COSTAR GROUP INC
For the period ended Jun 30, 2024. Filed Jul 25, 2024.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Jun 30, 2024 · Filed Jul 25, 2024
CSGP$30.55-4.7%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-03-31; filed 2024-04-24.
0001057352-24-000059
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2024-06-30; filed 2024-07-25.
0001057352-24-000091
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 161 previous paragraphs and 195 current paragraphs.
104 unchanged; 48 reworded; 33 added; 8 removed; 1 previous and 10 current paragraphs rearranged.
Tables are not compared: 1 previous and 2 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (33)
Current report
•an increase in Multifamily revenues of $40 million, or 18%, due to higher sales volume driven by an increase in the number of properties listed on our network and increases in pricing on renewals,
Current report
•an increase in CoStar revenues of $24 million, or 10%, due to converting legacy STR customers to our new CoStar-based benchmarking product, as well as, higher sales volume driven by an increase in subscribers,
Current report
•an increase in Residential revenues of $14 million, or 106%, due to the OnTheMarket Acquisition and the launch of the new Homes.com membership subscriptions, partially offset by the discontinuation of certain products and services that were inconsistent with our long-term business strategy,
Current report
•an increase in LoopNet revenues of $4 million, or 7%, due to an increase in the average price per listing, and
Current report
•a decrease in Information Services revenues of $9 million, or 20%, attributable to converting legacy STR customers to our new CoStar-based benchmarking product, partially offset by an increase in revenue from CoStar Real Estate Manager.
Current report
•an increase of $8 million in support costs for our researchers.
Current report
•an increase in personnel costs of $6 million related to existing employees.
Current report
•an increase in Multifamily revenues of $40 million due to higher sales volume driven by an increase in the number of properties listed on our network and increases in pricing on renewals,
Current report
•an increase in LoopNet revenues of $4 million due to an increase in the average price per listing,
Current report
•a decrease in Information Services revenues of $4 million attributable to converting legacy STR customers to our new CoStar-based benchmarking product, partially offset by an increase in revenue from CoStar Real Estate Manager.
Current report
Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Revenues. Revenues increased $144 million, or 12%, to $1.3 billion. The increase in our revenues primarily included:
Current report
•an increase in Multifamily revenues of $84 million, or 19%, due to higher sales volume driven by an increase in the number of properties listed on our network and increases in pricing on renewals,
Current report
•an increase in Residential revenues of $19 million, or 73%, due to the OnTheMarket Acquisition and the launch of the new Homes.com membership subscriptions, partially offset by the discontinuation of certain products and services that were inconsistent with our long-term business strategy,
Current report
•an increase in LoopNet revenues of $10 million, or 8%, due to an increase in the average price per listing, and
Current report
•a decrease in Information Services revenues of $17 million, or 20%, attributable to converting legacy STR customers to our new CoStar-based benchmarking product, partially offset by an increase in revenue from CoStar Real Estate Manager.
Current report
Gross Profit. Gross profit increased $99 million, or 10%, to $1.1 billion, and the gross profit percentage decreased from 81% to 79%. The increase in gross profit was due to higher revenues partially offset by an increase in cost of revenues. Cost of revenues increased $45 million, or 20%, to $277 million and, as a percentage of revenues, increased from 19% to 21%. The increase in cost of revenues primarily included:
Current report
•an increase of $14 million in support costs for researchers, and
Current report
•an increase of $3 million of payment processing fees.
Current report
Selling and Marketing Expenses (excluding customer base amortization). Selling and marketing expenses increased $248 million, or 52%, to $725 million and, as a percentage of revenues, increased from 40% to 54%. The increase primarily included:
Current report
•an increase in personnel and events costs of $27 million related to rising headcount in our sales force and increases in salaries, bonus, stock-based compensation and benefits costs for our existing employees.
Current report
Software Development Expenses. Software development expenses increased $32 million, or 25%, to $162 million and, as a percentage of revenues, increased from 11% to 12%. The increase primarily included:
Current report
•an increase in personnel costs of $23 million related to rising headcount and increases in salaries, stock-based compensation and benefits costs for our existing employees and
Current report
General and Administrative Expenses. General and administrative expenses increased $28 million, or 16%, to $208 million and, as a percentage of revenues, increased from 15% to 16%. The increase primarily included:
Current report
•an increase in professional services of $14 million, primarily related to acquisition activities and costs to defend our intellectual property,
Current report
•an increase in personnel costs of $9 million related to existing employees, and
Current report
Business Segment Results for Six Months Ended June 30, 2024 Compared to Six Months Ended June 30, 2023
Current report
Segment Revenues. North America revenues increased $119 million, or 10%, to $1.3 billion and included:
Current report
•an increase in Multifamily revenues of $84 million due to higher sales volume driven by an increase in the number of properties listed on our network and increases in pricing on renewals,
Current report
•an increase in CoStar revenues of $37 million due to higher sales volume driven by the impact of annual price increases and customer upgrades on contract renewals, as well as an increase in subscribers,
Current report
•an increase in LoopNet revenues of $9 million due to an increase in the average price per listing, and
Current report
•a decrease in Information Services revenues of $9 million attributable to converting legacy STR customers to our new CoStar-based benchmarking product, partially offset by an increase in revenue from CoStar Real Estate Manager.
