Market Overview

CoStar Group Third Quarter 2020 Revenues Increase 21% Year-over-Year with Third Quarter Sales of $53 Million Increasing 53% Above Second Quarter 2020 Sales

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CoStar Group, Inc. (NASDAQ:CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, announced today that revenue for the quarter ended September 30, 2020, was $426 million, an increase of 21% over revenue of $353 million for the third quarter of 2019. Net income for the third quarter of 2020 was $58 million, or $1.48 per diluted share. Adjusted EBITDA (which excludes stock-based compensation, acquisition and integration related costs and other items as described below) for the third quarter of 2020 was $134 million, an increase of 3% compared to adjusted EBITDA of $129 million for the third quarter of 2019.

"Our business delivered outstanding results in the third quarter, clearly demonstrating the mission critical nature of our information products and the strong countercyclical performance of our marketplaces. We delivered $53 million of company-wide net new sales bookings in the third quarter of 2020 with LoopNet reaching an all-time high sales quarter, increasing sales over 130% from the third quarter of 2019," said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. "For the third straight quarter we set record levels of traffic to our platforms, achieving 69 million monthly unique visitors in the third quarter, a 33% increase over the third quarter of 2019. It is evident that our online platforms and marketing investments are proving highly effective in the current environment."

"Apartments.com continues to go from strength to strength," continued Florance. "Our third quarter sales increased 59% over prior year levels and revenue growth accelerated to 23% over the third quarter of 2019. As a result of our increased marketing investments, we are delivering a record number of quality leads to our customers. The result is that the largest property managers and apartment communities continue to shift more and more of their marketing dollars to Apartments.com, while reducing their levels of spending on other advertising networks."

Yesterday afternoon, CoStar completed the acquisition of Emporis, a Germany-based provider of international commercial real estate data and images. With over 700,000 building records and 600,000 images, Emporis brings valuable research content from over 100 countries in every major region around the world, which the Company plans to integrate into the CoStar Suite international platform.

Year 2019-2020 Quarterly Results - Unaudited

(in millions, except per share data)

 

2019

 

2020

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

$328

 

$344

 

$353

 

$375

 

$392

 

$397

 

$426

Net income

85

 

63

 

79

 

88

 

73

 

60

 

58

Net income per share - diluted

2.33

 

1.73

 

2.15

 

2.39

 

1.98

 

1.60

 

1.48

Weighted average outstanding shares - diluted

36.6

 

36.6

 

36.7

 

36.7

 

36.8

 

37.7

 

39.4

 

 

 

 

 

 

 

 

 

 

 

 

 

 

EBITDA

113

 

94

 

113

 

125

 

100

 

109

 

108

Adjusted EBITDA

125

 

110

 

129

 

142

 

124

 

129

 

134

Non-GAAP net income

92

 

82

 

96

 

103

 

90

 

88

 

89

Non-GAAP net income per share - diluted

2.53

 

2.23

 

2.61

 

2.82

 

2.44

 

2.34

 

2.26

Non-GAAP net income (which excludes amortization of acquired intangible assets, stock-based compensation and other items as described below) for the third quarter of 2020 was $89 million or $2.26 per diluted share.

2020 Outlook

The Company expects revenue in the range of $1.644 billion to $1.650 billion for the full year of 2020, representing growth of approximately 18% for the year, and revenue for the fourth quarter of 2020 in the range of $429 million to $435 million, representing revenue growth of 15% year-over-year at the midpoint of the range.

The Company expects adjusted EBITDA in a range of $525 million to $530 million for the full year of 2020, an increase of 4% at the midpoint of the range compared to 2019. For the fourth quarter of 2020, the Company expects adjusted EBITDA in a range of $139 million to $144 million.

We expect full-year 2020 non-GAAP net income per diluted share in a range of $9.39 to $9.49 based on 38.3 million shares. For the fourth quarter of 2020, we expect non-GAAP net income per diluted share in a range of $2.34 to $2.44 based on 39.5 million shares. These ranges include an estimated non-GAAP tax rate of 25% for the full year and the fourth quarter 2020.

