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Virginia-based CoStar Group lifted revenue by 12 percent, to $732 million, despite falling profits amid first-quarter uncertainty, earnings data released Tuesday shows.
The revenue uptick represented the company’s 56th consecutive quarter of growth, but profitability slipped between January and March, with net income falling from $7 million in Q1 2024 to a net loss of $15 million in the first quarter of 2025. Executives attributed the loss to a $31 million “negative impact” associated with the acquisition of digital twin pioneer Matterport.
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Andy Florance | Credit: CoStar Group
“Once again, CoStar Group’s commercial information and marketplace brands delivered exceptional results with a 43 percent profit margin for Q1 2025,” CoStar CEO Andy Florance said in a statement on Tuesday. “We are gaining sales momentum across the board.”
Traffic to the Homes.com Network — which includes Homes.com, Land.com and Apartments.com — reached 104 million average monthly unique visitors, according to the earnings data, with Apartments.com adding 4,300 properties to its database, the biggest increase in listings in a single quarter since 2016, Florance said.
Revenue from CoStar’s North American residential segment — which includes Homes.com — ended up at $16.5 million in first quarter of 2025. That was up from $8.4 million a year earlier.
Florance added that the company is also adding strength to Homes.com with additional sales representatives later this year.
Florance also highlighted Homes.com’s progress in building a dedicated sales team, which led to a 50 percent increase in the demo-to-close rate.
“Today, our dedicated Homes.com salesforce has grown to 370 representatives, and we believe we will be at 500 sales reps by the end of June, as we continue to gain sales momentum,” Florance said. “In April, Homes.com’s demo-to-close rate increased to over 50 percent, the highest ever by any CoStar Group sales team. This demonstrates the strong demand for Homes.com.”
CoStar’s adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) increased 429 percent year over year from $12 million in the first quarter of 2024 to $60 million in this latest quarter, the data shows.
CoStar’s commercial real estate businesses also saw their fortunes rise, with net new bookings with CoStar up 68 percent year over year, the highest since late 2023, and LoopNet, its online marketplace for commercial property listings, generating a 200 percent increase year-over-year, its highest level since late 2022.
Despite the dip in profits, Florance said the period represented “another strong quarter of results” buoyed by strong net new bookings for CoStar and LoopNet.
In the company’s earnings call, Florance and CoStar Chief Financial Officer Chris Lown provided additional insight into CoStar’s Q1 performance.
The company’s net new bookings — which are based on the annualized change in sales bookings from new subscription contracts, changes to existing contracts, and contract cancellations — reached $56 million during the quarter. Lown said that represents a 6 percent sequential increase from the fourth quarter of 2024.
Homes.com’s monthly net new revenue is on the rise, with the portal’s still-growing dedicated sales team on track to close $240,000 by the end of April. If the sales team can maintain its pace, it will be on track to close $800,000 in monthly net new revenue by Q4.
Florance credited the boost in net new bookings and net new revenue to a more dynamic pricing structure, which now includes Boost, a new option that enables listing agents to increase marketing visibility for a single listing for a one-time fee paid at closing. The CEO said Boost is a “low-risk” way for listing agents to test Homes.com’s “Your Listing, Your Lead” promise without committing to an annual membership.
Homes.com is also expanding into the new-home market, with Florance teasing the July rollout of a site solely dedicated to listings in new developments.
“New construction represents approximately 20 percent of all homes sold in any given year,” he said. “Yet there’s no great single place for consumers to go and find all the available new communities. Building a site with a full inventory of available new homes would be a very valuable option for both consumers and the industry, and it would allow Homes.com to capture a piece of the estimated $3 billion annual marketing spend by America’s home builders.”
“We’ve already secured listing feeds representing 60 percent of the total available inventory, and I expect this number will grow as we approach July,” he added. “Initial feedback from builders has been overwhelmingly positive.”
Florance said improvements in net new bookings, net new revenue, and promising traffic and unaided awareness statistics allow CoStar to tighten the reins on Homes.com’s marketing spend, which reached $1 billion in 2024. CoStar achieved $50 million in annualized savings for Homes.com during the first quarter, primarily through a layoff of 423 staffers. A newly formed Capital Allocation Committee will help the company identify future savings.
“I have consistently set the expectation that building a B2C brand takes three to five years,” he said. “I feel that over the next two to four years, we can take a solid and very valuable leadership position in the industry with a superior product and an aggressive marketing campaign.”
The CEO took a few shots at Zillow, further lambasting the Seattle-based portal’s ban on privately marketed listings. Florance said agents have always leveraged private marketing and have the right to continue doing so. He said privately marketed listings will always be welcomed on Homes.com; however, Florance declined to answer questions on whether Homes.com will go as far as launching a marketing platform for exclusive listings.
“I believe that our lead diversion competitors are getting anxious that brokers with more choice may increasingly choose to market their properties away from those lead diversion platforms,” he said. “If the home is not listed on Zillow, they’ll lose the opportunity to use the listing to sell their buyer agency leads and take 40 percent of the buyer agents’ commission … We view this move not only as anti-competitive, but also shows a bit of desperation.”
Correction: CoStar’s North American residential segment brought in $16.5 million in revenue in Q1. Inman initially misreported this number. Inman also clarified the story to differentiated between CoStar and Homes.com figures.