Current report
On July 3, 2024, Matterport and CoStar Group each received a request for additional information and documentary materials (the “Second Request”) from the FTC in connection with the FTC’s review of the Transaction. The effect of the Second Request is to extend the waiting period imposed by the HSR Act until 30 days after Matterport and CoStar Group have each substantially complied with their respective Second Requests, unless that period is extended or terminated sooner by the FTC. Each of Matterport and CoStar Group expect to respond promptly to the Second Request and to continue to work cooperatively with the FTC in its review of the Transaction. Matterport and CoStar Group continue to expect that the Transaction will be completed in the fourth quarter of 2024, subject to approval by Matterport stockholders at a special meeting held for this purpose, the expiration or termination of the waiting period under the HSR Act and the satisfaction or waiver of the other closing conditions specified in the Merger Agreement.
Removed paragraphs (8)
Previous report
•an increase in Multifamily revenues of $44 million, or 21%, due to higher sales volume driven by an increase in the number of properties listed on our network and increases in pricing on renewals,
Previous report
•an increase in LoopNet revenues of $6 million, or 9%, due to an increase in the average price per listing,
Previous report
•an increase in Residential revenues of $5 million, or 41%, due to the OnTheMarket Acquisition and the launch of the new Homes.com membership subscriptions, partially offset by the discontinuation of certain products and services that were inconsistent with our long-term business strategy, and
Previous report
•a decrease in Information Services revenues of $9 million, or 21%, primarily attributable to converting legacy STR customers to our new CoStar-based benchmarking product,
Previous report
•an increase in personnel costs of $2 million related to increases in salaries and stock-based compensation for our existing employees and rising headcount.
Previous report
•an increase in Multifamily revenues of $44 million due to higher sales volume driven by an increase in the number of properties listed on our network and increases in pricing on renewals,
Previous report
•an increase in LoopNet revenues of $5 million due to an increase in the average price for listings,
Previous report
•a decrease in Information Services revenues of $5 million primarily attributable to converting legacy STR customers to our new CoStar based benchmarking product and
Reworded paragraphs (48)
Previous wording
Our services are typically distributed to our clients under subscription-based license agreements that typically renew automatically, a majority of which have a term of at least one year. Upon renewal, many of the subscription contract rates may change in accordance with contract provisions or as a result of contract renegotiations. To encourage clients to use our services regularly, we generally charge a fixed monthly amount for our subscription-based services rather than charging fees based on actual platform usage or number of paid clicks. Depending on the type of service, contract rates are generally based on the number of sites, number of users, organization size, the client’s business focus, the client's geographic location, the number of properties reported on or analyzed, the number and types of services to which a client subscribes, the number of properties a client advertises and the prominence and placement of a client's advertised properties in the search results. Our subscription clients generally pay contract fees on a monthly basis, but in some cases may pay us on a quarterly or annual basis. Our transaction-based services primarily consist of auction fees from our Ten-X online auction platform for commercial real estate, which are generally calculated as a percentage of the final sales price for the commercial real estate property sold and recognized as revenue upon the successful closure of an auction. Other transaction-based services are described by service offering below.
Current wording
Our services are typically distributed to our customers under subscription-based license agreements that typically renew automatically, a majority of which have a term of at least one year. Upon renewal, many of the subscription contract rates may change in accordance with contract provisions or as a result of contract renegotiations. To encourage customers to use our services regularly, we generally charge a fixed monthly amount for our subscription-based services rather than charging fees based on actual platform usage or number of paid clicks. Depending on the type of service, contract rates are generally based on the number of sites, number of users, organization size, the customer’s business focus, the customer's geographic location, the number of properties reported on or analyzed, the number and types of services to which a client subscribes, the number of properties a customer advertises and the prominence and placement of a customer's advertised properties in the search results. Our subscription customers generally pay contract fees on a monthly basis, but in some cases may pay us on a quarterly or annual basis. Our transaction-based services primarily consist of auction fees from our Ten-X online auction platform for commercial real estate, which are generally calculated as a percentage of the final sales price for the commercial real estate property sold and recognized as revenue upon the successful closure of an auction. Other transaction-based services are described by service offering below.
Previous wording
Our portfolio of information, analytics and online marketplaces is branded and marketed to our customers and marketplace end users under the primary brands of CoStar®, LoopNet®, Apartments.com®, Homes.com®,Ten-X®, BizBuySell®, Land.com®, and OnTheMarket. Our services are accessible via the internet and through our mobile applications. Our services are primarily derived from a database of building-specific information and offer customers specialized tools for accessing, analyzing and using our information. Over time, we have enhanced and expanded, and we expect to continue to enhance and expand, our existing information, analytics and online marketplace services. We have developed and we expect to continue to develop additional services leveraging our database to meet the needs of our existing customers as well as potential new categories of customers.
Current wording
Our portfolio of information and analytics services and online marketplaces is branded and marketed to our customers and marketplace end users under the primary brands of CoStar®, LoopNet®, Apartments.com®, Homes.com®, Ten-X®, BizBuySell®, Land.com®, and OnTheMarket®. Our services are accessible via the internet and through our mobile applications. Our services are primarily derived from a database of building-specific information and offer customers specialized tools for accessing, analyzing, and using our information. Over time, we have enhanced and expanded, and we expect to continue to enhance and expand, our existing information, analytics, and online marketplace services. We have developed and we expect to continue to develop additional services leveraging our database to meet the needs of our existing customers, as well as potential new categories of customers.
