Costar Group, Inc. · NASDAQ:CSGP
Costar — Q3 2023 Earnings Presentation
65 slides from Costar's earnings presentation, Oct 24, 2023
Slide 1: Third Quarter 2023 Investor Presentation
Third Quarter 2023 Investor Presentation
Slide 2: Legal Disclaimer
Legal Disclaimer Certain information in this presentation includes “forward-looking statements” within the meaning of federal securities laws, including financial projections of CoStar Group, Inc. (“CoStar Group” or the “Company”), addressable markets, statements about management’s plans, growth str
Slide 3: Third Quarter 2023 Highlights
Third Quarter 2023 Highlights
Slide 4: Third Quarter 2023 Highlights
Third Quarter 2023 Highlights • Third quarter 2023 revenue increased 12% year-over-year. Commercial information and marketplace businesses grew 14% year-over-year. • 50 consecutive quarters of double-digit revenue growth. • Homes.com traffic reached 100 million unique visitors in September, up 1,290
Slide 5: Homes.com Skyrockets Past 100M Unique Visitors in September
Homes.com Skyrockets Past 100M Unique Visitors in September Now #2 Most Trafficked U.S. Residential Site 100 90 80 Unique Visitors in Millions 70 60 50 40 30 20 10 Sep-22 Oct-22 Nov-22 Dec-22 Jan-23 Feb-23 Mar-23 Apr-23 May-23 Jun-23 Jul-23 Aug-23 Sep-23 Source: In September 2023, Homes.com surpasse
Slide 6: Our Websites Reached 141 Million Unique Visitors in September 2023
Our Websites Reached 160 Million Unique Visitors in September 2023 160 140 120 Unique Visitors in Millions 100 80 60 40 20 - 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Source: Google Analytics Unique Visitors – All CoStar Sites
Slide 7: Acquisition Offer Announced October 19th, 2023
Acquisition Offer Announced October 19th, 2023 • OnTheMarket is the third most visited residential property portal in the United Kingdom with approximately 20 million site visits per month1 • Founded by agents in 2013 as an agent friendly competitive alternative to the existing UK property portals •
Slide 8: Third Quarter and Year to Date 2023 Results
Third Quarter and Year to Date 2023 Results Third Quarter Year-To-Date $625 million $1.8 billion Revenue 12% year-over-year growth 13% year-over-year growth $112 million $362 million Adjusted EBITDA 18% margin 20% margin Net new bookings $65 million $228 million $91 million $278 million Net income $
Slide 9: 2023 Fourth Quarter and Full Year Outlook
2023 Fourth Quarter and Full Year Outlook Fourth Quarter Full Year $630 million to $635 million $2.445 billion to $2.450 billion Revenue 10% year-over-year growth 12% year-over-year growth $123 million to $128 million $485 million to $490 million Adjusted EBITDA 20% margin 20% margin $97 million to
Slide 10: Company Overview
Ot CoStar Group” Company Overview
Slide 11: Mission Statement
MISSION STATEMENT We are digitizing the world’s real estate, empowering all people to discover properties, insights, and connections that improve their businesses and lives. ms CoStar Group”
Slide 12: CoStar Group is the Global Leader in Digitizing Real Estate
CoStar Group is the Global Leader in Digitizing Real Estate 37 One billion+ $5 billion+ 5,700 years of real estate annual visits investment in research employees experience to our websites and technology member of the 500 Innovator of the Year COMPANY OF THE YEAR Best Integrated Marketing Campaign 7
Slide 13: A Global Leader in the Digital Transformation of the $300+ Trillion Real Estate Industry
A Global Leader in the Digital Transformation of the $300+ Trillion Real Estate Industry • Long growth runway: Global addressable market for real estate information and marketplaces estimated at > $100 billion. • Strong competitive position: Massive proprietary dataset built over 37 years with > $5
