CoStar Group, Inc. (CSGP) - Form 10-Q Summary
Business Context and Reporting Period
Company: CoStar Group, Inc.
Filing Type: Form 10-Q (Quarterly Report)
Period Ended: June 30, 2026
Business Overview: CoStar Group is a leading global provider of online real estate marketplaces, information, analytics, and 3D digital twin technology. The company operates in two segments: Commercial Real Estate and Residential Real Estate. Recent strategic moves include the completed acquisitions of Matterport (Feb 2025) and Domain (Aug 2025), and a pending agreement to acquire Zonda (announced May 2026).
Key Financial Metrics (Six Months Ended June 30, 2026)
| Metric | Amount (in millions) |
|---|---|
| Revenue | $1,822 |
| Gross Profit | $1,429 |
| Net Income | $58 |
| Diluted EPS | $0.14 |
| Operating Cash Flow | $267 |
| Free Cash Flow (Approx.) | $157 (Operating Cash Flow less CapEx of $112) |
| Cash and Cash Equivalents | $1,266 |
| Long-Term Debt (Net) | $994 |
| Adjusted EBITDA | $316 |
Material Changes vs. Prior Period
- Revenue Growth: Revenue increased 20% year-over-year (YoY) to $1.822 billion for the six months ended June 30, 2026, compared to $1.513 billion in 2025.
- Commercial Real Estate: Up 11% to $953 million, driven by CoStar and LoopNet growth and the Domain acquisition.
- Residential Real Estate: Up 32% to $869 million, primarily due to $131 million in revenue from the Domain acquisition.
- Profitability: Net income turned positive at $58 million, a significant improvement from a net loss of $9 million in the prior year period. Operating income improved from a loss of $70 million to a profit of $79 million.
- Cost Structure: Cost of revenue increased 22% to $393 million, largely due to amortization of acquired intangibles (Matterport and Domain) and increased personnel costs. Customer base amortization rose 66% to $73 million.
- Stock Repurchases: The company repurchased 13.8 million shares for an aggregate cost of $589 million during the six-month period, including a $500 million Accelerated Share Repurchase (ASR) completed in March 2026.
Guidance, Outlook, and Risks
- Outlook: Management expects Commercial Real Estate revenue growth to moderate in 2026 compared to 2025 due to the non-recurring benefit of the Matterport acquisition. Conversely, Residential Real Estate growth is expected to accelerate due to a full year of Domain integration and increased Homes.com memberships.
- Strategic Priorities: Focus on enhancing residential products (Apartments.com, Homes.com), international expansion of LoopNet and CoStar (France, Spain, Australia), and launching AI-enabled features (Homes Ai, Apartments Ai) across the portfolio.
- Pending Acquisition: CoStar entered into an agreement to acquire Zonda for approximately $800 million in cash, expected to close in the second half of 2026. This acquisition targets new home construction data and marketplaces.
- Litigation: The company settled the "Brown Judgment" related to the Matterport acquisition, paying $109 million in the second quarter of 2026. While resolved, similar class-action lawsuits remain pending with no amounts currently accrued.
- Capital Allocation: $913 million remains available under the current $1.5 billion stock repurchase program. The company anticipates repurchasing at least $113 million more in 2026.
Investor Verification Checklist
- Domain Integration: Verify the realization of synergies and revenue contribution from the Domain acquisition in the Australian and UK markets.
- Zonda Acquisition: Monitor regulatory approval status and closing timeline for the $800 million Zonda acquisition.
- Litigation Exposure: Track the status of consolidated class-action lawsuits related to the Matterport transaction to assess potential future liabilities beyond the settled Brown Judgment.
- Amortization Impact: Review the trajectory of amortization expenses from acquired intangible assets (Matterport, Domain, Visual Lease) and their impact on GAAP net income.
- AI Implementation: Assess the adoption rates and revenue impact of new AI-driven features (Homes Ai, Apartments Ai) as a growth driver.