The preceding guidance does not include any operating results from the proposed RentPath acquisition.

The preceding forward-looking statements reflect CoStar Group's expectations as of October 27, 2020, including forward-looking non-GAAP financial measures on a consolidated basis, based on current estimates, expectations, observations and trends. Given the risk factors, rapidly evolving economic environment, and uncertainties and assumptions discussed in this release and in our quarterly reports on Form 10-Q and annual reports on Form 10-K, including uncertainties as a result of the COVID-19 pandemic and responses to it by, and the impact on, global economies, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.

Reconciliation of EBITDA, adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share to their GAAP basis results are shown in detail below, along with definitions for those terms. A reconciliation of forward-looking non-GAAP guidance to the most directly comparable GAAP measure, net income, can be found within the tables included in this release.

Non-GAAP Financial 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 Company's financial condition and results of operations, please refer to the Company's latest periodic report.

EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before interest (expense) income and other (expense) income, loss on debt extinguishment, income taxes, depreciation and amortization.

Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before stock-based compensation expense, acquisition- and integration-related costs for pending and completed acquisitions, restructuring costs, and settlements and impairments incurred outside the Company's normal course of business.

Non-GAAP net income is a non-GAAP financial measure determined by adjusting GAAP net income attributable to CoStar Group for stock-based compensation expense, acquisition- and integration-related costs for pending and completed acquisitions, restructuring costs, settlement and impairment costs incurred outside the Company's normal course of business and loss on debt extinguishment, as well as amortization of acquired intangible assets and other related costs, and then subtracting an assumed provision for income taxes. In 2020, the Company is assuming a 25% tax rate in order to approximate our statutory corporate tax rate excluding the impact of discrete items.

Non-GAAP net income per diluted share is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period used in the calculation of GAAP net income per diluted share. For periods with GAAP net losses and non-GAAP net income, the weighted average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.

Earnings Conference Call

Management will conduct a conference call at 5:00 PM EDT on Tuesday, October 27, 2020 to discuss earnings results for the third quarter 2020 and the Company's outlook. The audio portion of the conference call will be broadcast live over the Internet at investors.costargroup.com. To participate in the conference call, please register online in advance at http://www.directeventreg.com/registration/event/9987236. After registering, participants will receive dial-in information as well as a passcode and registrant ID. At the time of the call, participants will dial in using the numbers on the confirmation email and enter their passcode and ID, upon which they will be entered into the conference.

The webcast replay will also be available in the Investors section of CoStar Group's website for a period of time following the call.

CoStar Group, Inc.

Condensed Consolidated Statements of Operations - Unaudited

(in thousands, except per share data)

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2020

 

2019

 

2020

 

2019

Revenues

 

$

425,620

 

 

$

352,808

 

 

$

1,214,626

 

 

$

1,024,993

 

Cost of revenues

 

77,865

 

 

71,172

 

 

230,814

 

 

214,243

 

Gross profit

 

347,755

 

 

281,636

 

 

983,812

 

 

810,750

 

 

 

 

 

 

 

 

 

 

Operating expenses:

 

 

 

 

 

 

 

 

Selling and marketing (excluding customer base amortization)

 

146,634

 

 

101,582

 

 

402,202

 

 

308,751

 

Software development

 

40,732

 

 

32,639

 

 

121,343

 

 

89,022

 

General and administrative

 

65,322

 

 

45,530

 

 

181,598

 

 

127,943

 

Customer base amortization

 

18,258

 

 

7,616

 

 

44,677

 

 

22,473

 

 

 

270,946

 

 

187,367

 

 

749,820

 

 

548,189

 

 

 

 

 

 

 

 

 

 

Income from operations

 

76,809

 

 

94,269

 

 

233,992

 

 

262,561

 

Interest (expense) income

 

(7,537

)

 

4,414

 

 

