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CoStar Group closed the fourth quarter on a strong note, according to the Virginia-based portal’s earnings call Tuesday.
CoStar Group’s Q4 revenue grew 11 percent year over year to $709 million, representing the 55th-consecutive quarter of double-digit revenue growth. CoStar remained profitable, although its net income dropped 37 percent year over year to $60 million.
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“CoStar Group delivered another strong year of profitable revenue growth in 2024 and in the fourth quarter of 2024 we achieved our 55th consecutive quarter of double-digit revenue growth while exceeding the top-end of our guidance range in both revenue and Adjusted EBITDA,” CoStar founder and CEO Andy Florance said in a written statement.
“CoStar, our flagship offering, generated revenue of $1.02 billion and grew 10 percent year-over-year,” Florance added. “CoStar Group’s commercial information and marketplace brands delivered exceptional results with 43 percent profit margins for 2024.”
The company’s full-year results mirrored its Q4 performance, with the commercial giant growing its revenue 11 percent year over year to $2.46 billion and its FY net income sliding from $375 million to $139 million. The adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) decreased 13 percent to $112 million during the quarter.
Although CoStar’s adjusted EBITDA fell in Q4, the portal ended the full year on the upswing, with the measure increasing from $240.8 million to $491.7 million.
Florance ended his statements by praising Homes.com, the company’s residential portal, which has battled with competitor Realtor.com in a race for second place. Despite a slight decline in traffic to the Homes.com Residential Network compared to 2023, the CEO said traffic to the Network — which includes Homes.com, Apartments.com and Land.com — is still outpacing Realtor.com.
“In less than one year, the Homes.com Network has become the second largest residential real estate marketplace in the United States,” he said. “We reached an audience of 110 million average monthly unique visitors in the fourth quarter, nearly doubling Realtor.com’s 62 million average monthly unique visitors.”
“Homes.com is benefiting consumers, sellers and their agents. Consumers are using what we believe is the best site in the U.S. to find a home,” he added. “Homes.com Members are gaining more exposure for their listings across the internet that helps them sell homes faster while building their brands and winning 58 percent more listings. Our dedicated sales force has grown to 275 representatives with increasing productivity of tenured reps and rising customer NPS scores.”
In the company’s earnings call, Florance said CoStar isn’t letting up on its marketing push for Homes.com, which includes a new slate of ads that debuted during Super Bowl 59. Those ads, he said, will start the residential portal’s push to raise its unaided awareness to 50 percent by the end of 2025.
“We began [2024] with our low single-digit unaided awareness, and during the year built and grew that awareness number to as high as 33 percent,” he said. “As we complete our second successful Super Bowl campaign and launch our 2025 campaign, I believe that we can reach 50 percent unaided awareness this year, potentially surpassing in two years what our competitors spent 30 years building.”
CoStar has also solved its Homes.com staffing issue, which Florance highlighted as a hindrance to membership growth in past earnings calls. Homes.com grew its staff from 41 dedicated salespeople to 275 in 2024, and plans to add 50 more employees by the end of March.
“Our goal is to have 500 Homes.com salespeople in place by the end of the year and productive,” he said. “Achieving that goal, our Homes.com sales force will go from basically not existing last year to being one of our largest sales teams in just two years. Despite that, the fact is the entire team is literally rookies, but they’re selling effectively.”
Florance said the bigger team has led to gains in net new monthly revenue and NPS consumer loyalty scores. As the team becomes more experienced, CoStar expects Homes.com membership growth rates to experience a significant boost.
“The Dedicated Homes sales team is significantly more effective at servicing our new clients, achieving good net new promoter scores, and renewing business than was the stopgap broader sales effort we put in at the beginning of the year on an ad hoc basis,” he said. “We launched the new homes.com memberships last year. I believe we offered a better value proposition than [other] residential portals, but it required educating real estate agents accustomed to buying agency leads for 30 years.”
The CEO also touched on the rental side of the market, with lengthy remarks about Zillow, which said in its earnings call last week that it had surpassed Apartments.com in terms of average monthly unique visitors based on Comscore data.
Florance said he welcomes the competition, but categorically rejected the assertion the residential behemoth had higher traffic while sharing SimilarWeb traffic statistics on the Apartments.com Network, which includes 11 sites. He also skewered Zillow’s $100 million rental syndication deal with Redfin, calling it “not an attractive transaction.”
“With consumers, we have dominated brand awareness with two out of three apartment seekers saying they will use Apartments.com,” he said. “We continue to add new customers with properties of all unit counts to our marketplace at a rapid pace with more than 75,000 paying apartment communities on our network, up 7 percent year over year.”
“For the year, we processed just over five billion rental payments,” he added. “In a little over a year, we are already number one in traffic in Canada, our newest Apartments.com market, which demonstrates the success we can have extending a brand from one market, one country to another. There’s still a lot of room to grow this business.”
