The company, which in recent years has been making inroads into the residential space, reported that both and saw significant growth in the first quarter of 2023.

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Despite a slower real estate market at the outset of 2023, commercial giant and would-be residential disrupter CoStar Group tallied an increase in revenue in the first quarter of the year, according to an earnings call Tuesday.

In total, CoStar brought in $584 million between January and March of 2023, the report revealed. That’s an increase of 13 percent compared to the first quarter of 2022 — notably a time when lower interest rates had created a much hotter real estate landscape.

CoStar also earned $87 million in profit during the first quarter of 2023. That’s down very slightly from the $89 million in profit the company made one year earlier.

Andy Florance

In the report, CoStar CEO Andy Florance repeatedly expressed satisfaction with the company’s first quarter results.

“CoStar Group delivered exceptional revenue, sales and marketplace traffic results in the first quarter against a backdrop of rising interest rates and continued disruption in the commercial and residential property markets,” he said.

Florance specifically highlighted, the company’s rental portal, which in the report he said saw 20 percent revenue growth and “reached its highest sales quarter ever with a 110% increase in net new bookings over the prior year.”

He also said that had 27 million unique monthly visitors in March, up from just 6 million when CoStar bought the property in 2021.

“Sequentially,’s unique visitors grew 41 percent in March over February of this year, and month to date in April’s traffic has grown 53 percent sequentially over the same period in March,” Florance continued.

During a call with investors Tuesday afternoon, Florance said he believes will “become the best online residential marketplace bar none.”

Shares in CoStar fell about 2.5 percent Tuesday during regular trading before the company posted its earnings. By the time the markets closed, shares were fetching $68.50. That was down compared to both the last week and the last six months. CoStar shares hit an all-time high price in October 2021, when they were hovering at nearly $100.

Shares fluctuated in after hours trading Tuesday following the publication of CoStar’s earnings report, but they ultimately recovered and ended up about where they were when regular trading ended.

Credit: Google

As of Tuesday afternoon, CoStar had a market cap of about $27.86 billion.

CoStar last reported earnings in February. At the time, the company revealed it raked in $573 million in revenue during the final quarter of 2022. The figure represented a 13 percent increase compared to the same period in 2021. Profit also jumped in the fourth quarter of last year, rising 34 percent year over year to $124 million.

The company’s last earnings report was also when it revealed that it had opted against trying to acquire from News Corp. Word of the potential deal first surfaced in January. It sent shockwaves through the real estate industry because it would have put CoStar more directly in competition with Zillow — a company Florance has repeatedly criticized, and with which CoStar currently competes via its New York City-based Citysnap portal. With in its suite of companies, CoStar would have had a national portal.

Florance nixed the deal in February, but indicated CoStar still plans to compete in the residential portal space by further building up

In Tuesday’s report, Florance further indicated is now reaching the goals the company set for the site. And during the call with investors, Florance added that traffic to the site “grew dramatically” during the first quarter of the year.

“We believe that by focusing on building a great user experience, combined with the lower friction of our ‘your listing, your lead’ business model, many home buyers are coming to prefer,” Florance said in the report.

Florance added during the investor call that CoStar plans to monetize the platform at the end of 2023.

Though CoStar has leaned sharply into residential real estate ventures, Tuesday’s report shows that revenue from the vertical actually dipped in the first quarter of the year, falling to $13.2 million from $18 million one year prior.

CoStar’s efforts to challenge Zillow — which Florance has suggested “blackmails” agents — have met a mixed reaction within the real estate industry. On the one hand, many agents who have grown discontent with Zillow have welcomed the emergence of a large and well-funded rival that could theoretically take on the largest portal incumbent.

On the other hand, some industry observers have argued that building a successful portal is incredibly difficult and that CoStar faces a steep uphill battle in trying to catch up with Zillow.

Beyond CoStar’s efforts in the residential portal wars, Florance also struck an optimistic tone Tuesday regarding rentals. In the investor call, he said that there are currently 1 million rental units under construction, the majority of which will enter the higher end of the market. This should create pressure on rents and keep vacancy rates elevated for the remainder of 2023.

Florance believes that situation should create a “jet stream-like tailwind for advertising demand,” which in turn should benefit And, he added, he expects to “deliver 22 to 23 percent revenue growth in 2023.”

In commercial real estate — traditionally CoStar’s bread and butter — Florance said vacancy rates are matching the all-time highs they reached following the Great Recession, and that CoStar expects those rates to “push higher for the foreseeable future.”

However, he also said that the residential market remains constrained, and that the sector is still strong. And overall he concluded that he remains “confident” in the company’s ability to grow revenue going forward.

Update: This post was updated after publication with information from CoStar’s earnings report, and with commentary from the company’s call with investors.

Email Jim Dalrymple II

websites | Zillow
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