Certain portions of the discussion today may contain forward-looking statements, including the company's outlook and expectations for the third and fourth quarters and full year and beyond. CoStar Group achieved revenue of $781 million, a strong 15% increase compared to last year. Adjusted EBITDA rose significantly to $85 million, representing an impressive 108% increase compared to Q2 of 2024. Both revenue and adjusted EBITDA exceeded consensus estimates and were above the high end of our guidance range.

Our commercial real estate information and marketplace businesses also delivered an outstanding profit margin of 43% this quarter. Net new bookings totaled $93 million, a remarkable 65% increase over the previous quarter. This sets a new record as the highest quarterly net new bookings in CoStar Group's history. Apartments.com had another excellent quarter, with revenue up 11% from Q2 2024, reaching $292 million.

Our sales team achieved $45 million in net new bookings, the fourth-highest quarter ever, representing a 20% increase year-over-year. Apartments.com is approaching an annual revenue run rate of $1.2 billion and maintains a very strong EBITDA margin. We significantly increased our investment across key media channels, streaming video grew by 25%. We believe the Apartments.com network holds the industry's most comprehensive inventory, with a record 2.2 million rental availabilities in June of 2025.

What went well
  • Second quarter revenue rose 15% year-over-year to $781 million, above the high end of guidance and marking the 57th consecutive quarter of double-digit revenue growth.
  • Adjusted EBITDA jumped 108% year-over-year to $85 million, also exceeding the high end of the $50 million to $60 million guidance range.
  • Net new bookings set a company record at $93 million, up 65% sequentially and 38% year-over-year, with Apartments.com, CoStar and LoopNet all contributing.
  • Apartments.com grew revenue 11% to $292 million with a record $45 million in net new bookings, a 99% monthly renewal rate, a 94 NPS, and 7,600 communities added in the first half, more than all of 2024.
  • Homes.com NPS jumped from 9 in Q1 to 38 in Q2, a 340% sequential increase, alongside 6,300 net new members up 56% and early cancellation rates below 1% on twelve-month contracts.
What went wrong
  • Homes.com remained early and small, with annualized net new bookings of only $12 million and revenue up just 8%, after overcoming Q1 churn from the prior year's initial sales.
  • Management discontinued about $10 million of non-core Matterport revenue that did not contribute to earnings, prompting a reduction to the top end of the other revenue guidance.
  • Overall adjusted EBITDA margin remained thin at 11% given the heavy Homes.com and sales force investment.
  • Comscore data showed rental portal traffic declined across the industry year-over-year, with the Apartments.com network down 11%, though it outperformed competitors that fell further.

Guidance Changes

MetricPeriodCurrent guidance
RevenueFY2025$3.135 billion to $3.155 billion (raised at the midpoint on the Q2 beat, implying 15% annual growth and excluding the pending Domain acquisition)
Adjusted EBITDAFY2025$370 million to $390 million (raised, reflecting the Q2 beat while incorporating growth-initiative spend pushed to the back half of the year)
RevenueQ3 2025$800 million to $805 million (reiterated as new quarterly guide, about 16% year-over-year growth at midpoint)
Adjusted EBITDAQ3 2025$75 million to $85 million (reiterated as new quarterly guide, reflecting timing of growth-initiative spend)
CoStar product revenue growthFY20257% (raised on the strong Q2 and internal leading indicators, with Q3 growth also expected at 7%)
Other revenueFY2025$270 million to $275 million (lowered at the top end due to discontinuing about $10 million of non-core Matterport revenue)

Performance Breakdown

MetricYoYNote
Total revenue up 15% to $781 million Broad strength across segments plus a $44 million Matterport contribution that beat guidance
Adjusted EBITDA up 108% to $85 million Higher revenue, lower professional services costs, and timing of investment spend
Apartments.com revenue up 11% to $292 million Record $45 million net new bookings, up 20% year-over-year, with sales rep productivity at its highest in two years
CoStar product revenue up 7% Sales rep productivity at its highest since Q3 2023 amid improving CRE conditions
LoopNet revenue up 8% Highest first-half net new bookings ever from the shift to broad subscription packages and asset-based pricing
Homes.com revenue up 8% $12 million annualized net new bookings and 6,300 net new members after absorbing Q1 churn from initial sales
Matterport revenue $44 million in the quarter Beat guidance and contributed to the overall revenue outperformance, though some non-core revenue is being discontinued

