tapebrief
CSGP · Q3 2025

CSGP · Q4 2025 Earnings

Bullish

CoStar Group

Reported February 24, 2026

30-second summary

Q4 revenue grew 27% YoY to $900M, clearing the high end of the prior $885-895M guide, with adjusted EBITDA of $177M (19.7% margin) running $17M above the high end and non-GAAP EPS of $0.31 beating the $0.26-0.28 guide. FY2025 net new bookings of $308M and Q4 net new bookings up 42% YoY (CoStar product bookings +54% YoY) confirm the salesforce ramp is paying out, and management reaffirmed the FY2026 revenue guide of $3.78-3.82B (~17% YoY) while initiating Q1 at $890-900M (~22% YoY) — a sequentially decelerating headline figure that masks Q1 being the strongest YoY growth quarter on the calendar. Management also disclosed a $700M share repurchase planned for 2026 following the $500M completed in 2025. The story shifted hard from "Homes.com investment burn" to "AI-native platform with reduced capital intensity and a 2030 residential profitability commitment."

Headline numbers

EPS

Q4 FY2025

$0.31

Revenue

Q4 FY2025

$0.90B

+27.0% YoY

Gross margin

Q4 FY2025

78.6%

Operating margin

Q4 FY2025

5.4%

Key financials

Q4 FY2025
MetricQ4 FY2025YoYQ3 FY2025QoQ
Revenue$0.90B+27.0%$0.83B+7.9%
EPS$0.31—$0.23+34.8%
Gross margin78.6%—79.3%-70bps
Operating margin5.4%—-6.1%+1150bps

Guidance

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

MetricPeriodPrior guideActualΔResult
RevenueQ4 FY2025$885 million to $895 million$900 millionabove the high endMet
Adjusted EPS (non-GAAP)Q4 FY2025$0.26 to $0.28$0.31+$0.03 above the high endBeat
Adjusted EBITDAQ4 FY2025$150 million to $160 million$177.3 million+$17.3 million above the high endBeat
RevenueFY 2025$3.23 billion to $3.24 billion$3.247 billionabove the high end of rangeMet
Adjusted EPS (non-GAAP)FY 2025$0.82 to $0.84$0.87+$0.03 above the high endBeat
Adjusted EBITDAFY 2025$415 million to $425 million$442 million+$17 million above the high endBeat

New guidance

MetricPeriodGuideYoY
RevenueQ1 FY2026$890 million to $900 millionapproximately 22% at the midpoint
Adjusted EPS (non-GAAP)Q1 FY2026$0.16 to $0.19—
Adjusted EBITDAQ1 FY2026$95 million to $115 million—

Reaffirmed unchanged this quarter: Revenue ($3.78 billion to $3.82 billion), Adjusted EPS (non-GAAP) ($1.22 to $1.33)

Segment KPIs

Q4 FY2025
SegmentQ4 FY2025YoY
Commercial Real Estate$0.471B+20.5%
Residential Real Estate$0.429B+35.2%

Other KPIs

Q4 FY2025
SegmentQ4 FY2025
Net New Bookings (Full Year)$308 million
Homes.com Network Monthly Unique Visitors108 million
Homes.com Agent Subscribers31,000
Homes.com Annual Run Rate Revenue$100 million
Adjusted EBITDA Margin (Q4)19.7%
Adjusted EBITDA (Full Year)$442 million
Adjusted EBITDA YoY Growth (Full Year)83% growth
Share Repurchase (2025)$500 million

Management tone

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

Three quarters ago Homes.com was the cash-burning bet that defined the bear case; two quarters ago the unit economics flipped; last quarter bookings compounded faster than the salesforce could absorb; this quarter management committed to a $300M reduction in net Homes.com investment in 2026 vs 2025 with run-rate profitability in 2029 and full-year profitability in 2030. Chris's exact words: "We've reduced our net investment in homes.com by $300 million in 26 over 25 and continued to continue reducing the investment each year with discipline until we reach run rate profitability in 29 and full profit year profitability in 2030." This is the first quarter where the residential burn curve has a public, dated terminal point — a fundamental shift from open-ended investment posture to disciplined burn-down with milestones.

The AI framing inverted from cost-reduction tool to product moat. Last quarter Andy referenced 50% AI software allocation as efficiency reallocation; this quarter the language is offensive: "CoStar Group is emerging as a clear winner in the artificial intelligence era. We're positioned to take transformative share with the advantage Holmes AI gives us." Homes AI users spend 16 min 50 sec on site vs 4 min 24 sec for non-users, do 4x as many searches, favorite 7x as many properties. The shift signals management now views proprietary real estate data as a defensive moat against LLM commoditization — and is pricing the platform off that premise rather than off SaaS cyclicality.