(9,482

)

 

13,304

 

Other (expense) income

 

(338

)

 

240

 

 

29

 

 

779

 

Income before income taxes

 

68,934

 

 

98,923

 

 

224,539

 

 

276,644

 

Income tax expense

 

10,748

 

 

20,304

 

 

33,200

 

 

49,608

 

Net income

 

$

58,186

 

 

$

78,619

 

 

$

191,339

 

 

$

227,036

 

 

 

 

 

 

 

 

 

 

Net income per share - basic

 

$

1.49

 

 

$

2.16

 

 

$

5.07

 

 

$

6.26

 

Net income per share - diluted

 

$

1.48

 

 

$

2.15

 

 

$

5.04

 

 

$

6.20

 

 

 

 

 

 

 

 

 

 

Weighted-average outstanding shares - basic

 

39,159

 

 

36,333

 

 

37,718

 

 

36,293

 

Weighted-average outstanding shares - diluted

 

39,401

 

 

36,652

 

 

37,970

 

 

36,615

 

CoStar Group, Inc.

Reconciliation of Non-GAAP Financial Measures - Unaudited

(in thousands, except per share data)

 

Reconciliation of Net Income to Non-GAAP Net Income

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2020

 

2019

 

2020

 

2019

Net income

 

$

58,186

 

 

 

$

78,619

 

 

 

$

191,339

 

 

 

$

227,036

 

 

Income tax expense

 

10,748

 

 

 

20,304

 

 

 

33,200

 

 

 

49,608

 

 

Income before income taxes

 

68,934

 

 

 

98,923

 

 

 

224,539

 

 

 

276,644

 

 

Amortization of acquired intangible assets

 

24,870

 

 

 

12,543

 

 

 

63,348

 

 

 

37,946

 

 

Stock-based compensation expense

 

16,730

 

 

 

13,139

 

 

 

41,437

 

 

 

38,984

 

 

Acquisition and integration related costs

 

7,887

 

 

 

2,287

 

 

 

26,631

 

 

 

3,028

 

 

Restructuring and related costs

 

413

 

 

 

806

 

 

 

413

 

 

 

3,054

 

 

Other expense

 

113

 

 

 

 

 

 

113

 

 

 

 

 

Non-GAAP income before income taxes

 

118,947

 

 

 

127,698

 

 

 

356,481

 

 

 

359,656

 

 

Assumed rate for income tax expense *

 

25

 

%

 

25

 

%

 

25

 

%

 

25

 

%

Assumed provision for income tax expense

 

(29,737

)

 

 

(31,925

)

 

 

(89,120

)

 

 

(89,914

)

 

Non-GAAP net income

 

$

89,210

 

 

 

$

95,773

 

 

 

$

267,361

 

 

 

$

269,742

 

 

 

 

 

 

 

 

 

 

 

Net income per share - diluted

 

$

1.48

 

 

 

$

2.15

 

 

 

$

5.04

 

 

 

$

6.20

 

 

Non-GAAP net income per share - diluted

 

$

2.26

 

 

 

$

2.61

 

 

 

$

7.04

 

 

 

$

7.37

 

 

 

 

 

 

 

 

 

 

 

Weighted average outstanding shares - basic

 

39,159

 

 

 

36,333

 

 

 

37,718

 

 

 

36,293

 

 

Weighted average outstanding shares - diluted

 

39,401

 

 

 

36,652

 

 

 

37,970

 

 

 

36,615

 

 

 

 

 

 

 

 

 

 

 

* A 25% tax rate is assumed for 2020 and 2019, which approximates our statutory corporate tax rate.