Previous wording
CoStar is our subscription-based integrated platform for commercial real estate intelligence, which includes information about office, industrial, retail, multifamily, hospitality and student housing properties, properties for sale, comparable sales, tenants, space available for lease, industry professionals and their business relationships, industry news and market status and provides benchmarking for the hospitality industry, lease analytical capabilities and risk management capabilities. CoStar's revenue growth rate for the three months ended March 31, 2024 decelerated compared to the revenue growth rate for the three months ended March 31, 2023 due to lower inflation-based price increases in 2023 relative to 2022. We expect CoStar's revenue growth rate for the year ending December 31, 2024 to be consistent with the revenue growth rate for the year ended December 31, 2023, primarily due to converting legacy STR customers to our new CoStar based benchmarking product offsetting lower inflation-based price adjustments.
Current wording
CoStar is our subscription-based integrated platform for commercial real estate intelligence, which includes information about office, industrial, retail, multifamily, hospitality, and student housing properties, properties for sale, comparable sales, tenants, space available for lease, industry professionals and their business relationships, industry news and market status and provides benchmarking for the hospitality industry, lease analytical capabilities, and risk management capabilities. CoStar's revenue growth rate for the six months ended June 30, 2024 was consistent with the revenue growth rate for the six months ended June 30, 2023. We expect CoStar's revenue growth rate for the year ending December 31, 2024 to be consistent with the revenue growth rate for the year ended December 31, 2023, due to converting legacy STR customers to our new CoStar-based benchmarking product offsetting lower inflation-based price adjustments.
Previous wording
We provide real estate and lease management technology solutions, including lease administration, lease accounting and abstraction services, through our CoStar Real Estate Manager service offerings, as well as portfolio and debt analysis, management and reporting capabilities through our CoStar Risk Analytics service offerings. We also provide data and reports on an ad hoc basis to customers in the hospitality industry. We earn revenue on ad hoc transactions as reports or data are delivered to customers. We provide information services internationally, through our Business Immo, Belbex and Thomas Daily businesses in France, Spain and Germany, respectively. Information Services' revenue growth rate for the three months ended March 31, 2024 decelerated compared to the revenue growth rate for the three months ended March 31, 2023 as a result of the Business Immo Acquisition in April of 2022. We expect the Information Services revenue growth rate for the year ending December 31, 2024 to decrease compared to the revenue growth rate for the year ended December 31, 2023 as a result of converting legacy STR customers to our new CoStar-based benchmarking product.
Current wording
We provide real estate and lease management technology solutions, including lease administration, lease accounting and abstraction services, through our CoStar Real Estate Manager service offerings, as well as portfolio and debt analysis, management and reporting capabilities through our CoStar Risk Analytics service offerings. We also provide data and reports on an ad hoc basis to customers in the hospitality industry. We earn revenue on ad hoc transactions as reports or data are delivered to customers. We provide information services internationally, through our Business Immo, Belbex, and Thomas Daily businesses in France, Spain, and Germany, respectively. Information Services' revenues for the six months ended June 30, 2024 decreased compared to the revenues for the six months ended June 30, 2023 due to converting legacy STR customers to our new CoStar based benchmarking product. We expect the Information Services revenues for the year ending December 31, 2024 to decrease compared to the revenues for the year ended December 31, 2023 due to converting legacy STR customers to our new CoStar-based benchmarking product.
Previous wording
Apartments.com is the flagship brand of our apartment marketing network of subscription-based advertising services and provides property management companies and landlords with a comprehensive advertising destination for their available rental units and offers renters a platform for searching for available rentals. This network also earns transaction-based revenue primarily from providing online tenant applications, including background and credit checks and rental payment processing. Multifamily's revenue growth rate for the three months ended March 31, 2024 was consistent with the revenue growth rate for the three months ended March 31, 2023. We expect the Multifamily revenue growth rate for the year ending December 31, 2024 to moderate compared to the revenue growth rate for the year ended December 31, 2023 due to lower inflation-based price adjustments.
Current wording
Apartments.com is the flagship brand of our apartment marketing network of subscription-based advertising services and provides property management companies and landlords with a comprehensive advertising destination for their available rental units and offers renters a platform for searching for available rentals. This network also earns transaction-based revenue primarily from providing online tenant applications, including background and credit checks, and rental payment processing. Multifamily's revenue growth rate for the six months ended June 30, 2024 moderated compared to the revenue growth rate for the six months ended June 30, 2023 due to lower inflation-based price adjustments. We expect the Multifamily revenue growth rate for the year ending December 31, 2024 to moderate compared to the revenue growth rate for the year ended December 31, 2023 due to lower inflation-based price adjustments.
Previous wording
Our LoopNet network of commercial real estate websites offers subscription-based, online marketplace services that enable commercial property owners, landlords and real estate agents working on their behalf to advertise properties for sale or for lease and to submit detailed information about property listings. Commercial real estate agents, buyers and tenants use the LoopNet network of online marketplace services to search for available property listings that meet their criteria. LoopNet's revenue growth rate for the three months ended March 31, 2024 decelerated compared to the revenue growth rate for the three months ended March 31, 2023 due to lower inflation-based price increases. We expect LoopNet's revenue growth rate for the year ended December 31, 2024 to decelerate compared to the revenue growth rate for the year ended December 31, 2023 as a result of disruptions related to transitioning sales and service activities to a dedicated LoopNet field sales team.
