TechDogs-"CoStar Group 2022 Revenue Increased 12% Year-over-Year and Full Year Net New Bookings Grew 41% to a Record $305 Million"

Marketing Technology

CoStar Group 2022 Revenue Increased 12% Year-over-Year and Full Year Net New Bookings Grew 41% to a Record $305 Million

By Business Wire

Business Wire
Overall Rating

WASHINGTON--(BUSINESS WIRE)--CoStar Group, Inc. (NASDAQ: CSGP), a leading provider of online real estate marketplaces, information and analytics in the property markets, announced today that revenue for the year ended December 31, 2022 was $2.18 billion, an increase of 12% over revenue of $1.94 billion for the full year of 2021. Revenue for the fourth quarter of 2022 was $573 million, an increase of 13% over revenue of $507 million for the fourth quarter of 2021.

Net income for the year ended December 31, 2022, was $369 million, an increase of 26% compared to net income of $293 million for the full year of 2021. Net income for the fourth quarter of 2022 was $124 million, or $0.31 per diluted share, an increase of 34% compared to net income of $93 million for the fourth quarter of 2021. Adjusted EBITDA was $672 million for the full year and $182 million for the fourth quarter of 2022.

“2022 was an outstanding year for CoStar Group,” said Andy Florance, Founder and Chief Executive Officer of CoStar Group. “We delivered 12% year over year revenue growth while setting a record for full year net new sales bookings of $305 million, an increase of 41% over 2021. Our two largest product platforms, CoStar and Apartments.com, delivered revenue growth of 15% and 16%, respectively, in the fourth quarter, while LoopNet revenue grew 12% to end the year. I believe our efforts to expand our sales team in 2022 are starting to pay off,” continued Florance.

“I’m particularly pleased with the revenue growth acceleration in Apartments.com, which began the year with 6% year-over-year revenue growth in the first quarter and ended the year with 16% year-over-year revenue growth in the fourth quarter,” stated Florance. "Net new bookings for Apartments.com in the fourth quarter were the highest ever, increasing 177% compared to the same period in 2021. This performance is expected to return Apartments.com to 20% or higher revenue growth during 2023,” continued Florance.

“We've made great progress on our residential strategy in 2022,” stated Florance. “Traffic to our Homes.com network has passed 20 million unique monthly visitors and has doubled in the last few months. Our new product received an incredible response from agents at the National Association of Realtors trade show recently, while our 'your listing, your lead' strategy is delivering hundreds of thousands of valuable consumer leads directly to listing agents. Given the strong momentum of Homes.com, we plan to increase our residential investments in the year ahead,” continued Florance.

Year 2021-2022 Quarterly Results - Unaudited

(in millions, except per share data)

2021

2022

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Revenues

$458

$480

$499

$507

$516

$536

$557

$573

Net income

74

61

64

93

89

83

72

124

Net income per share - diluted(1)

0.19

0.16

0.16

0.24

0.23

0.21

0.18

0.31

Weighted average outstanding shares - diluted(1)

394

394

394

395

394

394

396

406

EBITDA

136

133

123

173

158

140

129

155

Adjusted EBITDA

160

150

144

193

178

159

153

182

Non-GAAP net income

108

103

99

138

123

112

118

153

Non-GAAP net income per share - diluted(1)

0.27

0.26

0.25

0.35

0.31

0.28

0.30

0.38

__________________________

(1) Certain prior period amounts have been retroactively adjusted to reflect the ten-for-one stock split effected in the form of a stock dividend in June 2021.

2023 Outlook

The Company expects revenue in the range of $2.46 billion to $2.48 billion for the full year of 2023, representing growth of approximately 13% year-over-year at the midpoint of the range. The Company expects revenue for the first quarter of 2023 in the range of $575 million to $580 million, representing revenue growth of approximately 12% year-over-year at the midpoint of the range.

The Company expects adjusted EBITDA in the range of $500 million to $520 million for the full year of 2023. For the first quarter of 2023, the Company expects adjusted EBITDA in the range of $111 million to $116 million.

The Company expects full year 2023 non-GAAP net income per diluted share in a range of $1.06 to $1.09 based on 408 million shares. For the first quarter of 2023, the Company expects non-GAAP net income per diluted share in a range of $0.25 to $0.26 based on 407 million shares. These ranges include an estimated non-GAAP tax rate of 26% for the full year and the first quarter of 2023.