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

 

2020

 

2019

 

2020

 

2019

Net income

 

$

58,186

 

 

 

$

78,619

 

 

 

$

191,339

 

 

 

$

227,036

 

 

Amortization of acquired intangible assets in cost of revenues

 

6,612

 

 

 

4,957

 

 

 

18,671

 

 

 

15,503

 

 

Amortization of acquired intangible assets in operating expenses

 

18,258

 

 

 

7,586

 

 

 

44,677

 

 

 

22,443

 

 

Depreciation and other amortization

 

6,806

 

 

 

6,279

 

 

 

20,563

 

 

 

19,289

 

 

Interest expense (income)

 

7,537

 

 

 

(4,414

)

 

 

9,482

 

 

 

(13,304

)

 

Other expense (income)

 

338

 

 

 

(240

)

 

 

(29

)

 

 

(779

)

 

Income tax expense

 

10,748

 

 

 

20,304

 

 

 

33,200

 

 

 

49,608

 

 

EBITDA

 

$

108,485

 

 

 

$

113,091

 

 

 

$

317,903

 

 

 

$

319,796

 

 

Stock-based compensation expense

 

16,730

 

 

 

13,139

 

 

 

41,437

 

 

 

38,984

 

 

Acquisition and integration related costs

 

7,887

 

 

 

2,287

 

 

 

26,631

 

 

 

3,028

 

 

Restructuring and related costs

 

413

 

 

 

806

 

 

 

413

 

 

 

3,054

 

 

Adjusted EBITDA

 

$

133,515

 

 

 

$

129,323

 

 

 

$

386,384

 

 

 

$

364,862

 

 

CoStar Group, Inc.

Condensed Consolidated Balance Sheets - Unaudited

(in thousands)

 

 

 

 

 

 

 

September 30,

2020

 

December 31,

2019

ASSETS

 

 

 

 

Current assets:

 

 

 

 

Cash, cash equivalents and restricted cash

 

$

3,867,805

 

 

$

1,070,731

 

Accounts receivable

 

119,219

 

 

96,788

 

Less: Allowance for credit losses

 

(14,205

)

 

(4,548

)

Accounts receivable, net

 

105,014

 

 

92,240

 

Prepaid expenses and other current assets

 

34,414

 

 

36,194

 

Total current assets

 

4,007,233

 

 

1,199,165

 

 

 

 

 

 

Long-term investments

 

 

 

10,070

 

Deferred income taxes, net

 

3,891

 

 

5,408

 

Property and equipment, net

 

127,280

 

 

107,529

 

Lease right-of-use assets

 

106,320

 

 

115,084

 

Goodwill

 

2,015,079

 

 

1,882,020

 

Intangible assets, net

 

414,608

 

 

421,196

 

Deferred commission costs, net

 

93,006

 

 

89,374

 

Deposits and other assets

 

15,102

 

 

9,232

 

Income tax receivable

 

14,806

 

 

14,908

 

Total assets

 

$

6,797,325

 

 

$

3,853,986

 

LIABILITIES AND STOCKHOLDERS' EQUITY

 

 

 

 

Current liabilities:

 

 

 

 

Accounts payable

 

$

20,266

 

 

$

7,640

 

Accrued wages and commissions

 

63,341

 

 

53,087

 

Accrued expenses

 

54,753

 

 

38,680

 

Income taxes payable

 

256

 

 

10,705

 

Lease liabilities

 

31,494

 

 

29,670

 

Deferred revenue

 

75,001

 

 

67,274

 

Total current liabilities

 

245,111

 

 

207,056

 

 

 

 

 

 

Long-term debt, net

 

986,413

 

 

 

Deferred income taxes, net

 

97,022

 

 

87,096

 

Income taxes payable

 

21,114

 

 

20,521

 

Lease and other long-term liabilities

 

129,607

 

 

133,720

 

Total liabilities

 

$

1,479,267

 

 

$

448,393

 

 

 

 

 

 

Total CoStar, Inc. stockholders' equity

 

5,318,058

 

 

3,405,593

 

Total liabilities and stockholders' equity

 

$

6,797,325

 

 

$

3,853,986

 

CoStar Group, Inc.