Current wording
Our LoopNet network of commercial real estate websites offers subscription-based, online marketplace services that enable commercial property owners, landlords and real estate agents working on their behalf to advertise properties for sale or for lease and to submit detailed information about property listings. Commercial real estate agents, buyers, and tenants use the LoopNet network of online marketplace services to search for available property listings that meet their criteria. LoopNet's revenue growth rate for the six months ended June 30, 2024 decelerated compared to the revenue growth rate for the six months ended June 30, 2023 due to lower inflation-based price increases. We expect LoopNet's revenue growth rate for the year ended December 31, 2024 to decelerate compared to the revenue growth rate for the year ended December 31, 2023 as a result of disruptions related to transitioning sales and service activities to a dedicated LoopNet field sales team.
Previous wording
Our Homes.com Network and the acquisition of OnTheMarket have enabled us to expand our offerings to the residential for sale market. Homes.com is a homes-for-sale listings site that combines our proprietary research with listing information to allow homebuyers an informative and collaborative experience finding homes for sale or lease. Homes.com provides residential real estate professionals subscription-based access to applications that manage residential real estate agent workflow and receives transaction-based revenue for marketing campaigns delivered on third-party platforms. In February 2024, we began selling Homes.com memberships, on a subscription basis, which promote an agent's profile and listings on our website. OnTheMarket is a property portal in the U.K., which primarily offers subscriptions-based advertising services to agents. Residential's revenues for the three months ended March 31, 2024 increased compared to the three months ended March 31,
Current wording
The Homes.com Acquisition and the OnTheMarket Acquisition have enabled us to expand our offerings to the residential for sale market. Homes.com is a homes-for-sale listings site that combines our proprietary research with listing information to allow homebuyers an informative and collaborative experience finding homes for sale or lease. Homes.com provides residential real estate professionals subscription-based access to applications that manage residential real estate agent workflow and receives transaction-based revenue for marketing campaigns delivered on third-party platforms. In February 2024, we began selling Homes.com memberships, on a subscription basis, which promote an agent's profile and listings on our website. OnTheMarket is a property portal in the U.K., which primarily offers subscriptions-based advertising services to agents. Residential's revenues for the six months ended June 30, 2024 increased compared to the six months ended June 30, 2023 due to the OnTheMarket Acquisition and the launch of our new Homes.com product, partially offset by lost revenue due to the discontinuation of certain products and services that were inconsistent with our long-term business strategy. We expect Residential's revenues for the year ending December 31, 2024 to increase compared to the year ended December 31, 2023 due to the OnTheMarket Acquisition and the launch of our new Homes.com product.
Previous wording
Our other marketplaces include Ten-X, an online auction platform for commercial real estate, our BizBuySell network of sites and our Land.com Network of sites. The BizBuySell network provides online marketplaces for businesses and franchises for sale, and our Land.com Network provides online marketplaces for rural lands for sale. Other Marketplaces' revenues for the three months ended March 31, 2024 was consistent with the three months ended March 31, 2023. We expect other marketplaces revenue for the year ending December 31, 2024 to be consistent with the year ended December 31, 2023.
Current wording
Our other marketplaces include Ten-X, an online auction platform for commercial real estate, our BizBuySell network of sites, and our Land.com Network. The BizBuySell network provides online marketplaces for businesses and franchises for sale, and our Land.com Network provides online marketplaces for rural lands for sale. Other Marketplaces' revenues for the six months ended June 30, 2024 were consistent with the six months ended June 30, 2023. We expect other marketplaces revenues for the year ending December 31, 2024 to be consistent with the year ended December 31, 2023.
Previous wording
The majority of our revenue is generated from service offerings that are distributed to our clients under subscription-based agreements that typically renew automatically and have a term of at least one year. We recognize subscription revenues on a straight-line basis over the life of the contract.
Current wording
The majority of our revenue is generated from service offerings that are distributed to our customers under subscription-based agreements that typically renew automatically and have a term of at least one year. We recognize subscription revenues on a straight-line basis over the life of the contract.
Previous wording
For the three months ended March 31, 2024 and 2023, our annualized net new bookings of subscription-based services on all contracts were$86 million and $80 million, respectively. Net new bookings is calculated based on the annualized amount of change in our sales bookings resulting from new subscription-based contracts, changes to existing subscription-based contracts and cancellations of subscription-based contracts for the period reported. Net new bookings is calculated on all subscription-based contracts without regard to contract term. Net new bookings is considered an operating metric that is an indicator of future subscription revenue growth and is also used as a metric of sales force productivity by us and investors. However, information regarding net new bookings is not comparable to, nor should it be substituted for, an analysis of our revenues over time. Revenues from our subscription-based contracts were approximately 96% and 95% of total revenues for the three months ended March 31, 2024 and 2023, respectively. The increase was due to increased sales in our multifamily subscription products.