The preceding forward-looking statements reflect CoStar Group’s expectations as of February 21, 2023, including forward-looking non-GAAP financial measures on a consolidated basis, based on current estimates, expectations, observations, and trends. Given the risk factors, rapidly evolving economic environment, and uncertainties and assumptions discussed in this release and in our quarterly reports on Form 10-Q and annual reports on Form 10-K, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.

Reconciliation of EBITDA, adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share to their GAAP basis results are shown in detail below, along with definitions for those terms. A reconciliation of forward-looking non-GAAP guidance to the most directly comparable GAAP measure, net income, can be found within the tables included in this release.

Non-GAAP Financial Measures

For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the Company’s financial condition and results of operations, please refer to the Company’s latest periodic report.

EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before interest (expense) income and other (expense) income, loss on debt extinguishment, income taxes, depreciation and amortization.

Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, and settlements and impairments incurred outside the Company’s normal course of business. Adjusted EBITDA margin represents adjusted EBITDA divided by revenues for the period.

Non-GAAP net income is a non-GAAP financial measure determined by adjusting GAAP net income attributable to CoStar Group for stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, settlement and impairment costs incurred outside the Company's normal course of business and loss on debt extinguishment, as well as amortization of acquired intangible assets and other related costs, and then subtracting an assumed provision for income taxes. In 2023, the Company is assuming a 26% tax rate in order to approximate its statutory corporate tax rate excluding the impact of discrete items.

Non-GAAP net income per diluted share is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period used in the calculation of GAAP net income per diluted share. For periods with GAAP net losses and non-GAAP net income, the weighted average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.

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Operating Metrics

Net new bookings is calculated based on the annualized amount of change in the Company's sales bookings resulting from new subscription-based contracts and changes to existing subscription-based contracts for the period reported. Information regarding net new bookings is not comparable to, nor should it be substituted for, an analysis of the Company's revenues over time.

Earnings Conference Call

Management will conduct a conference call to discuss the fourth quarter and full year 2022 results and the Company’s outlook at 5:00 PM EST on Tuesday, February 21, 2023. A live audio webcast of the conference will be available in listen-only mode through the Investors section of the CoStar Group website: https://investors.costargroup.com. A replay of the webcast audio will also be available in the Investors section of our website for a period of time following the call.

CoStar Group, Inc.

Condensed Consolidated Statements of Operations - Unaudited

(in thousands, except per share data)

Three Months Ended
December 31,

Year Ended
December 31,

2022

2021

2022

2021

Revenues

$

573,345

$

506,786

$

2,182,399

$

1,944,135

Cost of revenues

109,194

86,330

414,008

357,241

Gross profit

464,151

420,456

1,768,391

1,586,894

Operating expenses:

Selling and marketing (excluding customer base amortization)

173,486

138,653

684,222

622,007

Software development

58,403

52,522

220,923

201,022

General and administrative

92,161

69,964

338,737

256,711

Customer base amortization

12,939

18,932

73,560

74,817

336,989

280,071

1,317,442

1,154,557

Income from operations

127,162

140,385

450,949

432,337

Interest income (expense), net

32,586

(7,923

)

32,125

(31,621

)

Other income (expense), net

(213

)

909

3,383

3,252

Income before income taxes

159,535

133,371

486,457

403,968

Income tax expense

35,163

40,471

117,004

111,404

Net income

$

124,372

$

92,900

$

369,453

$

292,564

Net income per share - basic

$

0.31

$

0.24

$

0.93

$

0.75

Net income per share - diluted

$

0.31

$

0.24

$

0.93

$

0.74

Weighted-average outstanding shares - basic

404,185

392,538

396,284

392,210

Weighted-average outstanding shares - diluted

406,087

394,532

397,752

394,160

CoStar Group, Inc.

Reconciliation of Non-GAAP Financial Measures - Unaudited

(in thousands, except per share data)

Reconciliation of Net Income to Non-GAAP Net Income

Three Months Ended
December 31,

Year Ended
December 31,

2022

2021

2022

2021

Net income

$

124,372

$

92,900

$

369,453

$

292,564

Income tax expense

35,163

40,471

117,004

111,404

Income before income taxes

159,535

133,371

486,457

403,968

Amortization of acquired intangible assets

19,978

26,176

102,579

103,626

Stock-based compensation expense

21,110

16,721

75,207

63,709

Acquisition and integration related costs

2,167

3,243

5,405

18,718

Restructuring and related costs

1,984

2,175

Settlements and impairments

1,969

6,069

Other expense, net

4,112

6,162

6,903

Non-GAAP income before income taxes

206,743

183,623

684,054

596,924

Assumed rate for income tax expense(1)

26

%

25

%

26

%

25

%

Assumed provision for income tax expense

(53,753

)

