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CoStar Group (CSGP) Q4 Earnings Beat Estimates, Revenues Up Y/Y

CoStar Group CSGP reported non-GAAP earnings of 33 cents per share in fourth-quarter 2023, which surpassed the Zacks Consensus Estimate by 3.13% but dropped 13.2% year over year.

Revenues of $640 million beat the Zacks Consensus Estimate by 1.07% and increased 11.7% year over year.

Top-Line Details

CoStar revenues (37.1% of revenues) of $238 million beat the consensus estimate by 0.72% and increased 8.5% year over year. Apartments.com revenues increased 23% year over year. Net new bookings in the fourth quarter amounted to $34 million.

Information Services revenues (6.7% of revenues) of $42.7 million missed the consensus mark by 2.18% but increased 4.9% year over year.

CoStar Group, Inc. Price, Consensus and EPS Surprise

 

CoStar Group, Inc. Price, Consensus and EPS Surprise
CoStar Group, Inc. Price, Consensus and EPS Surprise

CoStar Group, Inc. price-consensus-eps-surprise-chart | CoStar Group, Inc. Quote

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Multifamily revenues (38.1% of revenues) of $244 million lagged the consensus estimate by 0.70% but increased 23.1% year over year.

LoopNet revenues (10.7% of revenues) of $69 million beat the consensus mark by 1.09% and were up 11.7% year over year.

Fourth-quarter residential revenues (1.6% of revenues) were $10 million, beating the consensus mark by 48.15% but declining 38.3% year over year.

Other marketplace revenues (5.8% of revenues) of $37.4 million beat the consensus mark by 11.1% but dropped 1.8% year over year.

During the fourth quarter, CoStar acquired OnTheMarket in the U.K., aiming to enhance its appeal to homebuyers and sellers. Since the acquisition, the company observed substantial growth in traffic and leads.

As reported by Google Analytics, Homes.com achieved a milestone with 43 million unique visitors in 2023.

Operating Details

In the reported quarter, selling and marketing expenses increased 42.2% year over year to $246.7 million. As a percentage of revenues, selling and marketing expenses were 38.5% compared with 30.3% reported in the year-ago quarter.

General and administrative expenses, as a percentage of revenues, increased 70 basis points (bps) on a year-over-year basis to 16.7%.

Software development expenses, as a percentage of revenues, expanded by 70 bps. Customer base amortization expenses contracted 50 bps on a year-over-year basis.

Adjusted EBITDA margin in the fourth quarter was 20.3% compared with 31.8% in the year-ago quarter.

Balance Sheet and Cash Flow Statement

CoStar reported cash and cash equivalents of $5.2 billion as of Dec 31, 2023, compared with $5.2 billion as of Sep 30, 2023.

The company had a long-term debt of $990.5 million as of Dec 31, 2023, compared with $990.1 million as of Sep 30, 2023.

It generated $489.5 million in cash from operations compared with $340.9 million in the previous quarter.

Guidance

CoStar expects first-quarter 2024 revenues between $645 million and $650 million, indicating a year-over-year growth of approximately 11% at the midpoint.

The Zacks Consensus Estimate for revenues is pegged at $647.68 million, indicating 10.83% year-over-year growth.

The company anticipates a negative adjusted EBITDA of around $10 million for the first quarter of 2024.

Earnings are expected to be between 6 cents per share and 7 cents for the first quarter of 2024. The Zacks Consensus Estimate for the quarter’s earnings is pegged at 29 cents, unchanged in the past 30 days.

Zacks Rank & Stocks to Consider

CoStar currently carries a Zacks Rank #4 (Sell).

CSGP’s shares have declined 7% compared with the Zacks Computer and Technology sector’s rise of 7.7% year to date.

Here are some better-ranked stocks worth considering in the broader sector.

Agilent Technologies A, ACM Research ACMR and Bandwidth BAND are some same-ranked stocks that investors can consider in the broader sector.

All three stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Agilent Technologies shares have declined 3.5% year to date. A is scheduled to release first-quarter 2024 results on Feb 27.

ACM Research shares have declined 6.1% year to date. ACMR is set to report its fourth-quarter 2023 results on Feb 28.

Bandwidth shares have declined 6.7% year to date. BAND is set to report its fourth-quarter 2023 results on Feb 28.

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CoStar Group, Inc. (CSGP) : Free Stock Analysis Report

Bandwidth Inc. (BAND) : Free Stock Analysis Report

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