Real estate data provider CoStar Group (NASDAQ: CSGP) reported revenue ahead of Wall Street’s expectations in Q2 CY2025, with sales up 15.3% year on year to $781.3 million. The company expects next quarter’s revenue to be around $802.5 million, close to analysts’ estimates. Its non-GAAP profit of $0.17 per share was 23.4% above analysts’ consensus estimates.

Is now the time to buy CSGP? Find out in our full research report (it’s free).

StockStory’s Take

CoStar’s second quarter saw solid execution, with revenue and non-GAAP earnings both surpassing Wall Street expectations, prompting a positive reaction from the market. Management attributed this performance to strong growth across its core platforms—including Apartments.com, Homes.com, and LoopNet—driven by substantial investment in expanding sales capacity and ongoing product enhancements. CEO Andrew Florance highlighted the company’s ability to deliver “57 consecutive quarters of double-digit revenue growth,” pointing to record net new bookings and high customer renewal rates as evidence of sustained demand, despite ongoing challenges in some segments of the commercial real estate market.

Looking ahead, CoStar’s updated guidance is shaped by continued investment in its sales organization and product innovation, with management emphasizing the importance of capturing further share in large addressable markets. The company expects Homes.com and Apartments.com to benefit from expanded sales teams and new features, while integration of Matterport’s technology and the pending Domain acquisition are aimed at broadening its global footprint. CFO Christian Lown cautioned that some margin pressure may persist as “timing of investment spend” shifts into the second half of the year, but management remains focused on driving profitable growth through strategic expansion and operational efficiency.

Key Insights from Management’s Remarks

Management identified sales force expansion, enhanced marketing, and new product features as central to the quarter’s revenue growth and set the stage for further investment-driven momentum in the coming quarters.

• Sales force expansion: CoStar committed to increasing its core sales team by 20% and nearly tripling the Homes.com sales force by year-end. This initiative is intended to accelerate bookings growth and customer acquisition, especially in underpenetrated segments of residential and commercial real estate.

• Apartments.com performance: Apartments.com delivered notable revenue growth, supported by a robust marketing campaign, high customer renewal rates, and increased unaided brand awareness. Management cited the launch of AI-powered features and virtual tours as key to enhancing user engagement and maintaining competitive differentiation.

• Homes.com recovery and product evolution: Homes.com returned to positive sales growth following prior quarter churn, with a significant boost in membership and improved Net Promoter Score. The introduction of new features, targeted marketing campaigns, and the “Boost” product drove better agent engagement and provided a pathway for upselling basic users.

• LoopNet’s monetization strategy: LoopNet benefited from a revised sales approach emphasizing portfolio-level advertising and asset-based pricing, resulting in increased monetization per listing and sequential acceleration in revenue growth. Management also highlighted the platform’s international expansion with launches in Spain and an upcoming entry into France.

• Matterport integration and cost focus: Following the acquisition of Matterport, CoStar began integrating its digital twin technology across platforms and started winding down Matterport’s noncore, loss-making operations. The company aims to shift Matterport’s business model toward higher-margin, enterprise-focused offerings, leveraging CoStar’s larger sales footprint to scale adoption.

Drivers of Future Performance

CoStar’s outlook for the rest of the year centers on continued investment in sales and marketing, product enhancements, and expanding into new geographies, while managing margin pressures from these growth initiatives.

• Continued sales team growth: Management plans to sustain aggressive hiring, particularly for Homes.com and Apartments.com, to capture additional share in a large and fragmented market. This expansion is expected to drive further increases in net new bookings and revenue, though it may pressure margins in the near term.

• Product integration and innovation: The company is focused on deepening integration of Matterport’s 3D imaging technology across its platforms and rolling out new features, such as AI-powered search and fee transparency tools. Management believes these enhancements will differentiate its offerings and improve client retention, supporting long-term revenue growth.

• International expansion and acquisitions: CoStar’s pending acquisition of Domain in Australia and ongoing launches in Europe are expected to add new revenue streams and extend its global reach. However, management acknowledged integration risks and the need to adapt to local market dynamics as potential headwinds.

Catalysts in Upcoming Quarters

Looking forward, our analysts will be monitoring (1) the pace and effectiveness of ongoing salesforce expansion, especially at Homes.com and Apartments.com; (2) traction and user adoption of new AI and 3D imaging features, including Matterport integration; and (3) progress on international growth initiatives, particularly the closing and integration of the Domain acquisition in Australia. Execution on these fronts will be key indicators of CoStar’s ability to sustain growth and improve profitability.

CoStar currently trades at $93.42, up from $85.04 just before the earnings. Is there an opportunity in the stock?See for yourself in our full research report (it’s free).

Our Favorite Stocks Right Now

When Trump unveiled his aggressive tariff plan in April 2024, markets tanked as investors feared a full-blown trade war. But those who panicked and sold missed the subsequent rebound that’s already erased most losses.

Don’t let fear keep you from great opportunities and take a look at Top 5 Strong Momentum Stocks for this week. This is a curated list of our High Quality stocks that have generated a market-beating return of 183% over the last five years (as of March 31st 2025).

Stocks that made our list in 2020 include now familiar names such as Nvidia (+1,545% between March 2020 and March 2025) as well as under-the-radar businesses like the once-micro-cap company Kadant (+351% five-year return). Find your next big winner with StockStory today.

StockStory is growing and hiring equity analyst and marketing roles. Are you a 0 to 1 builder passionate about the markets and AI? See the open roles here.