(45,906

)

(177,854

)

(149,231

)

Non-GAAP net income

$

152,990

$

137,717

$

506,200

$

447,693

Net income per share - diluted

$

0.31

$

0.24

$

0.93

$

0.74

Non-GAAP net income per share - diluted

$

0.38

$

0.35

$

1.27

$

1.14

Weighted average outstanding shares - basic

404,185

392,538

396,284

392,210

Weighted average outstanding shares - diluted

406,087

394,532

397,752

394,160

__________________________

(1) The assumed tax rate approximates our statutory federal and state corporate tax rate for the applicable period.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

Three Months Ended
December 31,

Year Ended
December 31,

2022

2021

2022

2021

Net income

$

124,372

$

92,900

$

369,453

$

292,564

Amortization of acquired intangible assets in cost of revenues

7,039

7,244

29,019

28,809

Amortization of acquired intangible assets in operating expenses

12,939

18,932

73,560

74,817

Depreciation and other amortization

7,928

6,880

29,127

29,018

Interest (income) expense, net

(32,586

)

7,923

(32,125

)

31,621

Other (income) expense, net

213

(909

)

(3,383

)

(3,252

)

Income tax expense

35,163

40,471

117,004

111,404

EBITDA

$

155,068

$

173,441

$

582,655

$

564,981

Stock-based compensation expense

21,110

16,721

75,207

63,709

Acquisition and integration related costs

2,167

3,243

5,405

18,718

Restructuring and related costs

1,984

2,175

Settlements and impairments

1,969

6,069

Adjusted EBITDA

$

182,298

$

193,405

$

671,511

$

647,408

CoStar Group, Inc.

Condensed Consolidated Balance Sheets - Unaudited

(in thousands)

December 31,
2022

December 31,
2021

ASSETS

Current assets:

Cash and cash equivalents

$

4,967,970

$

3,827,126

Accounts receivable

166,140

138,191

Less: Allowance for credit losses

(12,195

)

(13,374

)

Accounts receivable, net

153,945

124,817

Prepaid expenses and other current assets

63,952

36,182

Total current assets

5,185,867

3,988,125

Deferred income taxes, net

9,722

5,034

Lease right-of-use assets

80,392

100,680

Property and equipment, net

321,250

271,431

Goodwill

2,314,759

2,321,015

Intangible assets, net

329,306

435,662

Deferred commission costs, net

142,482

101,879

Deposits and other assets

16,687

21,762

Income tax receivable

2,005

11,283

Total assets

$

8,402,470

$

7,256,871

LIABILITIES AND STOCKHOLDERS' EQUITY

Current liabilities:

Accounts payable

$

28,460

$

22,244

Accrued wages and commissions

104,988

81,794

Accrued expenses

89,113

81,676

Income taxes payable

10,438

31,236

Lease liabilities

36,049

26,268

Deferred revenue

103,567

95,471

Total current liabilities

372,615

338,689

Long-term debt, net

989,210

987,944

Deferred income taxes, net

76,202

98,656

Income taxes payable

14,001

12,496

Lease and other long-term liabilities

80,321

107,414

Total liabilities

$

1,532,349

$

1,545,199

Total stockholders' equity

6,870,121

5,711,672

Total liabilities and stockholders' equity

$

8,402,470

$

7,256,871

CoStar Group, Inc.

Condensed Consolidated Statements of Cash Flows - Unaudited

(in thousands)

Year Ended
December 31,

2022

2021

Operating activities:

Net income

$

369,453

$

292,564

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

137,885

139,558

Amortization of deferred commissions costs

76,082

63,391

Amortization of Senior Notes discount and issuance costs

2,365

2,327

Non-cash lease expense

38,489

28,485

Stock-based compensation expense

75,207

63,709

Deferred income taxes, net

(31,203

)

24,165

Credit loss expense

18,309

10,928

Other operating activities, net

(2,439

)

(654

)

Changes in operating assets and liabilities, net of acquisitions:

Accounts receivable

(46,403

)

(29,630

)

Prepaid expenses and other current assets

(17,910

)

(14,873

)

Deferred commissions

(116,796

)

(72,038

)

Accounts payable and other liabilities

23,234

(30,051

)

Lease liabilities

(37,396

)

(30,904

)

Income taxes payable

(19,259

)

5,860

Deferred revenue

6,785

17,396

Other assets

2,217

(502

)

Other assets

Net cash provided by operating activities

478,620

469,731

Investing activities:

