Real estate data analytics and marketplace provider CoStar revealed Tuesday that its revenue jumped 17 percent during the first three months of 2021, with CEO Andrew Florance saying the impact of the pandemic also appears to be passing.
The company’s latest earnings report, which it published Tuesday afternoon, specifically showed that CoStar raked in $458 million during the first quarter of the year. That’s up from $392 million during the same period in 2020, and it beat analysts’ expectations that revenue would end up being $453.93 million between January and March.
Net profit for the quarter hit $74 million, an increase of just under 2 percent compared to about $72.8 million one year ago. And EBITDA rose to $136 million, up 35 percent compared to one year ago. (EBITDA stands for earnings before interest, taxes, depreciation and amortization. It’s a useful shorthand for gauging a company’s profitability.)
In the report, Florance — who is also the company’s founder — said that “our business delivered a strong start to 2021, with revenue and profit ahead of forecast and record numbers of visitors to our platforms in the first quarter of the year.” He also singled out Homesnap, which CoStar bought late in 2020.
“The business performed well in the first quarter of 2021,” Florence said of Homesnap, “growing pro forma revenue by over 40 percent year over year as paid subscribers more than doubled and subscription revenue grew by 68 percent.”
CoStar also revealed in Tuesday’s earning report that traffic to its various websites was up 47 percent year-over-year during the first three months of 2021.
During a call with investors to discuss the earnings, Florance said the beginning of this year was the company’s best sales quarter since 2019, and that the earnings were “ahead of forecasts.” He was also bullish regarding the impact of the coronavirus.
“We appear to be moving past the pandemic disruption,” Florance said during the call.
CoStar’s stock dipped very slightly in after hours trading immediately following the report’s release.
However, in general the stock has been on a roll in recent days. For most of the day leading into the earnings report, shares were trading for around $937, up several dollars compared to Thursday’s closing price and more than $20 compared to a week ago. In fact, CoStar stock has seen a strong upward trend since early March, when shares bottomed out at just under $760.
Tuesday’s earnings report comes two months after the company revealed it saw profits soar in 2020. CoStar specifically pulled in $1.66 billion in revenue last year, for a jump of 18.5 percent compared to 2019, as interest in real estate skyrocketed during the latter months of the coronavirus pandemic.
Despite the positive revenue growth, however, CoStar’s profits actually fell 27.9 percent in 2020 thanks to a one-time payment related to the firm’s failed attempt to buy rival RentPath.
The latest earnings also come during a particularly active period for CoStar, during which the company has worked to aggressively expand its reach. In 2020, for example, it acquired Ten-X, Emporis, and Homesnap, while also raising $2.7 billion in debt and equity.
CoStar additionally beefed up its consumer-facing business in December when it bought the houses.com URL in December. Houses.com joins commercial sites Loopnet.com, Cityfeet.com and Showcase.com; rental-oriented sites Apartments.com, ForRent.com, ApartmentFinder.com, ApartmentHomeLiving.com and Apartamentos.com; and land sale sites Land.com, LandsofAmerica.com, LandWatch.com and LandandFarm.com.
Florance singled out several of those properties in Tuesday’s report, saying that Apartments.com saw revenue increase by 21 percent during the first quarter of the year while visitors were up 35 percent.
Unique visitors to LoopNet rose 34 percent, while visitors to Ten-X rose 45 percent.
This year, CoStar has also made news for its efforts to buy data and analytics firm CoreLogic. However, that deal ultimately fizzled in early March amid pushback from CoreLogic’s board of directors.
During the call with investors, Florance also discussed CoStar’s expansion plans. Though he didn’t identify specific acquisition targets, he did say that expansion opportunities will likely be “additive to some broader theme we’re trying to pursue.” He added that he gets multiple messages a day about potential expansion opportunities in the residential real estate sector, and that the company is looking to “build out a fairly robust pan-European product” in the future.
Florance also said the pandemic has been a challenge for the company, particularly with regard to hiring and training sales teams. The pandemic is also impacting interest in office space.
However, Florance praised the COVID-19 vaccines that are now rolling out across the world and said he believes in-person work will ultimately win out.
“Face to face,” he said, “will always outcompete remote, dispersed teams.”
Update: This post was updated after publication with additional information from CoStar’s earnings report and call with investors.