A month has gone by since the last earnings report for CoStar Group (CSGP). Shares have added about 7.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is CoStar due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
CoStar Group Q2 Earnings Beat Estimates, Revenues Increase Y/Y
CoStar Group reported adjusted earnings of 32 cents per share for the second quarter of 2026, up 88.2% year over year. The figure surpassed the Zacks Consensus Estimate by 14.29%.
Revenues increased 18.4% year over year to $925 million but missed the consensus estimate by 0.43%. Profitability benefited from disciplined expense management, while net new bookings rose 3% sequentially to $69 million.
CSGP’s Commercial Growth Stays Steady
Commercial Real Estate revenues increased 7.8% year over year to $481 million and accounted for 52% of total revenues. Commercial adjusted EBITDA rose 6.8% to $172 million.
Within the commercial portfolio, CoStar revenues advanced 8.7% to $337 million. LoopNet revenues climbed 14.5% to $87 million, supported by growth in paid listings. Other Commercial Real Estate revenues declined 5% to $57 million, primarily due to lower transaction volumes at Ten-X.
CoStar’s Residential Segment Turns Profitable
Residential Real Estate revenues climbed 33% year over year to $444 million. The segment generated adjusted EBITDA of $12 million, marking the first time that the residential segment turned adjusted EBITDA positive and improving $41 million sequentially.
Apartments.com revenues rose 9% to $318 million. Paid properties increased 12% to nearly 93,000, while monthly renewal rates remained at 99%. Average revenue per property declined 3.6%, primarily reflecting a sales mix shift toward smaller communities.
CSGP Expands Core Platforms and AI Tools
Apartments.com generated revenues of $318 million, up 9% year over year. Paid properties increased 12% to nearly 93,000, while monthly renewal rates remained at 99%. Average revenue per property declined 3.6%, reflecting a shift toward smaller communities with lower average pricing.
Homes.com revenues jumped 66% to $28.5 million. Agent subscribers more than doubled to over 36,000, while the monthly cancellation rate improved to 2.4% in June from 6.5% a year earlier. Management plans to introduce higher-priced Platinum advertising during the third quarter.
CSGP launched Apartments.com AI in June. Users completed more than half a million sessions within a few weeks, spending about 20 minutes per session. AI users viewed twice as many listings, while 3D-tour usage rose 225% and traffic-to-lead conversion increased 256%.
CSGP Expands Margins Through Cost Discipline
Operating expenses increased 1.9% year over year to $652 million, significantly slower than revenue growth. Selling and marketing expenses were unchanged at $395 million, while general and administrative expenses declined 6.6% to $114 million.
Software development expenses rose 11.5% to $107 million and customer-base amortization increased 33.3% to $36 million.
Operating income improved to $76 million from an operating loss of $27 million in the year-ago quarter. Adjusted EBITDA more than doubled to $184 million from $85 million.
The adjusted EBITDA margin expanded 900 basis points to 20%, reaching the target level one quarter earlier than management had expected. Adjusted net income increased 73% to $128 million.
CSGP Ends Quarter With Solid Balance Sheet
Cash and cash equivalents were $1.27 billion as of June 30, 2026, compared with $1.63 billion at the end of 2025. Long-term debt was $994 million, broadly unchanged from $993 million at the end of 2025.
For the six months ended June 30, 2026, net cash provided by operating activities totaled $267 million. CSGP repurchased $587 million of stock during the period, including $82.1 million in the second quarter. Management expects full-year repurchases of approximately $700 million.
CSGP Lowers Revenue Outlook, Retains Profit View
For the third quarter of 2026, CoStar expects revenues to be between $935 million and $945 million, adjusted EBITDA of $190-$210 million, and adjusted earnings of 31-34 cents per share. Commercial revenues are projected at $489-$494 million, while Residential revenues are expected between $446 million and $451 million.
For 2026, CoStar revised its revenue outlook to $3.715-$3.755 billion. The company affirmed adjusted EBITDA guidance of $780-$820 million and projected adjusted EPS of $1.32-$1.39.
The lower revenue outlook reflects restructuring at Ten-X, sales-force optimization at Homes.com and pricing discipline at Apartments.com.
How Have Estimates Been Moving Since Then?
Since the earnings release, investors have witnessed a downward trend in fresh estimates.
The consensus estimate has shifted -11.11% due to these changes.
VGM Scores
Currently, CoStar has a average Growth Score of C, however its Momentum Score is doing a bit better with a B. Charting a somewhat similar path, the stock has a score of C on the value side, putting it in the middle 20% for value investors.
Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. Interestingly, CoStar has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.
Performance of an Industry Player
CoStar is part of the Zacks Computers - IT Services industry. Over the past month, Roper Technologies (ROP), a stock from the same industry, has gained 1.3%. The company reported its results for the quarter ended June 2026 more than a month ago.
Roper Technologies reported revenues of $2.11 billion in the last reported quarter, representing a year-over-year change of +8.5%. EPS of $5.38 for the same period compares with $4.87 a year ago.
Roper Technologies is expected to post earnings of $5.79 per share for the current quarter, representing a year-over-year change of +12.7%. Over the last 30 days, the Zacks Consensus Estimate has changed +0.1%.
The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Roper Technologies. Also, the stock has a VGM Score of D.
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This article originally published on Zacks Investment Research (zacks.com).