Proceeds from sale and settlement of investments

864

Proceeds from sale of property and equipment and other assets

30,097

612

Purchase of Richmond assets

(35,169

)

(123,764

)

Purchases of property and equipment and other assets

(58,574

)

(65,220

)

Cash paid for acquisitions, net of cash acquired

(6,273

)

(192,971

)

Net cash used in investing activities

(69,055

)

(381,343

)

Financing activities:

Proceeds from long-term debt

Payments of debt issuance costs

Payments of long-term debt

(2,155

)

Repurchase of restricted stock to satisfy tax withholding obligations

(23,108

)

(33,314

)

Proceeds from equity offering, net of transaction costs

745,700

Proceeds from exercise of stock options and employee stock purchase plan

13,540

18,046

Other financing activities

(411

)

Net cash provided by (used in) financing activities

733,977

(15,679

)

Effect of foreign currency exchange rates on cash and cash equivalents

(2,698

)

(1,495

)

Net increase in cash and cash equivalents

1,140,844

71,214

Cash and cash equivalents at beginning of year

3,827,126

3,755,912

Cash and cash equivalents at end of year

$

4,967,970

$

3,827,126

CoStar Group, Inc.

Disaggregated Revenues - Unaudited

(in thousands)

Three Months Ended December 31,

2022

2021

North America

International

Total

North America

International

Total

CoStar

$

210,042

$

9,033

$

219,075

$

181,478

$

8,915

$

190,393

Information Services

31,645

9,007

40,652

28,764

7,112

35,876

Multifamily

198,016

198,016

170,051

170,051

LoopNet

59,341

1,955

61,296

53,046

1,613

54,659

Residential

16,182

16,182

20,644

20,644

Other Marketplaces

38,124

38,124

35,163

35,163

Total revenues

$

553,350

$

19,995

$

573,345

$

489,146

$

17,640

$

506,786

Year Ended December 31,

2022

2021

North America

International

Total

North America

International

Total

CoStar

$

800,183

$

36,797

$

836,980

$

686,948

$

35,873

$

722,821

Information Services

124,951

32,431

157,382

113,723

27,932

141,655

Multifamily

745,388

745,388

678,680

678,680

LoopNet

223,758

7,183

230,941

204,816

2,695

207,511

Residential

73,747

73,747

74,583

74,583

Other Marketplaces

137,961

137,961

118,885

118,885

Total revenues

$

2,105,988

$

76,411

$

2,182,399

$

1,877,635

$

66,500

$

1,944,135

CoStar Group, Inc.

Results of Segments - Unaudited

(in thousands)

Three Months Ended
December 31,

Year Ended
December 31,

2022

2021

2022

2021

EBITDA

North America

$

154,788

$

171,268

$

577,242

$

557,125

International

280

2,173

5,413

7,856

Total EBITDA

$

155,068

$

173,441

$

582,655

$

564,981

CoStar Group, Inc.

Reconciliation of Non-GAAP Financial Measures with Quarterly Results - Unaudited

(in millions, except per share data)

Reconciliation of Net Income to Non-GAAP Net Income

2021

2022

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Net income

$74.2

$61.1

$64.3

$92.9

$89.3

$83.5

$72.3

$124.4

Income tax expense

19.1

32.8

19.0

40.5

32.1

24.7

25.1

35.2

Income before income taxes

93.3

93.9

83.3

133.4

121.4

108.1

97.4

159.5

Amortization of acquired intangible assets

25.8

25.3

26.3

26.2

23.2

22.8

36.6

20.0

Stock-based compensation expense

15.5

15.1

16.3

16.7

17.8

18.1

18.1

21.1

Acquisition and integration related costs

8.5

2.0

5.0

3.2

1.6

0.5

1.1

2.2

Restructuring and related costs

0.2

2.0

Settlements and impairments

4.1

2.0

Other expense, net

1.1

0.8

0.9

4.1

2.0

2.1

2.1

Non-GAAP income before income taxes(1)

144.2

137.1

131.8

183.6

166.1

151.6

159.6

206.7

Assumed rate for income tax expense (2)

25%

25%

25%

25%

26%

26%

26%

26%

Assumed provision for income tax expense

(36.0)

(34.3)

(33.0)

(45.9)

(43.2)

(39.4)

(41.5)

(53.8)

Non-GAAP net income(1)

$108.2

$102.8

$98.8

$137.7

$122.9

$112.2

$118.1

$153.0

Non-GAAP net income per share - diluted(3)

$0.27

$0.26

$0.25

$0.35

$0.31

$0.28

$0.30

$0.38

Weighted average outstanding shares - basic(3)

391.6

392.3

392.4

392.5

392.9

393.3

394.7

404.2

Weighted average outstanding shares - diluted(3)

393.7

394.1

394.3

394.5

394.2

394.5

396.2

406.1

__________________________

(1) Totals may not foot due to rounding.