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Sales force expansionCore team plus Homes.com launch team1,800 reps at quarter end, up more than 400 since year start and 43% year-over-year, tripling Homes.com from 230 at end of 2024 toward about 750 by end of 2025
Homes.com pricing strategyOptimizing pricing model post-launchPrioritizing penetration over ASP at low penetration, shifting pricing toward the listing side and asset value, with deals ranging from a couple hundred dollars to $7,500 to $8,000 per month
Matterport as leasing driverRecently acquired hardware and SaaS business3D tours viewed 67 million times, up 193%, with listings featuring a Matterport tour receiving 23 times more leads, and new Matterport Max packages rolled out at the NAA convention
Domain acquisitionHeld a 16.9% stakeAgreed May 9 to acquire the rest at AUD 4.43 per share, roughly $1.5 billion incremental, with a USD-to-AUD forward swap to hedge, expected to close in Q3 and not yet in guidance
Competitive positioning versus ZillowDefending Apartments.com shareManagement argued no wallet-share loss, framing the competitor as buying low-ASP share from Redfin and Realtor, and emphasized selling leases rather than leads into a massive greenfield TAM

Q&A Summary

Have you observed any wallet-share loss at Apartments.com, and given Zillow's rental package is priced below yours, any pressure on your ability to take price or drive upgrades?
Florance said there has been no loss of share or ability to capture price, noting the strong product with high NPS, renewal and growing ASP is being conflated with a competitor paying top dollar to buy low-quality, low-ASP share from Redfin and Realtor. Lown added the greenfield TAM is massive so wallet-share framing does not apply, and stressed that CoStar sells leases, not leads.
What is driving the improvement in Homes.com NPS, and where is there still significant work to improve membership ROI?
Florance said it is important to keep perspective that Homes.com is a brand-new product in roughly its first year, that he believes it is a vastly superior offering inspired by profitable international models, and that a relatively rookie sales force is doing a great job building the business.
Can you talk about pricing across the business suite and elaborate on the new homes model?
Florance said he has no information that CoStar ASP is changing and that lender ASP runs dramatically higher than standard broker-owner ASP. On Homes.com, pricing ranges from a couple hundred dollars a month for small players to $7,500 or $8,000 for larger ones, and at low penetration the company is deliberately playing more to penetration than to maximizing ASP.
Can you contextualize the Homes.com new member growth of about 61%, and what is factored into guidance for the rest of the year, plus what is driving the Q3 EBITDA guide?
Lown declined to provide member-level detail beyond the stated guidance. On the Q3 adjusted EBITDA guide, he said the second quarter beat was primarily timing, so taking Q2 and Q3 together shows the organic beat plus a timing shift that accounts for the sequential delta.
Is there any seasonality in the commercial bookings excluding Apartments.com?
Management said CoStar bookings are pretty stable through the year with occasional fourth quarter lift, Apartments always has a strong second quarter, LoopNet's historical negative fourth quarter seasonality has been eliminated by the business model change, and Homes will likely develop a strong second quarter over time.
How did the average price for new Homes.com memberships change, and what is the broader pricing strategy going forward, tiered or based on agent performance?
Florance said every subscription carries a very high gross margin and the company is focused on profitable unit penetration at this early stage. Pricing has shifted away from buyer-agency work toward the listing side, asset value and volume, team size, and increasingly rental portfolios given Homes-to-Apartments syndication, and will keep being adjusted quarterly, with depth advertising a lever for later years.
Is the 750 Homes.com headcount exiting the year a change from the prior 500 to 600, and how large is the serviceable addressable market of agents?
Florance said he is reining in the Richmond sales build and holding headcount at that level, potentially redeploying some resources to sell Matterport. He sized the market at 1.5 million agents with roughly 500,000 to 750,000 viable prospects, framing each as a long-term relationship to grow over time, and reiterated that the model can sell to 60% to 80% of the market versus about 5% for lead-diversion competitors.

More on Costar Group, Inc.

Reported 2025-07-22 · figures from the Costar Group, Inc. Q2 2025 earnings call.

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