Slide 14: Global Real Estate: A $300 Trillion Asset Class
Global Real Estate: A $300 Trillion Asset Class U.S. REAL ESTATE $70 TRILLION GLOBAL REAL ESTATE (Year CoStar entered market) $300 TRILLION Office (1986) Industrial (1994) United States Retail (2004) Rural Land (2011) Apartment (2014) Single Family Hotel Residential/ (2019) Canada New Homes China (2
Slide 15: ~$40B North American Addressable Market, Global Market > $100B
~$40B North American Addressable Market, Global Market > $100B Total North American Addressable Market $4 Billion $9 Billion $5 Billion $6 Billion >$15 Billion 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% TAM Sources: CoStar, Apartments, LoopNet and Ten-X – CoStar estimate Homes.com – extrapolation o
Slide 16: Consistent Double Digit Revenue Growth
Consistent Double Digit Revenue Growth 5 YEAR CAGR $2.5B 23% 16% $2.2B 20% TOTAL 5 YEAR REVENUE CAGR $1.9B 16% $1.7B $1.4B $1.2B 18% 11% 2018 2019 2020 2021 2022 2023E CoStar Multifamily LoopNet Residential Information Services Other Marketplaces
Slide 17: Consecutive Quarters of Double-Digit Revenue Growth
50 Consecutive Quarters of Double-Digit Revenue Growth Regardless of Commercial Property Transaction Volumes 700 Quarterly Revenue Transaction Volumes High Inflation 450 2022-2023: +12% Growth 400 600 Pandemic • Sustained double-digit revenue growth 2020-2021: +18% Growth 350 500 • 95% subscription
Slide 18: More Diversified with More Countercyclical Business Mix
More Diversified with More Countercyclical Business Mix Since the Great Recession 2008 REVENUE 2023E REVENUE Other Marketplaces Other 5% Information Revenue Residential Services 2% LoopNet 11% CoStar 38% CoStar Information Marketplaces 92% & Analytics 55% 45% Information & Analytics Multifamily Info
Slide 19: Diversified Client Base with Minimal Concentration
Diversified Client Base with Minimal Concentration TOP 1,000 CLIENTS: REVENUE BY CLIENT SEGMENT NONE MORE THAN 2% Lender Investors 4% 7% Owners Other 34% 14% Property Management 19% Brokers 22% *Revenue by client segment and by client extrapolated from September 2023 CoStar billing data.
Slide 20: Successful Acquisition and Integration Track Record
Successful Acquisition and Integration Track Record 2023 REVENUE COMPOSITION $600 Acquired 22% $500 $400 Millions Organic 78% $300 $200 $100 $0 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Organic Revenue Acquired Revenu
Slide 21: High Growth, High Margin Subscription Business Model
High Growth, High Margin Subscription Business Model ü 23% Revenue CAGR since IPO 24 years ago Double-Digit Revenue and ü Net Income CAGR of 29% over the last 10 years Adjusted EBITDA Growth ü Adjusted EBITDA CAGR of 14% over the last 10 years ü 95% subscription revenue with 82%+ annual contracts Pr
Slide 22: ESG Recent Accomplishments
ESG Recent Accomplishments • Calculated Greenhouse Gas baseline emissions in 2022 • Completed CDP Questionnaire • Signed Net Zero Commitment with Science Based Target initiative • ISS 50% Score Improvement To read our full 2023 ESG Report visit: https://investors.costargroup.com/ESG
Slide 23: The global leader in commercial real estate information, analytics, and data-driven news
The global leader in commercial real estate information, analytics, and data-driven news
Slide 24: CoStar by the Numbers
CoStar by the Numbers $930M 180K+ Revenue Run Rate Subscribers 890K+ 7.1M+ Commercial Listings Properties 14.8M+ 5.2M+ Lease Sale Transactions Transactions * Data from CoStar internal database as of September 2023. Run Rate based on Q3 2023 annualized.