Condensed Consolidated Statements of Cash Flows - Unaudited

(in thousands)

 

 

 

Nine Months Ended

September 30,

 

2020

 

2019

Operating activities:

 

 

 

Net income

$

191,339

 

 

$

227,036

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

 

Depreciation and amortization

83,911

 

 

57,235

 

Amortization of deferred commissions costs

45,017

 

 

39,189

 

Amortization of senior notes discount and issuance costs

1,082

 

 

657

 

Non-cash lease expense

18,801

 

 

16,369

 

Stock-based compensation expense

40,783

 

 

38,984

 

Deferred income taxes, net

6,812

 

 

13,288

 

Credit loss expense

21,395

 

 

7,458

 

Other operating activities, net

(12

)

 

 

 

 

 

 

Changes in operating assets and liabilities, net of acquisitions:

 

 

 

Accounts receivable

(34,131

)

 

(8,797

)

Income taxes payable

(9,838

)

 

7,784

 

Prepaid expenses and other current assets

4,145

 

 

(754

)

Deferred commissions

(48,704

)

 

(48,791

)

Other assets

1,521

 

 

(43

)

Accounts payable and other liabilities

47,341

 

 

7,664

 

Lease liabilities

(21,247

)

 

(19,787

)

Deferred revenue

7,123

 

 

12,525

 

Net cash provided by operating activities

355,338

 

 

350,017

 

 

 

 

 

Investing activities:

 

 

 

Proceeds from sale and settlement of investments

10,259

 

 

 

Purchases of property and equipment and other assets

(42,137

)

 

(44,162

)

Cash paid for acquisitions, net of cash acquired

(192,002

)

 

(13,721

)

Net cash used in investing activities

(223,880

)

 

(57,883

)

 

 

 

 

Financing activities:

 

 

 

Proceeds from long-term debt

1,744,210

 

 

 

Payments of debt issuance costs

(15,747

)

 

 

Payments of long-term debt

(745,000

)

 

 

Repurchase of restricted stock to satisfy tax withholding obligations

(34,051

)

 

(25,040

)

Proceeds from equity offering, net of transaction costs

1,689,971

 

 

 

Proceeds from exercise of stock options and employee stock purchase plan

28,169

 

 

22,970

 

Other financing activities

(1,650

)

 

(123

)

Net cash provided by (used in) financing activities

2,665,902

 

 

(2,193

)

 

 

 

 

Effect of foreign currency exchange rates on cash and cash equivalents

(286

)

 

(738

)

Net increase in cash, cash equivalents and restricted cash

2,797,074

 

 

289,203

 

Cash, cash equivalents and restricted cash at the beginning of period

1,070,731

 

 

1,100,416

 

Cash, cash equivalents and restricted cash at the end of period

$

3,867,805

 

 

$

1,389,619

 

CoStar Group, Inc.

Disaggregated Revenues - Unaudited

(in thousands)

 

 

 

Three Months Ended September 30,

 

2020

 

2019

 

North America

 

International

 

Total

 

North America

 

International

 

Total

Information and analytics

 

 

 

 

 

 

 

 

 

 

 

CoStar Suite

$

158,235

 

 

$

7,753

 

 

$

165,988

 

 

$

149,187

 

 

$

6,826

 

 

$

156,013

 

Information services

26,357

 

 

6,817

 

 

33,174

 

 

17,382

 

 

2,089

 

 

19,471

 

Online marketplaces

 

 

 

 

 

 

 

 

 

 

 

Multifamily

155,184

 

 

 

 

155,184

 

 

125,707

 

 

 

 

125,707

 

Commercial property and land

71,128

 

 

146

 

 

71,274

 

 

51,508

 

 

109

 

 

51,617

 

Total revenues

$

410,904

 

 

$

14,716

 

 

$

425,620

 

 

$

343,784

 

 

$

9,024

 

 

$

352,808

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Nine Months Ended September 30,

 

2020

 

2019

 

North America

 

International

 

Total

 

North America

 

International

 

Total

Information and analytics

 

 

 

 

 

 

 

 

 

 

 

