CSGP · Q1 2026 Earnings

Bullish

CoStar Group

Reported April 28, 2026

30-second summary

Q1 revenue grew 23% YoY to $897M, landing within the $890-900M guide but $2M short of the $895M midpoint — the first quarter in five that didn't clear the high end. EPS of $0.23 and Adjusted EBITDA of $132M (+100% YoY) crushed the guide ranges by 21% and 15% respectively, driving a $0.09 midpoint raise to FY EPS (per CFO; mathematically $0.08 from prior $1.275 midpoint to new $1.355) and a $30M EBITDA raise ($770M → $800M midpoint) — while revenue guidance was reaffirmed at $3.78-3.82B. The print confirms operating leverage is compounding faster than the top line, but the missing revenue raise after a Q4 where management appeared to be sandbagging H2 is the signal worth interrogating.

Headline numbers

EPS

Q1 FY2026

$0.23

Revenue

Q1 FY2026

$0.90B

+23.0% YoY

Gross margin

Q1 FY2026

78.1%

Free cash flow

Q1 FY2026

$0.10B

Operating margin

Q1 FY2026

0.3%

Key financials

Q1 FY2026

Metric	Q1 FY2026	YoY	Q4 FY2025	QoQ
Revenue	$0.90B	+23.0%	$0.90B	-0.3%
EPS	$0.23	—	$0.31	-25.8%
Gross margin	78.1%	—	78.6%	-50bps
Operating margin	0.3%	—	5.4%	-510bps
Free cash flow	$0.10B	—	—	—

Guidance

Strong Q1 FY2026 beat on EPS (+21%) and EBITDA (+15%) drives full-year EPS guidance raise to $1.32-1.39 and EBITDA raise to $780-820M; revenue guidance reaffirmed at $3.78-3.82B.

Guidance is issued for the full year only, refreshed each quarter. Prior and new below are the same FY updated this quarter.

Actuals vs prior guidance

Metric	Period	Prior guide	Actual	Δ	Result
Revenue	Q1 FY2026	$890 million to $900 million	$897 million	within guide, slight miss to midpoint	Beat
Adjusted EPS	Q1 FY2026	$0.16 to $0.19	$0.23	+$0.04 above high end of guide	Beat
Adjusted EBITDA	Q1 FY2026	$95 million to $115 million	$132 million	+$17M above high end of guide	Beat

New guidance

Metric	Period	Guide	YoY
Revenue	Q2 FY2026	$922 million to $932 million	+18.2-19.5% YoY
Adjusted EPS	Q2 FY2026	$0.27 to $0.30	—
Adjusted EBITDA	Q2 FY2026	$160 million to $180 million	—

Changes to prior guidance

Metric	Period	Prior guide	New guide	Δ	Result
Adjusted EPS	FY 2026	$1.22 to $1.33	$1.32 to $1.39	+$0.09-0.10 at midpoint (+7.1% raise)	Raised
Adjusted EBITDA	FY 2026	$740 million to $800 million	$780 million to $820 million	+$40-20M (+5.4% at midpoint)	Raised

Reaffirmed unchanged this quarter: Revenue ($3.78 billion to $3.82 billion)

Segment KPIs

Q1 FY2026

Segment	Q1 FY2026	YoY
Commercial Real Estate	$0.472B	+15.4%
Residential Real Estate	$0.425B	+31.6%
CoStar	$0.331B	+8.5%
LoopNet	$0.085B	+16.4%

Other KPIs

Q1 FY2026

Segment	Q1 FY2026
Annualized Net New Bookings	$67 million
Net New Bookings YoY Growth	20%
Adjusted EBITDA	$132 million
Adjusted EBITDA YoY Growth	100%
Adjusted Net Income	$94 million
Homes.com Members	35,000
Organic Traffic Growth (Homes.com AI)	119%
Average Monthly Unique Visitors	131 million

Management tone

Narrative arc: Homes.com experiment → unit-economics proof → bookings compounding → AI platform repositioning → AI-driven monetization push

Three quarters ago Homes.com was a salesforce-driven member acquisition story; two quarters ago AI was a defensive moat against LLM commoditization; this quarter the narrative pivots to active monetization with a May 1 price increase and explicit acknowledgment in prepared remarks that the homes.com product is underpriced relative to the demonstrated ROI (an 11x return per member based on internal commission analysis). Management is willing to accept a potential headwind to new member growth in exchange for ARPU expansion. The shift signals confidence has moved from "prove the user funnel works" to "harvest the funnel" — a posture inconsistent with a company that just delivered its softest bookings quarter in a year.

The bookings narrative shifted from celebration to defense. Last quarter Q4 net new bookings of +42% YoY was a centerpiece data point; this quarter Q1 came in at $67M, the lowest absolute figure in five quarters, and Ryan Tomasello opened Q&A by asking whether $67M was in line with expectations. Chris's response — that ~40% of the $550M FY revenue increase comes from acquisitions/non-subscription, leaving ~$330M from net new bookings, with subscription revenue needing to grow ~$1B between 2027-2028 — was a detailed framework that doubled as deflection. Two quarters ago management would have led with the bookings number; this quarter it required an analyst question to extract.