Slide 25: CoStar Product Investments Expand the Market Size
CoStar Product Investments Expand the Market Size, Resulting in Long-Term Double-Digit Growth $250 $4B U.S. MARKET SIZE 13% Revenue Growth Rate Tenants Ten Year CAGR Hospitality $200 Quarterly Revenue Lenders (in millions) Owners / $150 Investors Brokers / Appraisers $100 $50 $0 2005 2006 2007 2008
Slide 26: Unparalleled Research Methodology
Unparalleled Research Methodology 1,000+ 300 Drones 70 Analysts and In-market Economists canvassers 1 1,500 Cessna capturing aerial insights Researchers Automated data extraction 1,000 Software Developers To facilitate the gathering of data 50 Journalists Across Data feeds and third-party data 1 Bas
Slide 27: Discover your new home. Helping 100 million renters find their perfect fit.
Discover your new home. Helping 100 million renters find their perfect fit.
Slide 28: Apartments.com by the Numbers
Apartments.com by the Numbers $940M 24% Year-over-Year Revenue Run Rate Revenue Growth #1 1M+ Rank in Brand Rental Awareness Availabilities 1B 45M Average Monthly Annual Visits Unique Visitors *All data as of September 2023. Revenue Run Rate based on Q3 2023 annualized. Brand awareness from Dynata,
Slide 29: Apartments.com Beats Competition on the Metrics That Matter to Advertisers
Apartments.com Beats Competition on the Metrics That Matter to Advertisers 2X more time 2X higher 3X more per visit conversion leases Sources: Traffic from Comscore Media Metrix, YTD 2023; Lease data from Rent Dynamics, April - June 2023
Slide 30: Record Unaided Consumer Brand Awareness
Record Unaided Consumer Brand Awareness 53% 49% 40% 37% 36% 36% 35% 34% 34% 34% 33% 32% 31% 30% '20 Q1 '20 Q2 '20 Q3 '20 Q4 '21 Q1 '21 Q2 '21 Q3 '21 Q4 '22 Q1 '22 Q2 '22 Q3 '22 Q4 '23 Q1 '23 Q2 23 Q3 Source: Dynata a leading market research sampling provider
Slide 31: Success of Apartments.com
Success of Apartments.com Growth Since Acquisition 2014 2023 5th place in highly fragmented The leading online rental Industry Rank #1 online rental search industry marketplace* Revenue $86 million $940 million revenue run rate 11X Traffic 4 million monthly uniques 45 million average monthly uniques
Slide 32: Tremendous Opportunity Ahead in the Small to Medium Property Space
Tremendous Opportunity Ahead in the Small to Medium Property Space Client Annual Revenue Revenue Unit Range Universe TAM ($M) Properties Run Rate Penetration $7B 1-49 23M 11K $60M 1% $6B opportunity 50-99 68K 11K $108M 11% $1B 100+ 102K 43K $772M 39% $2B Grand Total 23M 65K $940 10% $9B Data as of S
Slide 33: The #1 global commercial real estate marketplace
The #1 global commercial real estate marketplace
Slide 34: LoopNet by the Numbers
LoopNet by the Numbers $270M 16% 5 Year Revenue Revenue Run Rate CAGR 14M 93% Monthly Unique #1 Position for CRE Visitors Worldwide Terms in Google 370K+ 97% Fortune 1000 CRE Brokers & Companies Owners Advertising Active on Site *All data as of September 2023. Run Rate based on Q3 2023 annualized. T
Slide 35: Commanding Share of Traffic vs. Marketplace Competitors
Commanding Share of Traffic vs. Marketplace Competitors LoopNet Network vs. Competitors LoopNet Network crexi propertyshark commercialcafe officespace commercialexchange commercialsearch 50x vts Unique Visitors of the Avg. CRE Marketplace Competitor buildout Instantoffices commercialmls 7x reonomy U
Slide 36: LoopNet Revenue Up 5x Since Acquisition
LoopNet Revenue Up 5x Since Acquisition $70 Early Stages of a Massive Global Opportunity Domestic International $60 $5 Billion North American TAM Quarterly Revenue in Millions $50 $15 Billion $40 Global TAM $30 $20 $10 $0 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
