At a time when the housing market—and the national economy—is going through changes, commercial real estate and data giant CoStar was tallying “exceptional results” in the third quarter, according to company executives.
In its latest earnings report, CoStar earned $557 million, marking 12% year-over-year growth from the same period last year—up from $499 million. The company also tallied $72 million in net income—up from $62 million in Q3 last year.
“Net new bookings totaled $76 million in the third quarter of 2022, up 62% over the third quarter of 2021,” said CoStar Group Founder and CEO Andrew C. Florance in a statement.
With three months left in 2022, Florence emphasized that company sales results have already exceeded the net new bookings for all of 2021.
CoStar’s Q3 performance comes at a time when many real estate companies are weathering a problematic shift in the once-hot housing market of the past couple of years. Despite a late surge in August, single-family home sales have taken a hit as mortgage rates have surged and prices continue to climb—albeit at slower stages.
During a Tuesday call with investors, Florence emphasized the impact that Apartments.com contributed to CoStar’s Q3 showing, stating that the segment delivered “record sales in September.”
“Year-to-date, net new sales for Apartments.com are up 192% over the prior year,” he said, adding that the portals revenue hit $190 million in the third quarter—up 11% YoY.
“We are now back to double-digit revenue growth and expect the growth rate to improve in the fourth quarter,” Florence told investors.
The CoStar CEO acknowledged that Apartments.com faced headwinds during tightening rental market conditions but told investors that recent shifts could provide “a strong tailwind” for the segment.
“Apartments.com continues to provide the highest quality consumer traffic to our customers,” Florence said. “Overall, I’m extremely pleased with the strong performance of Apartments.com marketplace and sales team and have confidence in our ability to return to 20% revenue growth.”
On the ownership side of CoStar’s portfolio, Florence told attendees that he was “encouraged by the rapid improvement in consumer traffic” of Homes.com. The consumer-facing portal saw its average monthly unique visitors jump 52% in the third quarter compared to the same period last year.
However, residential revenue decreased 22% overall for the third quarter of last year, which Florance attributed to the “runoff of the acquired nonstrategic revenue from Homes.com.”
“We do have a long way to go, but we’re tracking just where we were with traffic growth on Apartments.com at the same time,” he said. “Our objective is to partner with the 1.5 million agents in the United States in support of ‘your listing, your lead’ approach and enable consumers at any agent to collaborate digitally throughout the home buying or selling process.”
He also stated, “With rising interest rates and a rapidly cooling residential property market, I believe now is the perfect time to invest in a marketplace designed to help consumers and their agents advertise and sell properties faster and at a higher price. Deteriorating market conditions may well create a tailwind for our business model.”
Riding high on its Q3 momentum, CoStar tweaked its revenue guidance upwards for the remainder of the year. The company boosted its earnings forecast to a range of $2.175 billion to $2.180 billion—up $5 million from its prior outlook.
The company expects to rake in $570 million in revenue for the fourth quarter of 2022, marking a $5 million increase from previous forecasts, which would also represent a 12% growth in revenue growth in Q4.