Current wording
For the three months ended June 30, 2024 and 2023, our annualized net new bookings of subscription-based services on all contracts were$67 million and $82 million, respectively. Net new bookings is calculated based on the annualized amount of change in our sales bookings resulting from new subscription-based contracts, changes to existing subscription-based contracts, and cancellations of subscription-based contracts for the period reported. Net new bookings is calculated on all subscription-based contracts without regard to contract term. Net new bookings is considered an operating metric that is an indicator of future subscription revenue growth and is also used as a metric of sales force productivity by us and investors. However, information regarding net new bookings is not comparable to, nor should it be substituted for, an analysis of our revenues over time. Revenues from our subscription-based contracts were approximately 96% and 95% of total revenues for the three months ended June 30, 2024 and 2023, respectively. The increase was due to increased sales in our multifamily subscription products.
Previous wording
For both the trailing 12 months ended March 31, 2024 and 2023, our contract renewal rates for existing company-wide CoStar Group subscription-based services for contracts with a term of at least one year were approximately 90%, and, therefore, our cancellation rates for those services for the same periods were approximately 10%. Contract renewal rates are calculated on all subscription-based contracts with a term of at least one year. Our contract renewal rate is a quantitative measurement that is typically closely correlated with our revenue results. As a result, we believe that the rate may be a reliable indicator of short-term and long-term performance absent extraordinary circumstances. Our trailing 12-month contract renewal rate may decline as a result of negative economic conditions, consolidations among our clients, reductions in customer spending or decreases in our customer base. Revenues from our subscription-based contracts with a term of at least one year were approximately 81% and 80% of total revenues for the trailing 12 months ended March 31, 2024 and 2023, respectively. The increase was primarily due to increased sales of CoStar and multifamily subscription products.
Current wording
For both the trailing 12 months ended June 30, 2024 and 2023, our contract renewal rates for existing company-wide subscription-based services for contracts with a term of at least one year were approximately 90%, and, therefore, our cancellation rates for those services for the same periods were approximately 10%. Contract renewal rates are calculated on all subscription-based contracts with a term of at least one year. Our contract renewal rate is a quantitative measurement that is typically closely correlated with our revenue results. As a result, we believe that the rate may be a reliable indicator of short-term and long-term performance absent extraordinary circumstances. Our trailing 12-month contract renewal rate may decline as a result of negative economic conditions, consolidations among our customers, reductions in customer spending or decreases in our customer base. Revenues from our subscription-based contracts with a term of at least one year were approximately 81% for each of the trailing 12 months ended June 30, 2024 and 2023.
Previous wording
We expect our investment in these priorities will increase our research, selling and marketing and facilities expenses, including potential impairments of assets associated with the acquired building, and increase in our cash spent on capital expenditures. Each of the increased expenses will reduce our net income, and the increase in these expenses and the capital expenditures are expected to reduce our cash on hand for the year ending December 31, 2024 compared to the year ended December 31, 2023. We intend to continue to assess the need for additional investments in our business to develop and distribute new services and functionality within our current platform or expand the reach of, or otherwise improve, our current service offerings. Any future product development or expansion of services, combination and coordination of services or elimination of services or corporate expansion, development or restructuring efforts could reduce our profitability and increase our capital expenditures. Any new investments, changes to our service offerings or other unforeseen events could cause us to experience reduced revenues or generate losses and negative cash flow from operations in the future. Any development efforts must comply with our credit facility, which contains restrictive covenants that restrict our operations and use of our cash flow and may prevent us from taking certain actions that we believe could increase our profitability or otherwise enhance our business.
Current wording
We expect our investment in these priorities will increase our research, selling and marketing, and facilities expenses, including potential impairments of assets associated with the acquired building, and increase the cash spent on capital expenditures. Each of the increased expenses will reduce our net income, and the increase in these expenses and the capital expenditures are expected to reduce our cash on hand for the year ending December 31, 2024 compared to the year ended December 31, 2023. We intend to continue to assess the need for additional investments in our business to develop and distribute new services and functionality within our current platform or expand the reach of, or otherwise improve, our current service offerings. Any future product development or expansion of services, combination and coordination of services or elimination of services or corporate expansion, development or restructuring efforts could reduce our profitability and increase our capital expenditures. Any new investments, changes to our service offerings or other unforeseen events could cause us to experience reduced revenues or generate losses and negative cash flow from operations in the future. Any development efforts must comply with our credit facility, which contains restrictive covenants that restrict our operations and use of our cash flow and may prevent us from taking certain actions that we believe could increase our profitability or otherwise enhance our business.
Previous wording
In response to the concerns over inflation risk, the U.S. Federal Reserve raised interest rates over the recent two years. It is currently unclear how the commercial real estate industry will ultimately be impacted by the current economic conditions. Rising interest rates or a period of elevated interest rates may reduce demand for all types of real estate. If the demand for office space or other real estate decreases significantly, there could be a downturn in the commercial real estate market that may materially adversely affect many of our clients. A depressed commercial real estate market would have a negative impact on our core customer base, which could impact our customers’ ability to subscribe and pay for our services and reduce demand for our services. Reduced demand and increased cancellations could cause our revenues or our revenue growth rates to decline and reduce our profitability.