Slide 37: LoopNet International Expansion Underway
LoopNet International Expansion Underway LoopNet Canada loopnet.ca LoopNet UK loopnet.co.uk LoopNet Spain loopnet.es LoopNet France loopnet.fr
Slide 38: The fastest growing U.S. residential marketplace
The fastest growing U.S. residential marketplace
Slide 39: Our Vision
Our Vision Establish Homes.com as the #1 residential real estate marketplace
Slide 40: Homes.com by the Numbers
Homes.com by the Numbers 100M+ Millions Monthly Unique Free Leads Visitors per Quarter 2.1M+ 15K+ Residential For Sale Neighborhood and Rental Listings Content 630K 1M+ Agents with Registered Agents 1+ Listing * Sources: Homes.com surpassed 100 million monthly unique visitors, according to Google An
Slide 41: A Better Business Model – "Your Listing, Your Lead"
A Better Business Model – “Your Listing, Your Lead” • Only Homes.com connects you to the listing agent who knows the home best • No cold calls, robocalls, or spam from random agents • Competitor models monetize buyer agency, taking one third of agent’s commissions • Homes.com is providing millions o
Slide 42: "Your Listing, Your Lead" Delivering Real Value to Agents
“Your Listing, Your Lead” Delivering Real Value to Agents
Slide 43: Our Proprietary Content Sets Us Apart
Our Proprietary Content Sets Us Apart. Consumers Aren’t Just Looking for a Home, They’re Looking for a Community. Homes.com is digitizing rich content for communities across the U.S. 20,000+ Neighborhoods 40,000+ Parks 125,000+ Schools 65,000+ Condo Buildings
Slide 44: Marketing the Property is the Superior Financial Model
Marketing the Property is the Superior Financial Model Contact Agent Companies that Market the Agent Companies that Market the Property 300 300 200 ($1.8) Billion Cumulative Net Loss 200 Net Income ($ in millions) Net Income ($ in millions) 100 100 0 0 (100) (100) (200) (200) $2.5 Billion Cumulative
Slide 45: The global leader in hospitality information, analytics and benchmarking
The global leader in hospitality information, analytics and benchmarking
Slide 46: STR by the Numbers
STR by the Numbers 22% 78K YoY Subscription Hotels Worldwide Revenue Growth 10M 190 Guest Rooms Countries $300M 97% Total Addressable Renewal Rate Market *Based on internal CoStar data as of September 2023.
Slide 47: STR Data Includes 78,000+ Hotels Across 190 Countries
STR Data Includes 78,000+ Hotels Across 190 Countries
Slide 48: The leading platform for lease accounting and management
The leading platform for lease accounting and management
Slide 49: Real Estate Manager by the Numbers
Real Estate Manager by the Numbers 17% 97% 5 Year Revenue Customer CAGR Retention Rate $4B Monthly Lease Payments Managed 625K 33K Real Estate System Users Leases CAGR and Retention Rate based on 9/30/23 trailing twelve-month period. All other data from internal database as of August 2023.
Slide 50: Platform for Managing the Tenant's Entire Lease Lifecycle
Platform for Managing the Tenant’s Entire Lease Lifecycle The Most Comprehensive Portfolio Management Platform with Integrated CoStar Real Estate Data Drive Cost Savings Optimize Real Estate Portfolios Achieve Lease Accounting Compliance
Slide 51: The SMARTER, BETTER, FASTER way to transact commercial real estate
The SMARTER, BETTER, FASTER way to transact commercial real estate
Slide 52: Ten-X by the Numbers
Ten-X by the Numbers $31B 90% Properties Sold in Assets Sold 90 Days or Less 63% Trade Rate Since 2020 93% 84% Non-Distressed Close Rate Assets Assets sold since inception in 2009. Trade rate since acquisition in 2020. Close rate, time to close and non-distressed assets sold are YTD 2023.
