CoStar Group delivered a record-breaking second quarter, posting the highest net new bookings in its history and raising its full-year revenue outlook.
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CoStar hit $93M in net new bookings in Q2, a 65% increase from Q1, fueled by Apartments.com’s highest net new bookings quarter in two years. CoStar’s Homes.com vertical posted its best net new bookings in Q2, adding 6,300 members, an increase of 56% from last quarter.
“We're seeing strong performance across all our business segments, driven by strategic investments in expanding our sales force and innovative product development,” CEO Andy Florance said on the company’s quarterly earnings call.
CoStar Group topped Q2 revenue expectations and raised its full-year forecast to between $3.13B and $3.15B, projecting 15% growth over last year at the midpoint.
Chief Financial Officer Christian Lown credited the results to a surge in net new bookings and cost discipline as the company continues to invest across its platforms. CoStar also raised its third-quarter outlook.
On the call, Florance said the company hadn’t seen any loss of share or ability to capture value at Apartments.com, even given offerings from lower-priced rivals like Zillow. He said Apartments.com continues to have strong customer satisfaction and growing bookings.
“We feel that we're in a very strong competitive position and nothing is changing,” Florance said.
JPMorgan also raised its price target on CoStar Group to $101 from $87 on Wednesday. The bank said Q3 net new bookings could match Q2’s record pace, signaling an even sharper acceleration in year-over-year growth. Shares were at about $90.20 on Wednesday, up 5.9% as of the time of publication.
The historically strong Q2 performance comes after New York-based Third Point, which owns just under 2 million shares of CoStar Group, sent a note to investors in Q1 saying CoStar’s attempt to aggressively expand to multiple verticals was holding back the stock.
Third Point CEO Daniel Loeb wrote that the management team had been distracted by its expansion into the residential sector with its acquisition of Homes.com.
“Despite the continued strength of its core business, we believe recent capital allocation decisions have derailed CoStar’s compounding algorithm” of growth, Loeb wrote at the time.
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