CoStar Suite

$

473,363

 

 

$

22,634

 

 

$

495,997

 

 

$

436,070

 

 

$

20,469

 

 

$

456,539

 

Information services

77,069

 

 

19,023

 

 

96,092

 

 

52,632

 

 

6,466

 

 

59,098

 

Online marketplaces

 

 

 

 

 

 

 

 

 

 

 

Multifamily

438,185

 

 

 

 

438,185

 

 

360,463

 

 

 

 

360,463

 

Commercial property and land

184,096

 

 

256

 

 

184,352

 

 

148,418

 

 

475

 

 

148,893

 

Total revenues

$

1,172,713

 

 

$

41,913

 

 

$

1,214,626

 

 

$

997,583

 

 

$

27,410

 

 

$

1,024,993

 

CoStar Group, Inc.

Results of Segments - Unaudited

(in thousands)

 

 

 

 

 

 

 

 

 

Three Months Ended

September 30,

 

Nine Months Ended

September 30,

 

2020

 

2019

 

2020

 

2019

EBITDA

 

 

 

 

 

 

 

North America

$

107,906

 

 

$

115,973

 

 

$

322,611

 

 

$

326,648

 

International

579

 

 

(2,882

)

 

(4,708

)

 

(6,852

)

Total EBITDA

$

108,485

 

 

$

113,091

 

 

$

317,903

 

 

$

319,796

 

 

CoStar Group, Inc.

Reconciliation of Non-GAAP Financial Measures with 2019-2020 Quarterly Results - Unaudited

(in millions, except per share data)

 

 

 

 

 

 

 

 

 

Reconciliation of Net Income to Non-GAAP Net Income

 

 

 

 

 

 

 

 

 

 

2019

 

2020

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

 

 

 

 

 

 

 

 

Net income

$85.2

 

$63.2

 

$78.6

 

$87.9

 

$72.8

 

$60.4

 

$58.2

Income tax expense

12.5

 

16.8

 

20.3

 

26.4

 

5.6

 

16.9

 

10.7

Income before income taxes

97.7

 

80.0

 

98.9

 

114.3

 

78.4

 

77.3

 

68.9

Amortization of acquired intangible assets

13.2

 

12.2

 

12.5

 

17.4

 

17.5

 

21.0

 

24.9

Stock-based compensation expense

12.0

 

13.8

 

13.1

 

13.3

 

15.2

 

9.5

 

16.7

Acquisition and integration related costs

0.2

 

0.5

 

2.3

 

3.7

 

8.7

 

10.0

 

7.9

Restructuring and related costs

0.1

 

2.2

 

0.8

 

 

 

 

0.4

Other (income) expense

 

 

 

(10.8)

 

 

 

0.1

Non-GAAP income before income taxes

123.2

 

108.7

 

127.6

 

137.9

 

119.8

 

117.8

 

118.9

Assumed rate for income tax expense *

25%

 

25%

 

25%

 

25%

 

25%

 

25%

 

25%

Assumed provision for income tax expense

(30.8)

 

(27.2)

 

(31.9)

 

(34.5)

 

(30.0)

 

(29.5)

 

(29.7)

Non-GAAP net income

$92.4

 

$81.5

 

$95.7

 

$103.4

 

$89.8

 

$88.3

 

$89.2

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Non-GAAP net income per share - diluted

$2.53

 

$2.23

 

$2.61

 

$2.82

 

$2.44

 

$2.34

 

$2.26

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted average outstanding shares - basic

36.2

 

36.3

 

36.3

 

36.4

 

36.5

 

37.5

 

39.2

Weighted average outstanding shares - diluted

36.6

 

36.6

 

36.7

 

36.7

 

36.8

 

37.7

 

39.4

 

 

 

 

 

 

 

 

 

* A 25% tax rate is assumed for 2020 and 2019, which approximates our statutory corporate tax rate.

