tapebrief
CSGP · Q3 2025
CSGP · Q1 2026

CSGP · Q4 2025 Earnings

Bullish

CoStar Group

Reported February 24, 2026

30-second summary

Q4 revenue grew 27% YoY to $900M, landing at the top of the prior $885-895M guide, while adjusted EBITDA of $177M crushed the $150-160M guide by $17M and non-GAAP EPS of $0.31 beat the high end by $0.03. Management issued FY2026 guidance of $3.78-3.82B (≈17% YoY) with $740-800M adjusted EBITDA (20% margin midpoint, a ~640bps step-up from FY25's 13.6%) and a $700M buyback, while Q1 2026 revenue guide of $890-900M implies ~22% YoY growth — a sequential acceleration over Q4 and a confirmation that the Q3-era "throttled by training capacity" sales constraint is unblocking. The narrative shifted from Homes.com-as-investment to AI-as-moat, with Andy framing CoStar's proprietary data as the structural advantage in the LLM era.

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$885M to $895M$900Mat high end of guideMet
Adjusted EPS (non-GAAP)Q4 FY2025$0.26 to $0.28$0.31+$0.03 above high endBeat
Adjusted EBITDAQ4 FY2025$150M to $160M$177M+$17M above high endBeat
Revenue YoY growthQ4 FY2025approximately 25% at midpoint27%+2pts above guideBeat
RevenueFY2025$3.23B to $3.24B$3.247Bat high end of guideMet
Adjusted EPS (non-GAAP)FY2025$0.82 to $0.84$0.87+$0.03 above high endBeat
Adjusted EBITDAFY2025$415M to $425M$442M+$17M above high endBeat
Revenue YoY growthFY2025approximately 18% at midpoint18.7%+0.7pts above guideBeat

New guidance

MetricPeriodGuideYoY
RevenueQ1 FY2026$890M to $900Mapproximately 22% at midpoint
Adjusted EPS (non-GAAP)Q1 FY2026$0.16 to $0.19—
Adjusted EBITDAQ1 FY2026$95M to $115M—
RevenueFY2026$3.78B to $3.82Bapproximately 17% at midpoint

Segment KPIs

Q4 FY2025
SegmentQ4 FY2025YoY
Commercial Real Estate$0.471B+20.5%
Residential Real Estate$0.429B+35.0%

Other KPIs

Q4 FY2025
SegmentQ4 FY2025
Net New Bookings$308 million
Homes.com Network Average Monthly Unique Visitors108 million
Homes.com Network Total Views2.1 billion
Homes.com Agent Subscribers31,000
Homes.com Annual Run Rate Revenue~$100 million
Adjusted EBITDA Margin Q419.7%
Adjusted EBITDA Margin FY202513.6%
CoStar Group Total Average Monthly Unique Visitors139 million

Management tone

Narrative arc: Homes.com unit-economics proof (Q2) → Sales-engine throttled by training capacity (Q3) → AI-as-moat with margin acceleration call (Q4).

Three quarters ago Homes.com was the cash-burning experiment that needed to prove unit economics; two quarters ago it was sales-engine throttled; this quarter Andy explicitly mapped the glide path: "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 call where Homes.com profitability has a dated terminal value — and it arrives concurrent with management's claim of "fastest organic revenue build we've ever had for a new product."

The commercial real estate framing executed a hard pivot from defensive to offensive. Last quarter Chris was still characterizing CRE as facing "difficulties"; this quarter Andy: "The CRE economy is shifting from headwind to tailwind...commercial sales volumes have climbed 30% year-over-year, and in fact, now are above long-term averages." The shift matters because it underwrites the 20% FY26 EBITDA margin call — management is no longer absorbing cyclical drag on the commercial side and is explicitly redirecting that operating leverage into the margin trajectory.

AI moved from "agentic operating model" (Q2 phrasing) to structural moat thesis (Q4 phrasing). Andy: "LLMs do not create information from thin air...only CoStar has the massive, very difficult to replicate volumes of high quality system of record proprietary real estate data." The Q3 framing positioned AI as an internal productivity reallocation within existing budgets; the Q4 framing positions proprietary data as the durable competitive answer to LLM commoditization. This is the most aggressive defensive positioning CoStar has articulated against a potential disruption vector, and it pairs with new metrics — Homes AI driving 187% YoY lead growth, 4-7x engagement increase — to substantiate the claim.