Current wording
In response to the concerns over inflation risk, the U.S. Federal Reserve raised interest rates over the last two years. It is currently unclear how the commercial real estate industry will ultimately be impacted by the current economic conditions. Rising interest rates or a period of elevated interest rates may reduce demand for all types of real estate. If the demand for office space or other real estate decreases significantly, there could be a downturn in the commercial real estate market that may materially adversely affect many of our customers. A depressed commercial real estate market would have a negative impact on our core customer base, which could impact our customers’ ability to subscribe and pay for our services and reduce demand for our services. Reduced demand and increased cancellations could cause our revenues or our revenue growth rates to decline and reduce our profitability.
Previous wording
•Income tax expense may be useful for investors to consider because it generally represents the taxes which may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.
Current wording
•Income tax expense may be useful for investors to consider because it generally represents the taxes that may be payable for the period and the change in deferred income taxes during the period and may reduce the amount of funds otherwise available for use in our business. However, we do not consider the amount of income tax expense to be a representative component of the day-to-day operating performance of our business.
Previous wording
Revenues. Revenues increased $72 million, or 12%, to $656 million. The increase in our revenues included:
Current wording
Revenues. Revenues increased $72 million, or 12%, to $678 million. The increase in our revenues primarily included:
Previous wording
Gross Profit and Cost of Revenues. Gross profit increased $50 million, or 11%, to $515 million, and the gross profit margin decreased from 80% to 78%. The increase in gross profit was due to higher revenues, partially offset by an increase in cost of revenues. Cost of revenues increased $22 million, or 18%, to $141 million and, as a percentage of revenues, increased from 20% to 22%. The increase in cost of revenues included:
Current wording
Gross Profit and Cost of Revenues. Gross profit increased $49 million, or 10%, to $542 million, and the gross profit margin decreased from 81% to 80%. The increase in gross profit was due to higher revenues, partially offset by an increase in cost of revenues. Cost of revenues increased $23 million, or 21%, to $136 million and, as a percentage of revenues, increased from 19% to 20%. The increase in cost of revenues primarily included:
Previous wording
•an increase in personnel costs of $12 million related to rising headcount to support our residential research efforts, and increases in salaries and benefits costs for our existing employees and
Current wording
•an increase in personnel costs of $13 million related to rising headcount to support our residential research efforts and increases in salaries and benefits costs for our existing employees and
Previous wording
Selling and Marketing Expenses (excluding customer base amortization). Selling and marketing expenses (excluding customer base amortization) increased $140 million, or 62%, to $366 million and, as a percentage of revenues, increased from 39% to 56%. The increase primarily included:
Current wording
Selling and Marketing Expenses (excluding customer base amortization). Selling and marketing expenses increased $108 million, or 43%, to $358 million and, as a percentage of revenues, increased from 41% to 53%. The increase primarily included:
Previous wording
•an increase in marketing expenses of $125 million for advertising our brands and
Current wording
•an increase in marketing expenses of $93 million for advertising our brands and
Previous wording
•an increase in personnel costs of $12 million related to rising headcount in our sales force and in commissions expense due to increased sales volumes.
Current wording
•an increase in personnel costs of $15 million related to rising headcount in our sales force and in commissions expense due to increased sales volumes.
Previous wording
Software Development Expenses. Software development expenses increased $16 million, or 24%, to $82 million and, as a percentage of revenues, increased from 11% to 13%. The increase primarily included:
Current wording
Software Development Expenses. Software development expenses increased $16 million, or 26%, to $80 million and, as a percentage of revenues, increased from 10% to 12%. The increase primarily included:
Previous wording
•an increase in personnel costs of $11 million related to increases in salaries, stock-based compensation and benefits costs for our existing employees and
Current wording
•an increase in personnel costs of $12 million related to rising headcount and increases in salaries, stock-based compensation and benefits costs for our existing employees and
Previous wording
General and Administrative Expenses. General and administrative expenses increased $9 million, or 10%, to $99 million and, as a percentage of revenues, was consistent at 15%. The increase included:
Current wording
General and Administrative Expenses. General and administrative expenses increased $19 million, or 21%, to $110 million and, as a percentage of revenues, increased from 15% to 16%. The increase primarily included:
Previous wording
•an increase in professional services of $4 million,
Current wording
•an increase in professional services of $10 million primarily related to acquisition activities and costs to defend our intellectual property and
Previous wording
Customer Base Amortization Expense. Customer base amortization expense was consistent for the three months ended March 31, 2024 and 2023.
Current wording
Customer Base Amortization Expense. Customer base amortization expense was consistent.
Previous wording
Interest Income, Net. Interest income, net increased $13 million, or 29%, to $56 million. The increase was primarily due to an increase in interest earned on our cash equivalents.
Current wording
Interest Income, Net. Interest income, net increased $2 million, or 3%, to $54 million. The increase was primarily due to an increase in interest earned on our cash equivalents.
Previous wording
Income Tax Expense. Income tax expense decreased $24 million, or 84%, to $5 million and the effective tax rate increased 17% to 42% of income before income taxes. The decrease in income tax expense was primarily attributable to lower income before income taxes.
Current wording
Income Tax Expense. Income tax expense decreased $14 million, or 46%, to $17 million and the effective tax rate was 47% of income before income taxes compared to 24% of income before income taxes for the three months ended June 30, 2023. The decrease in income tax expense was primarily attributable to lower income before income taxes.