The CRE narrative completed a multi-quarter rotation from defense to offense. Two quarters ago CoStar was emerging from CRE crisis; last quarter Commercial Information margin expanded to 47%; this quarter Andy explicitly stated "the CRE economy is shifting from headwind to tailwind" with seven consecutive quarters of accelerating growth and CoStar product Q4 net new bookings +54% YoY. This is the first time in years CoStar can attribute commercial acceleration to market tailwind rather than internal execution alone — meaning the next downcycle is now the bear case, not the current macro.

Competitive posture against Zillow hardened from policy-vulnerable to structurally weakening. Two quarters ago management flagged Zillow antitrust risk; this quarter Andy cited Comscore data showing Zillow brand awareness declines, traffic down YoY every month in 2025, and the "shotgunning leads" practice as evidence of capitulation. The phrasing — "their position…makes us feel that our position within the multifamily industry is very solid" — is notably more confident than the defensive framing of mid-2025 calls.

Disclosure boundaries tightened. Q&A with Scott Wurzel saw management decline to break out apartments.com or homes.com bookings separately, citing the new segment structure. Last quarter Ryan Tomasello pressed similarly on Apartments bookings and got historical-seasonality deflection; this quarter the deflection is more systematic. Management is reducing granularity precisely as growth accelerates — a stance that works while beats compound but creates risk if a segment decelerates without warning.

Recurring themes management leaned on this quarter:

AI as foundational competitive advantage and product innovation engineEBITDA margin expansion through operating leverage and product maturationCommercial real estate market recovery shifting from headwind to tailwindHomes.com achieving profitability pathway with reduced investment requirementGlobal expansion (Australia, France, UK, Europe) generating synergiesProprietary data as defensible moat against LLM competition

Risks management surfaced:

Commercial real estate market could reverting to negative absorption if macro deterioratesResidential portal competitive dynamics and potential MLS disruptionIntegration execution risk on multiple recent acquisitions (Matterport, Domain, Visual Lease)Sales force productivity ramp risk from adding 800+ reps in 2025Currency headwinds on international growth (Domain Australian exposure)

Q&A highlights

Brett Huff · Stevens

Request for clarification on commercial EBITDA guidance and top investment priorities; also asked about Matterport headcount reductions mentioned by Andy

Management identified primary 2026 investments: CoStar Australia de novo build (~200+ hires), European expansion, origination workflow module for CoStar Debt Solutions, integration of Real Estate Manager and Visual Lease into CoStar, lease benchmarking product, new homes information product, STR profitability modules, Homes AI expansion, Matterport camera development, and additional salespeople. Confirmed approximately 120 million in Matterport duplicative public company cost eliminations post-merger.

120 million in Matterport duplicative public company costs eliminated200+ people hired in CoStar AustraliaMultiple product launches and integrations planned for 2026

Pete Christensen · Citi

Asked whether AI disruption in CRE broker space could impact CoStar's pricing power or represent disruption to CoStar suite business

Management stated CRE brokers are relationship-driven professionals unlikely to be disintermediated; noted that high-volume support staff (not core customers) may be displaced but these are not revenue drivers. Emphasized brokers represent only 30-33% of revenue; majority comes from banks, owners, institutions, CMBSs, and government agencies on non-seat license basis. Indicated CoStar successfully maintained pricing during prior downturns despite seat reductions.

Brokers represent 30-33% of CoStar revenueMajority revenue from banks, owners, institutions, CMBSs, government agenciesSuccessfully maintained comparable pricing with seat reduction in past downturns

Curtis Nagel · Bank of America

Asked for breakdown of commercial EBITDA decline guidance, specifically seeking clarity on impact of cost allocations shifting back from homes.com to commercial segment

Management noted apartments.com was separated into residential segment (high-margin business), while Matterport and Domain acquisitions brought lower-margin inorganic businesses impacting commercial. From organic perspective, commercial margin is roughly flat despite investments. Primary margin impact attributed to inorganic acquisitions' first full year effect, with expectation margins will improve post-2026.

Apartments.com separated to residential segmentOrganic commercial margin roughly flat despite investmentsMargin decline driven primarily by inorganic acquisitions (Matterport, Domain)Margin improvement expected after 2026

Andrew Boone · Citizens

Asked about early Homes AI results, expected impact on retention and traffic, and how this fits within marketing spend context for a newer product

Management reported 187% year-over-year lead growth for Homes members; described engagement increases of 4-7x with Homes AI interface. Emphasized product functionality is remarkably compelling enough to drive organic adoption. Shifting marketing from top-of-funnel brand awareness to product feature marketing and lower-funnel SEM. Described AI as learning user preferences and providing persistent personalization across all platforms, making it harder to replace.