 

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

 

 

 

 

 

 

 

 

 

 

2019

 

2020

 

Q1

 

Q2

 

Q3

 

Q4

 

Q1

 

Q2

 

Q3

 

 

 

 

 

 

 

 

 

Net income

$85.2

 

$63.2

 

$78.6

 

$87.9

 

$72.8

 

$60.4

 

$58.2

Amortization of acquired intangible assets

13.2

 

12.2

 

12.5

 

17.4

 

17.5

 

21.0

 

24.9

Depreciation and other amortization

6.5

 

6.5

 

6.3

 

6.5

 

6.8

 

7.0

 

6.8

Interest (income) expense

(4.2)

 

(4.7)

 

(4.4)

 

(3.4)

 

(1.7)

 

3.6

 

7.5

Other (income) expense

 

(0.5)

 

(0.2)

 

(9.9)

 

(0.8)

 

0.4

 

0.3

Income tax expense

12.5

 

16.8

 

20.3

 

26.4

 

5.6

 

16.9

 

10.7

EBITDA

$113.2

 

$93.5

 

$113.0

 

$124.9

 

$100.2

 

$109.3

 

$108.4

Stock-based compensation expense

12.0

 

13.8

 

13.1

 

13.3

 

15.1

 

9.5

 

16.7

Acquisition and integration related costs

0.2

 

0.5

 

2.3

 

3.7

 

8.7

 

10.0

 

7.9

Restructuring and related costs

0.1

 

2.2

 

0.8

 

 

 

 

0.4

Adjusted EBITDA

$125.5

 

$110.0

 

$129.2

 

$141.9

 

$124.0

 

$128.8

 

$133.4

CoStar Group, Inc.

Reconciliation of Forward-Looking Guidance - Unaudited

(in thousands, except per share data)

 

Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income

 

 

 

 

 

Guidance Range

 

Guidance Range

 

For the Three Months

 

For the Twelve Months

 

Ended December 31, 2020

 

Ended December 31, 2020

 

Low

 

High

 

Low

 

High

 

 

 

 

 

 

 

 

Net income

$

58,000

 

 

 

$

66,000

 

 

 

$

250,000

 

 

 

$

258,000

 

 

Income tax expense

20,000

 

 

 

21,000

 

 

 

53,000

 

 

 

54,000

 

 

Income before income taxes

78,000

 

 

 

87,000

 

 

 

303,000

 

 

 

312,000

 

 

Amortization of acquired intangible assets

25,000

 

 

 

25,000

 

 

 

88,000

 

 

 

88,000

 

 

Stock-based compensation expense

15,000

 

 

 

13,000

 

 

 

56,000

 

 

 

54,000

 

 

Acquisition and integration related costs

5,000

 

 

 

3,000

 

 

 

32,000

 

 

 

30,000

 

 

Restructuring and related costs

 

 

 

 

 

 

400

 

 

 

400

 

 

Non-GAAP income before income taxes

123,000

 

 

 

128,000

 

 

 

479,400

 

 

 

484,400

 

 

Assumed rate for income tax expense *

25

 

%

 

25

 

%

 

25

 

%

 

25

 

%

Assumed provision for income tax expense

(30,600

)

 

 

(31,700

)

 

 

(119,900

)

 

 

(121,100

)

 

Non-GAAP net income

$

92,400

 

 

 

$

96,300

 

 

 

$

359,500

 

 

 

$

363,300

 

 

 

 

 

 

 

 

 

 

Net income per share - diluted

$

1.47

 

 

 

$

1.67

 

 

 

$

6.53

 

 

 

$

6.74

 

 

Non-GAAP net income per share - diluted

$

2.34

 

 

 

$

2.44

 

 

 

$

9.39

 

 

 

$

9.49

 

 

 

 

 

 

 

 

 

 

Weighted average outstanding shares - diluted

39,500

 

 

 

39,500

 

 

 

38,300

 

 

 

38,300

 

 

 

 

 

 

 

 

 

 

* A 25% tax rate is assumed, which approximates our statutory corporate tax rate.