Previous wording
Segment Revenues. North America revenues increased $60 million, or 11%, to $623 million and included:
Current wording
Segment Revenues. North America revenues increased $60 million, or 10%, to $644 million and included:
Previous wording
•an increase in CoStar revenues of $20 million due to higher sales volume driven by an increase in subscribers, as well as, converting legacy STR customers to our new CoStar based benchmarking product,
Current wording
•an increase in CoStar revenues of $18 million due to higher sales volume driven by an increase in subscribers, as well as, converting legacy STR customers to our new CoStar based benchmarking product,
Previous wording
•a decrease in Residential revenues of $5 million due to the discontinuation of certain products and services that were inconsistent with our long-term business strategy, partially offset by revenue from the launch of the new Homes.com membership subscriptions.
Current wording
•an increase in Residential revenues of $4 million due to revenue from the launch of the new Homes.com membership subscriptions partially offset by the discontinuation of certain products and services that were inconsistent with our long-term business strategy, and
Previous wording
The $12 million, or 59%, increase in International revenues was primarily attributable to the impact of the OnTheMarket Acquisition, as well as, as an increase in CoStar sales driven by an increase in subscribers.
Current wording
The $12 million, or 57%, increase in International revenues was primarily attributable to the impact of the OnTheMarket Acquisition, as well as an increase in CoStar sales driven by an increase in subscribers.
Previous wording
•an increase in CoStar revenues of $25 million, or 11%, due to higher sales volume driven by an increase in subscribers, as well as, converting legacy STR customers to our new CoStar-based benchmarking product,
Current wording
•an increase in CoStar revenues of $49 million, or 11%, due to higher sales volume driven by an increase in subscribers, as well as converting legacy STR customers to our new CoStar-based benchmarking product,
Previous wording
•an increase of $6 million in equipment costs to support our research efforts.
Current wording
•an increase of $6 million in software and equipment costs.
Previous wording
•an increase of $3 million in credit loss expense, primarily due to our expectations that the downturn in the commercial real estate market will increase delinquent trade receivables, and
Current wording
•an increase of $3 million in credit loss expense, primarily due to increased write offs.
Previous wording
Segment EBITDA. North America EBITDA decreased $93 million, or 97%, to $3 million. The decrease in North America EBITDA was primarily due to increases in personnel costs, marketing costs and credit loss expense, partially offset by increases in revenues described above. International EBITDA decreased $17 million to a loss of $16 million. The decrease included an increase of $24 million of operating expense from the OnTheMarket Acquisition and an increase in personnel costs associated with the expansion of our international research team.
Current wording
Segment EBITDA. North America EBITDA decreased $167 million, or 83%, to $34 million. The decrease in North America EBITDA was primarily due to increases in marketing costs, personnel costs, professional service fees, and credit loss expenses, partially offset by increases in revenues described above. International EBITDA decreased $36 million to a loss of $35 million. The decrease in International EBITDA was primarily due to the OnTheMarket Acquisition and an increase in personnel costs associated with the expansion of our international research team.
Previous wording
We believe the balance of cash and cash equivalents, which was $5.0 billion as of March 31, 2024, along with cash generated by ongoing operations and continued access to capital markets, will be sufficient to satisfy our cash requirements over the next 12 months and beyond. Other than the construction commitments and pending acquisition discussed below, our cash requirements have not changed materially from what is described in the 2023 Form 10-K.
Current wording
We believe the balance of cash and cash equivalents, which was $4.9 billion as of June 30, 2024, along with cash generated by ongoing operations and continued access to capital markets, will be sufficient to satisfy our cash requirements over the next 12 months and beyond. Other than the construction commitments and pending acquisition discussed below, our cash requirements have not changed materially from what is described in the 2023 Form 10-K.
Previous wording
We expect the total cost of construction, net of the estimated value of the tax incentives from 2023 to 2032, to be in the range of $450 – $600 million. We have engaged a project manager, architects and a general contractor on terms that generally require payments as services are provided or construction is performed. As of March 31, 2024, we have paid $156 million and we have committed to spend an additional $460 million as further work is performed under these contracts. We plan to amend these contracts to include additional commitments as construction progresses. Total cash expenditures for 2024 are expected to be approximately $385 million. We expect to fund the expansion with cash on hand.
Current wording
We expect the total cost of construction, net of the estimated value of the tax incentives from 2023 to 2032, to be in the range of $450 – $600 million. We have engaged a project manager, architects and a general contractor on terms that generally require payments as services are provided or construction is performed. As of June 30, 2024, we have paid $232 million, and we have committed to spend an additional $388 million as further work is performed under these contracts. We plan to amend these contracts to include additional commitments as construction progresses. Total cash expenditures for 2024 are expected to be approximately $180 million. We expect to fund the expansion with cash on hand.
Previous wording
Consummation of the Mergers is subject to certain customary conditions, including, among others, the required approval of the Matterport stockholders, expiration or termination of the applicable waiting periods under the HSR Act and the Antitrust Laws (each as defined in the Merger Agreement) of certain other jurisdictions, the absence of any law, injunction, order or award restraining, enjoining or otherwise prohibiting or making illegal the consummation of the Mergers, the CoStar Shares to be issued in the Mergers being approved for listing on Nasdaq Global Select Market, and the registration statement registering the Merger Consideration becoming effective. Each party’s obligation to consummate the Mergers is subject to certain other conditions, including the accuracy of the representations and warranties of the other party, compliance in all material respects by the other party with its obligations under the Merger Agreement, and the absence of a material adverse effect related to the other party. Consummation of the Mergers is not subject to approval by the stockholders of the Company or to any financing condition.