187% year-over-year lead growth with Homes members4-7x engagement increase when using Homes AI interfaceMarketing shift from brand awareness to product feature and SEMPersistent AI learning across apartments.com, CoStar, Loopnet, and future platforms

Scott Wurzel · Wolf Research

Asked for directional commentary on apartments.com and homes.com bookings relative to prior quarter

Management declined to provide specific bookings numbers or directional qualitative commentary, citing new disclosure and segment structure. Reiterated second-highest net new bookings number since 2015 and stated they remain confident about businesses and trajectory.

Second highest net new bookings number since 2015

Answers to last quarter's watch list

Q4 revenue at or above $895M high end — Revenue came in at $900M, clearing the high end by $5M with YoY growth of 27% (ahead of the ~25% implied by the midpoint). Salesforce productivity drag did not bite. Status: Resolved positively
Homes.com members net additions exceeding 5-6K in Q4 — Members reached 31,000, up 5,000 from Q3's 26,000 — at the lower end of the 5-6K threshold. Homes.com ARR hit $100M. The pace decelerated from the Q3 implied step-up but is still positive. Status: Resolved positively on the threshold, though the deceleration is worth monitoring.
Net new bookings Q4 above $80M, establishing structural floor — Management disclosed Q4 total net new bookings were up 42% YoY (with CoStar product bookings specifically +54% YoY) and called it the second-highest Q4 since 2015. Specific dollar number not given. The +42% YoY growth on total Q4 bookings comfortably implies a fourth consecutive quarter above $80M. Status: Resolved positively
Matterport explicit 2026 contribution targets — Management did not break out Matterport-specific revenue or profitability targets for 2026. Chris referenced $120M of duplicative public-company cost elimination but no standalone Matterport P&L disclosure. Disclosure granularity has tightened, not loosened. Status: Continue monitoring
GAAP-to-EBITDA gap narrowing in 2026 guidance — Q4 GAAP operating margin flipped positive to 5.4% from -6.1% in Q3, a significant narrowing. FY2026 EBITDA midpoint of $770M against EPS midpoint of $1.275 implies the gap will continue narrowing as Homes.com burn declines $300M YoY. Status: Resolved positively
FY2026 revenue guide breaching 18-20% — FY2026 guide of $3.78-3.82B implies ~17% YoY at midpoint, below the 18-20% threshold that would have validated bookings durability beyond catch-up effects. However, Q1 FY2026 guide of ~22% YoY suggests the full-year ~17% reflects conservative second-half assumptions rather than fading momentum. Status: Resolved negatively on the literal threshold; the Q1 figure suggests management is sandbagging the back half, but the bear case (catch-up fade) cannot be fully ruled out until H2 prints.

What to watch into next quarter

Whether Q1 FY2026 revenue lands at or above the $900M high end — implied YoY at midpoint is ~22%, the strongest quarterly growth rate guided; a print below $890M would signal Q4's 27% YoY benefitted from acquisition timing, not underlying momentum

Homes.com member trajectory: 5,000 net adds in Q4 was at the lower end of the prior pace — watch whether Q1 sustains ≥5K net adds or whether the burn-down commitment is being delivered via slower customer acquisition

Homes AI engagement metrics: 16 min 50 sec session time and 187% YoY lead growth need to compound into measurable monetization — watch for Homes.com ARR exceeding $130M by Q1 print (from $100M baseline)

Commercial Real Estate segment growth at +20.5%: watch whether this accelerates further or plateaus — Q1 will reveal whether the "headwind to tailwind" framing holds or was a Q4 anomaly

GAAP operating margin sustaining above breakeven after the Q4 flip to +5.4% — a relapse to negative GAAP margin in Q1 would suggest the inflection was acquisition-driven rather than structural

Disclosure posture: watch whether management resumes apartments.com and homes.com segment bookings granularity in the 10-K or Q1 supplement, or whether the deliberate reduction in transparency continues — the latter creates blind-spot risk if a segment decelerates

2026 FY guide revision: with Q1 guided at +22% YoY against FY at +17%, the implied H2 deceleration is steep; first sign of an FY revenue raise in the Q1 or Q2 print would validate that current guidance is sandbagged

Pace of the $700M 2026 buyback execution: watch quarterly repurchase cadence as a signal of management's confidence in the cash-flow ramp ahead of the Richmond/Arlington campus completions

Sources

  1. CoStar Group Q4 2025 Earnings Press Release — https://www.sec.gov/Archives/edgar/data/1057352/000105735226000012/q42025earningspressrelea.htm
  2. CoStar Group Q4 2025 Earnings Call Q&A (transcript excerpts)
  3. CoStar Group Q3 2025 Tapebrief
  4. CoStar Group Q2 2025 Tapebrief

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