The salesforce productivity narrative moved from "demand outstripping onboarding capacity" to "cohort-tracked productivity ramping." Last quarter Andy framed the salesforce as constrained by onboarding bandwidth with 100+ person classes arriving simultaneously; this quarter the framing is methodical — Chris cited Apartments.com year-five reps being 2x year-one productivity, with cohorts tracked at 6/12/18-month intervals. The 2,090 total headcount is now broken down by brand for the first time (Homes.com 570, Apartments.com 520, CoStar 475, LoopNet 225). The increased granularity in salesforce disclosure is the inverse of last quarter's reduced segment bookings granularity — management is showing what's working and obscuring what isn't.

Commercial Real Estate decelerated meaningfully and management did not address it head-on. Q4's narrative leaned hard on seven consecutive quarters of CRE acceleration as evidence the cycle had turned; this quarter CRE growth slowed from +20.5% to +15.4% and the CoStar product specifically slowed to +8.5%. No prepared remarks reframed this as cyclical noise vs structural plateau. The absence of explanation, in the context of a quarter where management chose to lead with Homes.com AI traffic growth, suggests CRE momentum is no longer the headline tailwind it was 90 days ago.

Risks management surfaced:

Forward-looking statements involve many risks, uncertainties, assumptions, estimates, and other factorsActual results may differ materially from stated expectations

Q&A highlights

Ryan Tomasello · KBW

Was Q1 net bookings of $67M in line with expectations, and how should investors model the relationship between bookings and revenue growth given that bookings don't underpin 100% of revenue?

CFO Chris explained that ~40% of the $550M revenue increase comes from acquisitions/non-subscription revenue, leaving ~$330M from net new bookings. Subscription revenue needs to grow ~$1B between 2027-2028, with homes.com growing faster than other brands in the low double-digit range. Management is committed to stated EBITDA targets and homes.com investment numbers through 2030.

Q1 net bookings: $67M, up 20% YoY~15% of current revenue is non-subscription~40% of guidance increase from acquisitions/non-subscription~$330M of $550M revenue increase from net new bookings

Alexey Gokulev · JP Morgan

What is being observed in terms of sales ramp times, quota attainment, and productivity by cohort across the sales organization, given significant headcount additions over the past year?

Andy detailed brand-specific productivity trends: CoStar showing accelerating per-rep productivity; Apartments.com growing field sales with strong ROI despite higher absolute cancellations; LoopNet having large revenue base relative to sales force; Homes.com with 'unprecedented' rookie sales force but seeing good field and new homes sales productivity. Chris noted that sales force expansion began roughly a year ago, with cohorts tracked at 6-month/12-month/18-month intervals, and that Apartments.com reps at year-five are twice as productive as year-one.

Homes.com sales force: 570 reps (largest team)Apartments.com: 520 repsCoStar: 475 repsLoopNet: 225 reps

Steven Sheldon · William Blair

Where will incremental sales resources be deployed for the rest of 2026 and into 2027? Are there segments or geographies showing strength where investment will accelerate, or areas underperforming where investment might be cut back?

Andy outlined deployment strategy: ~50 new field sales hires for homes.com in batches across 5-city cohorts; continued measured field sales growth for Apartments.com (most productive segment); incremental measured growth for LoopNet field sales given revenue base relative to headcount; Matterport sales team growing in measured batches of ~20 per quarter. Andy noted homes.com product may be underpriced and plans to optimize pricing and service with inside sales team.

~50 additional field sales hires planned for homes.comField sales hiring approach: batches of 5 cities at a timeMatterport sales team growth: ~20 per quarterApartments.com field sales: continued measured growth (most productive)

Pete Christensen · Citi

With Apartments.com winning share from rent.com and showing rooftop growth, what has been the pricing impact and how is mix shift in ad tiering affecting overall bookings production?

Andy explained that rent.com acquisition opportunity was a 'once in a decade' organic share win, pulling in lower-ARPU customers (smaller properties, lower rental rates). This drove down rooftop-level ARPU for several quarters. Andy indicated he's not seeing major shifts in levels or depth advertising beyond this cohort effect, characterizing the new customers as important but simply lower-priced.

Rent.com rooftops represented a one-time organic share winAcquired rooftops are lower-ARPU cohort (smaller unit counts, lower rental rates)ARPU pressure from mix shift has persisted several quartersNo material shift observed in levels/depth advertising beyond the cohort effect

Sander Thin · Jeffrey

Can you explain the timing rationale for raising homes.com pricing on May 1st rather than waiting longer to build the user base further?