Apartments.com was repositioned from mature cash cow to gateway-to-single-family-rentals: "With tens of millions of single-family rentals in the U.S., we believe that it represents at least half of the rental market in the U.S., and it's a $5 billion TAM." Coupled with the segment recut (Apartments.com moved from Commercial to Residential), management is signaling Apartments is now the revenue engine to fund the residential platform expansion, not a stable utility — a re-narration that should raise the bar for Apartments.com growth disclosures going forward.

The bookings disclosure itself shifted: Q4 net new bookings of $308M is roughly a 4x sequential acceleration over Q3's $84M and represents a new high-water mark. Management did not provide the multi-quarter normalization framing they used in Q3 — they let the number speak. Combined with the 22% Q1 implied YoY guide (acceleration from Q4's 27%? No — deceleration, but vs. a tougher comp), the bookings number is the leading indicator the FY26 guide isn't a stretch.

Recurring themes management leaned on this quarter:

AI as structural competitive advantage via proprietary data moatHomes.com reaching inflection point with Homes.ai transformative productCommercial real estate recovery creating tailwind vs prior headwind narrativeMargin expansion across portfolio as growth investments matureInternational expansion (UK, Canada, Australia, France) gaining tractionSales force leverage and productivity as growth multiplier

Risks management surfaced:

MLS and listing syndication industry instability could disrupt agent/broker relationshipsMacro environment: apartment vacancy rising to 8.5%, new supply exceeding demandCompetitive threat from incumbent portals deploying lead quality degradation tactics (shotgunning)Foreign exchange headwinds on Domain revenue (14M USD sequential Q4-Q1 volatility noted)Execution risk on multiple simultaneous product launches and international builds

Q&A highlights

Brett Huff · Stevens

Requested breakdown of top commercial EBITDA investment priorities and clarification on Matterport cost reductions

Management detailed $120M in eliminated duplicative public company costs from Matterport merger and outlined major 2026 investments: CoStar Australia de novo build, European expansion, origination workflow module for Debt Solutions, Real Estate Manager/Visual Lease integration, lease benchmarking product, new homes information product, STR profitability modules, Homes AI expansion, Matterport camera development, and additional salespeople

$120 million in duplicative public company costs eliminated200+ people hired in CoStar AustraliaMultiple product launches: STR profitability modules, new homes information product, Homes AIInvestments expected to moderately impact 2026 margins but drive long-term growth

Andrew Boone · Citizens

Requested early results from Homes AI, expected impact on retention and traffic generation, and context on marketing spend strategy

Management reported 187% year-over-year lead growth for Homes members, engagement increases of 4-7x with AI interface, and strategic shift from top-of-funnel brand awareness to product feature marketing and lower-funnel SEM. Emphasized deep engagement capabilities, persistent user preference learning, and cross-platform integration plans

187% year-over-year lead growth with Homes members4-7x increase in engagement with Homes AI interface18,000 clients reached with Homes AI in recent weekAI agent learns user preferences and maintains persistent knowledge across platforms

Curtis Nagel · Bank of America

Requested disaggregation of commercial EBITDA guidance decline, specifically regarding reflatforming costs from homes.com back to commercial segment

Management clarified that apartments.com was removed from commercial segment for comparison purposes, and margin decline primarily attributable to inorganic acquisitions (Matterport, Domain) in their first full year. From organic perspective, commercial margins remain roughly flat despite significant investment

Apartments.com removed from commercial segment in new structureMatterport and Domain acquisitions creating margin headwind in 2026Organic commercial margins roughly flat despite major investmentsMargin recovery expected post-2026

Pete Christensen · Citi

Explored AI disruption risk to commercial real estate broker space and potential impact on CoStar pricing power and revenue

Management expressed confidence that relationship-driven brokers will not be significantly displaced by AI, that high-volume administrative roles (not revenue drivers) face disruption, and that CoStar has demonstrated pricing resilience during downturns. Noted brokers represent only 30-33% of revenue, with majority from banks, owners, institutions, CMBSs, and government agencies

