CoStar Group, Inc. 2026 Q1 Filing Summary
Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2026. CoStar Group operates as a leading global provider of real estate information, analytics, online marketplaces, and 3D digital twin technology. The company operates through two segments: Commercial Real Estate and Residential Real Estate. The reporting period reflects the integration of the Matterport Acquisition (completed February 2025) and the Domain Acquisition (completed August 2025), which significantly expanded the company's footprint in 3D spatial data and the Australian residential market.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Revenue | $897 million | $732 million |
| Gross Profit | $701 million | $579 million |
| Operating Income (Loss) | $3 million | $(43) million |
| Net Income (Loss) | $3 million | $(15) million |
| Adjusted EBITDA | $132 million | $66 million |
| Cash from Operations | $152 million | $53 million |
| Cash & Equivalents (End of Period) | $1.316 billion | $3.778 billion |
| Long-Term Debt | $994 million | $993 million |
Margins: Gross margin decreased slightly from 79% to 78%. Operating margin improved from a loss of 6% to a positive 0.3%.
Material Changes vs. Prior Period
- Revenue Growth: Total revenue increased 23% year-over-year. Commercial Real Estate revenue grew 15% to $472 million, driven by CoStar, LoopNet, and Matterport. Residential Real Estate revenue surged 32% to $425 million, primarily due to the full quarter impact of the Domain acquisition ($60 million contribution).
- Profitability: The company returned to GAAP profitability with $3 million in net income, compared to a $15 million loss in Q1 2025. This turnaround was driven by revenue growth outpacing operating expense increases, despite higher amortization costs from recent acquisitions.
- Amortization: Customer base amortization expense increased 118% to $37 million due to intangible assets recognized from the Matterport and Domain acquisitions.
- Interest Income: Net interest income decreased 74% to $10 million, reflecting a lower cash balance compared to the prior year.
Guidance, Outlook, and Risks
Outlook & Strategy: Management expects Commercial Real Estate revenue growth to moderate in 2026 as the one-time benefit from the Matterport acquisition normalizes. Conversely, Residential Real Estate growth is expected to accelerate due to a full year of Domain integration and increased Homes.com membership. Key priorities include international expansion of LoopNet and CoStar, launching AI-enabled features (Homes AI), and enhancing residential platforms.
Capital Allocation: The company repurchased 11.4 million shares for $505 million in Q1 2026 under a $1.5 billion program approved in December 2025. Approximately $995 million remains available for repurchases. The company anticipates repurchasing at least $195 million more in 2026.
Risks & Contingencies:
- Litigation: A significant accrual of $99 million exists related to the Brown v. Matterport litigation regarding transfer restrictions on shares. The Delaware Supreme Court affirmed a $79 million damages award, with interest calculations pending. Additional post-judgment interest could reach up to $17 million.
- Construction: The company has $115 million in remaining obligations for its Richmond, Virginia campus expansion, expected to be completed in the first half of 2026.
- Market Risks: Exposure to foreign currency fluctuations (14% of revenue in Q1 2026) and potential impairment of goodwill and intangible assets ($6.7 billion total) if economic conditions or performance assumptions deteriorate.
Investor Verification Checklist
- Litigation Resolution: Monitor the final ruling on post-judgment interest in the Brown case and the status of consolidated "Post-Brown Complaints" to assess potential liability beyond the $99 million accrual.
- Domain Integration: Verify the sustainability of the 32% revenue growth in the Residential segment and the timeline for achieving profitability in this segment (currently reporting an Adjusted EBITDA loss of $29 million).
- Stock Repurchase Execution: Track the pace of the remaining $995 million in authorized buybacks and the impact on share count and EPS.
- Amortization Impact: Assess the long-term effect of increased amortization expenses ($64 million total in Q1 2026) on GAAP operating margins as the company integrates new acquisitions.
- Campus Expansion: Confirm the completion timeline and cost adherence for the Richmond campus expansion to ensure no material overruns affect liquidity.