the risk that the Company is unable to sustain current revenue and earnings, as well as CoStar Suite and Company-wide net new sales growth rates or increase them; the risk that the Company's business or investment plans change or that investments do not produce the expected results, including investments in residential marketplace technology and content; the risk that Apartments.com adjusted pricing does not accelerate net new bookings; the risk that revenues for the third quarter and full year 2021 will not be as stated in this press release; the risk that net income for the third quarter and full year 2021 will not be as stated in this press release; the risk that adjusted EBITDA for the third quarter and full year 2021 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 third quarter and full year 2021 will not be as stated in this press release; the risk that the tax rate estimates stated in this press release may change; uncertainty surrounding the impact of the COVID-19 pandemic, including volatility in the international and U.S. economy and the commercial real estate industry, employee attrition, absenteeism or decreased productivity, quarantines or other travel or health-related restrictions; the length and severity of the COVID-19 pandemic; the pace of recovery following the COVID-19 pandemic; and government and private actions taken to control the spread of COVID-19. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar Group's filings from time to time with the Securities and Exchange Commission, including in CoStar Group's Annual Report on Form 10-K for the year ended December 31, 2020 and Quarterly Report on Form 10-Q for the quarter ended March 31, 2020, each of which is filed with the SEC, including in the "Risk Factors" section of those filings, as well as CoStar Group's other filings with the SEC (including Current Reports on Form 8-K) available at the SEC's website (www.sec.gov). All forward-looking statements are based on information available to CoStar Group on the date hereof, and CoStar Group assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

View source version on businesswire.com: https://www.businesswire.com/news/home/20210727006107/en/

CONTACT: Investor Relations: Bill Warmington Vice President CoStar Group Investor Relations (202) 346-5661 wwarmington@costar.com News Media: Matthew Blocher Vice President CoStar Group Corporate Marketing & Communications (202) 346-6775 mblocher@costargroup.com