Brokers represent approximately 30-33% of CoStar revenueMajority of revenue (67-70%) from banks, owners, institutions, CMBSs, and government agenciesSuccessfully maintained comparable pricing during prior downturns despite seat reductionCommercial real estate headcount declined significantly over past 5 years; CoStar revenue continued to grow

George Tong · Goldman Sachs

Requested quantification of M&A contributions for 2026 and organic growth rates embedded in full-year guidance for commercial and residential segments

Management declined to provide specific organic growth rates or detailed M&A contribution breakouts, stating they did not have the numbers in front of them and would need to follow up. Confirmed only full-year impact of 2025 acquisitions flows into 2026 guidance with no new M&A activity currently underway

2026 guidance incorporates full-year impact of 2025 acquisitions onlyDomain revenue came ahead of expectations in 4QMatterport contributing inorganically to resultsNo ongoing M&A activity or closings in progress

Answers to last quarter's watch list

Q4 revenue at or above $895M and acceleration into Q1 2026 — Q4 revenue landed at $900M (at the high end of $885-895M guide), and management guided Q1 2026 to $890-900M, implying ~22% YoY growth — a meaningful continuation of the 27% Q4 pace given comp normalization. The acceleration narrative carried into Q1 commentary cleanly.
Resolved positively
Q4 net new bookings holding above $80M — Q4 net new bookings of $308M came in roughly 4x Q3's $84M, decisively clearing the threshold. The moderated sales hiring pace from Q3 did not translate into a bookings fade.
Resolved positively
Homes.com member adds in Q4 — Homes.com agent subscribers reached 31,000 in Q4, up from 26,000 in Q3 — approximately 5,000 net adds, below the Q3 figure of 7,000 but well above the 5,000 drop-line that would have signaled the linear-growth narrative was breaking. Mild deceleration consistent with Andy's prior holiday-impact caveat.
Continue monitoring
2026 Homes.com investment guide holding "same or lower" vs. 2025 — Andy went further than the Q3 commitment: net Homes.com investment is being reduced by $300M in 2026 vs. 2025, with continued annual reductions until run-rate profitability in 2029 and full-year profitability in 2030. The margin-model anchor is intact and strengthened.
Resolved positively
LoopNet above 11% growth and Spain/France launches — LoopNet was not broken out separately under the new segment structure (Commercial Real Estate now reported as a single $471M, +20.5% line). The segment recut prevents direct comparison to the Q3 11.8% LoopNet figure.
Not resolved
Operating margin gap to adjusted EBITDA narrowing — Q4 GAAP operating margin reached 5.4% (positive, vs. Q3's -6.1%) while adjusted EBITDA margin hit 19.7%. The gap narrowed materially this quarter, and FY26 guidance implies 20% adjusted EBITDA margin — the GAAP-to-adjusted gap is structurally compressing as Homes.com investment moderates.
Resolved positively

What to watch into next quarter

Whether Q1 2026 revenue lands at or above $900M (high end), validating the ~22% YoY guide — a miss here would unwind the FY26 17% growth narrative immediately given Q1 sets the baseline run rate

Q1 2026 adjusted EBITDA margin: the $95-115M guide on $890-900M revenue implies an 11.5% midpoint margin, well below the FY26 20% target, so the back-half ramp needs to be visible in Q2 — watch for any management framing of when the margin step-up actually arrives

Whether management discloses organic vs. inorganic growth for 2026 in follow-up communications: Goldman's question went unanswered live, and clarity on organic commercial growth (ex-Matterport/Domain) is essential to underwrite the moat thesis

Homes.com agent subscriber adds: 31,000 base means a sub-5,000 Q1 add would break the trajectory toward the $100M ARR benchmark and the 2029 run-rate profitability glide path

Apartments.com growth disclosure under the new residential segment structure: the $5B single-family-rentals TAM call requires Apartments.com itself to keep growing double-digit; if the segment recut obscures this, the gateway thesis becomes unverifiable

Execution on $700M buyback pace — first capital return commitment of this magnitude alongside heavy reinvestment is a balance test; watch quarterly buyback cadence vs. FCF generation

CRE "headwind to tailwind" claim durability: Andy cited commercial sales volumes +30% YoY; if this rolls over in 1H 2026, the FY26 margin call loses its underwriting

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 (analyst exchanges as documented)

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