Slide 53: Ten-X Platform Closes Deals 2-3x Faster than Offline Transactions
Ten-X Platform Closes Deals 2-3x Faster than Offline Transactions Asset Marketing & Asset Evaluation Bidder Qualification Contracts & Closing +- 10 Days Onboarding & Due Diligence Online Auction
Slide 54: Ten-X Revenue Opportunity is >$3 Billion at Current Transaction Levels
Ten-X Revenue Opportunity is >$3 Billion at Current Transaction Levels Market Penetration % ($1M - $10M Property Size) Revenue Opportunity Current 1% $50 Million 5% $155 Million 10% $310 Million 25% $775 Million 33% $1 Billion 100% $3.1 Billion 0 500 1,000 1,500 2,000 2,500 3,000 Annual Revenue (in
Slide 55: The largest rural real estate marketplace in the country
The largest rural real estate marketplace in the country
Slide 56: Land.com by the Numbers
Land.com by the Numbers 16% 10M 5 Year Revenue Average Monthly CAGR Visitors 8K+ Paid Clients 430K+ 50K+ Land Sale Comps in Database Paid Listings *CAGR and leads based on 9/30/23 trailing twelve-month period. Traffic data from Google Analytics for Q3 23 Paid listing and client data from internal da
Slide 57: Land.com Leads All Competitors in Traffic Share
Land.com Leads All Competitors in Traffic Share LandSearch LandFlip Network 7.6M AcreValue visits per month 2.6X Homes And Land Land Broker MLS our largest competitor Farm And Ranch LandHub Source: SimilarWeb, Monthly Visits, August 2023
Slide 58: The largest business-for-sale marketplace in the U.S.
The largest business-for-sale marketplace in the U.S.
Slide 59: BizBuySell by the Numbers
BizBuySell by the Numbers 10% 35M 5 Year Revenue CAGR Annual Visits 2.5M Annual Leads Delivered 120K 150K Annual Sold Business Paid Listings Comps in Database *CAGR based on trailing twelve-month revenue from 9/30/23. Run Rate based on Q3 2023 annualized. Traffic data from Google Analytics. Listing,
Slide 60: Our Network Has More Traffic Than All Competitors Combined
Our Network Has More Traffic Than All Competitors Combined BizBuySell Network BusinessesForSale.com FranchiseGator FranchiseDirect 4M visits per month BusinessBroker.net 14x BizBen our largest competitor BusinessMart GlobalBX * BizBuySell Network traffic vs similar sites; SimilarWeb, August 2023
Slide 61: Appendix
Ot CoStar Group” Appendix
Slide 62: Non-GAAP Measures
Non-GAAP Measures For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the CoStar Group Inc.’s (the “Company” of “CoStar Group”) financial condition
Slide 63: Reconciliation of Net Income to Non-GAAP Net Income
Reconciliation of Net Income to Non-GAAP Net Income The following table presents a reconciliation of CoStar Group’s, Non-GAAP Net Income, including forward-looking guidance Non-GAAP Net Income, to the most directly comparable GAAP financial measure, net income. For the Nine For the Year Ended Decemb
Slide 64: Reconciliation of Net Income to Adjusted EBITDA
Reconciliation of Net Income to Adjusted EBITDA The following table presents a reconciliation of CoStar Group’s Adjusted EBITDA, including forward-looking guidance range Adjusted EBITDA for the full year ending December 31, 2023, to the most directly comparable GAAP financial measure, net income. Fo
Slide 65: Use of Operating Metrics
Use of Operating Metrics CoStar Group reviews a number of operating metrics to evaluate its business, measure performance, identify trends, formulate business plans and make strategic decisions. This presentation includes Net New Bookings. Going forward, CoStar Group expects to use these operating m