Current wording
Consummation of the Mergers is subject to certain customary conditions, including, among others, the required approval of the Matterport stockholders, expiration or termination of the applicable waiting periods under the HSR Act and the Antitrust Laws (each as defined in the Merger Agreement) of certain other jurisdictions, the absence of any law, injunction, order, or award restraining, enjoining, or otherwise prohibiting or making illegal the consummation of the Mergers and the CoStar Group Shares to be issued in the Mergers being approved for listing on Nasdaq Global Select Market. Each party’s obligation to consummate the Mergers is subject to certain other conditions, including the accuracy of the representations and warranties of the other party, compliance in all material respects by the other party with its obligations under the Merger Agreement, and the absence of a material adverse effect related to the other party. Consummation of the Mergers is not subject to approval by our stockholders or to any financing condition.
Previous wording
The Company intends to fund the cash consideration with cash on hand and expects the transaction to close in 2024. The cash consideration is estimated to be $940 million, not considering Fractional Share Consideration.
Current wording
The cash consideration is estimated to be $940 million, not considering Fractional Share Consideration. The Company intends to fund the cash consideration with cash on hand.
Previous wording
Cash and cash equivalents decreased to approximately $5.0 billion as of March 31, 2024, compared to cash and cash equivalents of approximately $5.2 billion as of December 31, 2023. The decrease in cash and cash equivalents for the three months ended March 31, 2024 was primarily due to $380 million of cash used in investing activities and cash used in financing activities of $23 million primarily related to repurchases of restricted stock to satisfy tax withholding obligations, partially offset by cash provided by operating activities of $140 million.
Current wording
Cash and cash equivalents decreased to approximately $4.9 billion as of June 30, 2024, compared to cash and cash equivalents of approximately $5.2 billion as of December 31, 2023. The decrease in cash and cash equivalents for the six months ended June 30, 2024 was primarily due to $478 million of cash used in investing activities and cash used in financing activities of $15 million primarily related to repurchases of restricted stock to satisfy tax withholding obligations, partially offset by cash provided by operating activities of $198 million.
Showing the first 40 of 48 pairs. Open the source sections for the rest.
Rearranged current paragraphs (10)
Current report — wording carried from elsewhere
Segment EBITDA. North America EBITDA decreased $74 million, or 71%, to $31 million. The decrease in North America EBITDA was primarily due to increases in marketing costs, personnel costs, and professional service fees, partially offset by increases in revenues described above. International EBITDA decreased $19 million to a loss of $19 million. The decrease in International EBITDA was primarily due to the OnTheMarket Acquisition and an increase in personnel costs associated with the expansion of our international research team.
Current report — wording carried from elsewhere
The following table provides a comparison of our selected consolidated results of operations for the six months ended June 30, 2024 and 2023 (in millions, except percentages):
Current report — wording carried from elsewhere
•an increase in personnel costs of $26 million related to rising headcount to support our residential research efforts, and increases in salaries and benefits costs for our existing employees,
Current report — wording carried from elsewhere
•an increase in marketing expenses of $219 million for advertising our brands and
Current report — wording carried from elsewhere
Customer Base Amortization Expense. Customer base amortization expense was consistent.
Current report — wording carried from elsewhere
Interest Income, net. Interest income, net increased $14 million, or 15%, to $110 million. This increase was primarily due to an increase in interest earned on our cash equivalents.
Current report — wording carried from elsewhere
Other (Expense) Income, net. Other (expense) income, net was insignificant for the six months ended June 30, 2024 and 2023.
Current report — wording carried from elsewhere
Income Tax Expense. Income tax expense decreased $39 million, or 64%, to $22 million and the effective tax rate was 45% of income before income taxes compared to 24% of income before income taxes for the six months ended June 30, 2023. The decrease in income tax expense was primarily attributable to lower income before income taxes.
Current report — wording carried from elsewhere
We manage our business geographically in two operating segments, with our primary areas of measurement and decision-making being North America, which includes the U.S. and Canada, and International, which primarily includes Europe, Asia-Pacific, and Latin America. Management relies on an internal management reporting process that provides revenues and operating segment EBITDA. Management believes that operating segment EBITDA is an appropriate measure for evaluating the operational performance of our operating segments. EBITDA is used by management to internally measure our operating and management performance and to evaluate the performance of our business. However, this measure should be considered in addition to, not as a substitute for or superior to, income from operations or other measures of financial performance prepared in accordance with GAAP.
Current report — wording carried from elsewhere
The $25 million, or 58%, increase in International revenues was primarily attributable to the impact of the OnTheMarket Acquisition, as well as an increase in CoStar sales driven by an increase in subscribers.
Rearranged previous paragraphs (1)
Previous report — wording carried elsewhere
2023 due to the OnTheMarket Acquisition and the launch of our new Homes.com product, partially offset by lost revenue due to the discontinuation of certain products and services that were inconsistent with our long-term business strategy. We expect Residential's revenues for the year ending December 31, 2024 to increase compared to the year ended December 31, 2023 due to the OnTheMarket Acquisition and the launch of our new Homes.com product.