(2) The assumed tax rate approximates our statutory federal and state corporate tax rate for the applicable period.

(3) Certain prior period amounts have been retroactively adjusted to reflect the ten-for-one stock split effected in the form of a stock dividend in June 2021.

Reconciliation of Net Income to EBITDA and Adjusted EBITDA

2021

2022

Q1

Q2

Q3

Q4

Q1

Q2

Q3

Q4

Net income

$74.2

$61.1

$64.3

$92.9

$89.3

$83.5

$72.3

$124.4

Amortization of acquired intangible assets

25.8

25.3

26.3

26.2

23.2

22.8

36.6

20.0

Depreciation and other amortization

8.5

7.0

6.6

6.9

7.0

7.0

7.2

7.9

Interest (income) expense, net

7.9

7.9

7.9

7.9

7.7

3.4

(10.7)

(32.6)

Other (income) expense, net

0.1

(0.8)

(1.5)

(0.9)

(0.9)

(1.3)

(1.4)

0.2

Income tax expense

19.1

32.8

19.0

40.5

32.1

24.7

25.1

35.2

EBITDA(1)

$135.6

$133.3

$122.6

$173.4

$158.4

$140.0

$129.1

$155.1

Stock-based compensation expense

15.5

15.1

16.3

16.7

17.8

18.1

18.1

21.1

Acquisition and integration related costs

8.5

2.0

5.0

3.2

1.6

0.5

1.1

2.2

Restructuring and related costs

0.2

2.0

Settlements and impairments

4.1

2.0

Adjusted EBITDA(1)

$159.6

$150.4

$143.9

$193.4

$177.9

$158.6

$152.7

$182.3

__________________________

(1) Totals may not foot due to rounding.

CoStar Group, Inc.

Reconciliation of Forward-Looking Guidance - Unaudited

(in thousands, except per share data)

Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income

Guidance Range

Guidance Range

For the Three Months

For the Year Ending

Ending March 31, 2023

December 31, 2023

Low

High

Low

High

Net income

$

71,000

$

75,000

$

314,000

$

329,000

Income tax expense

25,000

26,000

110,000

115,000

Income before income taxes

96,000

101,000

424,000

444,000

Amortization of acquired intangible assets

18,000

18,000

69,000

69,000

Stock-based compensation expense

21,000

21,000

88,000

88,000

Acquisition and integration related costs

1,000

1,000

1,000

1,000

Settlements and impairments

Other expense, net

Non-GAAP income before income taxes

136,000

141,000

582,000

602,000

Assumed rate for income tax expense(1)

26

%

26

%

26

%

26

%

Assumed provision for income tax expense

(35,400

)

(36,700

)

(151,300

)

(156,500

)

Non-GAAP net income

$

100,600

$

104,300

$

430,700

$

445,500

Net income per share - diluted

$

0.17

$

0.18

$

0.77

$

0.81

Non-GAAP net income per share - diluted

$

0.25

$

0.26

$

1.06

$

1.09

Weighted average outstanding shares - diluted

406,600

406,600

407,700

407,700

__________________________

(1) The assumed tax rate approximates our statutory federal and state corporate tax rate for the applicable period.

Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA

Guidance Range

Guidance Range

For the Three Months

For the Year Ending

Ending March 31, 2023

December 31, 2023

Low

High

Low

High

Net income

$

71,000

$

75,000

$

314,000

$

329,000

Amortization of acquired intangible assets

18,000

18,000

69,000

69,000

Depreciation and other amortization

8,000

8,000

34,000

34,000

Interest (income), net

(33,000

)

(33,000

)

(116,000

)

(116,000

)

Other expense, net

Income tax expense

25,000

26,000

110,000

115,000

Stock-based compensation expense

21,000

21,000

88,000

88,000

Acquisition and integration related costs

1,000

1,000

1,000

1,000

Settlements and impairments

Adjusted EBITDA

$

111,000

$

116,000

$

500,000

$

520,000


Contacts

Investor Relations:
Cyndi Eakin
Senior Vice President
CoStar Group Investor Relations
(202) 346-6784
ceakin@costar.com

News Media:
Matthew Blocher
Vice President
CoStar Group Corporate Marketing & Communications
(202) 346-6775
mblocher@costar.com


Read full story here

First published on Wed, Feb 22, 2023

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