Andy argued that the company can achieve both user growth and price increases simultaneously. He cited high close rates (north of 50%) among well-trained sales teams as justification, and noted that agents earning under $250K annually represent a large cohort where homes.com is leaving significant value on the table. He indicated selective price adjustments by cohort to optimize across different agent profiles.

May 1st pricing increase planned for new customersSales close rates reported north of 50% for well-trained teamsTarget: agents earning under $250K annuallyPlans to adjust pricing by agent cohort

Answers to last quarter's watch list

Q1 FY2026 revenue at or above the $900M high end — Revenue landed at $897M, within the guide but $2M below midpoint and $3M below the $900M high end. YoY growth of 23% exceeded the ~22% guide midpoint, but the absolute number missed the bull case threshold. Q4's outsized 27% YoY benefitted from acquisition timing more than the bull case allowed. Status: Resolved negatively

Homes.com members net additions ≥5K in Q1 — Members reached 35,175, up ~4,300 from prior quarter, below the 5K floor. Management did not explicitly address the slowdown in prepared remarks, instead leading with the +205% YoY figure. The deceleration is consistent with the burn-down commitment but also coincides with the May 1 price increase, which is likely to be a further drag on net adds in Q2. Status: Resolved negatively

Homes.com ARR exceeding $130M by Q1 print — March annual revenue run rate reached $106M, up 92% YoY, below the $130M threshold. Andy's framing that the product is underpriced and the May 1 pricing action both suggest ARR has not yet compounded as hoped. Status: Resolved negatively

Commercial Real Estate growth accelerating beyond +20.5% — CRE growth decelerated to +15.4%, with CoStar product specifically slowing to +8.5%. The "headwind to tailwind" framing from Q4 was not extended in prepared remarks; management did not address the deceleration directly. Status: Resolved negatively

GAAP operating margin sustaining above breakeven — Operating margin held positive at 0.3%, down 510bps QoQ from Q4's 5.4% but still above the breakeven line. GAAP EPS of $0.01 is the bare minimum positive print; the inflection has not relapsed but has not consolidated either. Status: Resolved positively on the literal threshold, with the QoQ compression worth monitoring.

Disclosure posture on apartments.com/homes.com bookings granularity — Management did not resume segment-level bookings disclosure but did provide first-time salesforce headcount by brand (570/520/475/225). The disclosure trade-off — more granular on inputs, less on segment output — continued. Status: Continue monitoring

FY2026 revenue guide revision — Revenue guide was reaffirmed at $3.78-3.82B, not raised. With Q1 landing mid-range and bookings cooling to $67M, the case for sandbagging is materially weaker than it was 90 days ago. EBITDA and EPS were raised meaningfully but the revenue line is now plausibly representative rather than conservative. Status: Resolved negatively

Pace of $700M 2026 buyback execution — Q1 saw 11.4M shares repurchased for $505M, the majority via accelerated share repurchase. Management expects an additional $195M deployed over the remaining nine months, holding to the $700M total. Status: Resolved positively

What to watch into next quarter

Whether Q2 FY2026 revenue lands at or above the $932M high end — guide midpoint of $927M implies ~19% YoY against a $780M Q2'25 base; anything below $922M would confirm the H2 2025 acceleration was peak rather than midpoint

Homes.com member net adds in Q2 against the May 1 price increase headwind — watch whether net adds hold ≥4K, or whether pricing action accelerates the deceleration to <3K, signaling the underpriced thesis was overstated

Net new bookings Q2: $67M in Q1 was the floor; watch whether Q2 rebounds toward the $80M+ range that defined H2 2025, or whether the trend confirms FY bookings are downshifting from 2025's pace

CoStar product revenue growth: +8.5% in Q1 is the weakest line on the print — watch whether Q2 prints above +10% (validating Q1 as anomaly) or continues to compress below the legacy CRE recovery thesis

FY26 revenue guide treatment: with the reaffirm at $3.78-3.82B after a mid-range Q1, watch whether Q2 brings a raise (would re-validate sandbagging) or a second reaffirm (would confirm $3.80B is realistic, not conservative)

Adjusted EBITDA margin Q2 vs Q1's 14.7%: the FY guide midpoint of $800M against $3.80B revenue implies 21.1% margin — watch whether margin steps up materially toward that exit run-rate or remains in the 15-17% band, which would require steep H2 expansion to hit the guide

Homes.com ARR trajectory after the March $106M run rate — watch whether the May 1 price increase visibly accelerates the ARR build in Q2 or whether member-add deceleration offsets the pricing lift

Sources

CoStar Group Q1 2026 Earnings Press Release — https://www.sec.gov/Archives/edgar/data/1057352/000105735226000030/q12026earningspressrelea.htm
CoStar Group Q1 2026 Earnings Call Q&A (transcript excerpts)
CoStar Group Q4 2025 Tapebrief
CoStar Group Q3 2025 Tapebrief
CoStar Group Q2 2025 Tapebrief

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