 

 

 

 

 

 

 

 

Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA

 

 

 

 

 

Guidance Range

 

Guidance Range

 

For the Three Months

 

For the Twelve Months

 

Ended December 31, 2020

 

Ended December 31, 2020

 

Low

 

High

 

Low

 

High

Net income

$

58,000

 

 

 

$

66,000

 

 

 

$

250,000

 

 

 

$

258,000

 

 

Amortization of acquired intangible assets

25,000

 

 

 

25,000

 

 

 

88,000

 

 

 

88,000

 

 

Depreciation and other amortization

8,000

 

 

 

8,000

 

 

 

29,000

 

 

 

29,000

 

 

Interest and other expense, net

8,000

 

 

 

8,000

 

 

 

17,000

 

 

 

17,000

 

 

Income tax expense

20,000

 

 

 

21,000

 

 

 

53,000

 

 

 

54,000

 

 

Stock-based compensation expense

15,000

 

 

 

13,000

 

 

 

56,000

 

 

 

54,000

 

 

Acquisition and integration related costs

5,000

 

 

 

3,000

 

 

 

32,000

 

 

 

30,000

 

 

Restructuring and related costs

 

 

 

 

 

 

400

 

 

 

400

 

 

Adjusted EBITDA

$

139,000

 

 

 

$

144,000

 

 

 

$

525,400

 

 

 

$

530,400

 

 

About CoStar Group, Inc.

CoStar Group, Inc. (NASDAQ:CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality sector. Ten-X provides a leading platform for conducting commercial real estate online auctions and negotiated bids. LoopNet is the most heavily trafficked commercial real estate marketplace online with over 7 million monthly unique visitors. Realla is the UK's most comprehensive commercial property digital marketplace. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. CoStar Group's websites attracted an average of approximately 69 million unique monthly visitors in aggregate in the third quarter of 2020. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe, Canada and Asia with a staff of over 4,300 worldwide, including the industry's largest professional research organization. For more information, visit www.costargroup.com.

This news release and the Company's earnings conference call contain "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar's plans, objectives, expectations, beliefs and intentions and other statements including words such as "hope," "anticipate," "may," "believe," "expect," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar and are subject to many risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements and the assumptions and estimates used as a basis for the forward-looking statements. The following factors, among others, could cause or contribute to such differences: uncertainty surrounding the impact of the COVID-19 pandemic, including volatility in the international and U.S. economy, worker absenteeism or decreased productivity, quarantines or other travel or health-related restrictions; the length and severity of the COVID-19 pandemic; the pace of recovery following the COVID-19 pandemic; government and private actions taken to control the spread of COVID-19; the risk that the trends stated or implied by this release or in the earnings conference call cannot or will not be sustained at the current pace or may increase or decrease, including trends related to revenue, net income, non-GAAP net income, EBITDA, adjusted EBITDA, site traffic and visitors, leads generated, sales, renewal rates, and brand awareness; the risk that the Company is unable to sustain current revenue, earnings and net new sales bookings growth rates or increase them; the risk that CoStar and Emporis cannot be combined successfully or that the acquisition does not produce the expected results; the risk that revenues for the fourth quarter and full year 2020 will not be as stated in this press release; the risk that net income for the fourth quarter and full year 2020 will not be as stated in this press release; the risk that adjusted EBITDA for the fourth quarter and full year 2020 will not be as stated in this press release; the risk that non-GAAP net income and non-GAAP net income per diluted share for the fourth quarter and full year 2020 will not be as stated in this press release; the risk that the tax rate estimates stated in this press release may change; and the possibility that the acquisition of RentPath does not close when expected or at all. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar's filings from time to time with the Securities and Exchange Commission, including in CoStar's Annual Report on Form 10-K for the year ended December 31, 2019, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2020, each of which is filed with the SEC, including in the "Risk Factors" section of those filings, as well as CoStar's other filings with the SEC available at the SEC's website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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