CoStar Group — Q3 2026 Earnings Summary

Financial Performance:

• Revenue for the quarter ended September 30, 2026, was $952 million, a 14% increase year-over-year from $834 million.
• Net income was $74 million, an increase of $105 million year-over-year from a loss of $31 million.
• Earnings per diluted share were $0.18 for the quarter.
• Adjusted Net Income rose to $153 million, up 59% year-over-year.
• Adjusted EPS was $0.38, up 65% year-over-year.
• EBITDA was $179 million, up $166 million year-over-year.
• Adjusted EBITDA reached a record $229 million, doubling from the prior year period.
• Net new bookings were $37 million for the quarter.
• Cash and cash equivalents were $500 million as of September 30, 2026, down from $1,633 million at December 31, 2025.
• Long-term debt, net, was $994 million as of September 30, 2026, compared to $993 million at December 31, 2025.
• Deferred revenue was $250 million as of September 30, 2026, up from $205 million at December 31, 2025.
• Net cash provided by operating activities for the nine months ended September 30, 2026, was $455 million, compared to $268 million in the prior year period.
• Net cash used in investing activities for the nine months ended September 30, 2026, was $981 million, primarily driven by $789 million in cash paid for acquisitions.
• Net cash used in financing activities for the nine months ended September 30, 2026, was $706 million, including $668 million in stock repurchases.

Guidance and Future Outlook:

• Full-year 2026 Adjusted EBITDA guidance raised to $820 million to $840 million, representing a $30 million increase at the midpoint from July 2026 guidance.
• Full-year 2026 revenue guidance raised to $3.75 billion to $3.77 billion, representing approximately 16% year-over-year growth at the midpoint.
• Full-year 2026 Adjusted EPS guidance raised to $1.38 to $1.41 based on 405 million shares.
• Q4 2026 Adjusted EBITDA guidance set at $275 million to $295 million, representing a 29% margin at the midpoint.
• Q4 2026 revenue guidance set at $976 million to $996 million, representing approximately 10% year-over-year growth at the midpoint.
• Q4 2026 Adjusted EPS guidance set at $0.46 to $0.50 based on 400 million shares.
• Management expects to realize an additional $200 million in cost savings over the next 12 to 18 months.
• The company remains on track to achieve a 2028 Adjusted EBITDA target of $1.25 billion.
• Total anticipated cost savings for 2026 are approximately $150 million versus original guidance.

Business Segments and Product Lines:

• Commercial Real Estate revenue was $492 million for the quarter, up from $461 million in the prior year period.
• Residential Real Estate revenue was $460 million for the quarter, up from $373 million in the prior year period.
• Commercial Real Estate Adjusted EBITDA was $180 million for the quarter, compared to $183 million in the prior year period.
• Residential Real Estate Adjusted EBITDA was $49 million for the quarter, compared to a loss of $69 million in the prior year period.
• The company leverages AI and proprietary ground truth data to provide value to information clients.
• Global scale enables the delivery of best-in-class consumer-facing AI functionality at lower costs than competitors.
• The acquisition of Zonda and the agreement to acquire Vexcel are cited as enhancements to proprietary datasets and global scale.

Market and Competitive Landscape:

• CoStar Group is described as a leading global provider of online real estate marketplaces, information, analytics, and 3D digital twin technology.
• The company's websites attracted 121 million average monthly unique visitors in the third quarter of 2026.
• Management states the company has a unique competitive advantage in providing value to information clients through AI and data.
• The company believes its global scale allows for lower-cost delivery of consumer-facing AI functionality compared to competitors.

Risks and Challenges:

• The release notes risks related to AI technologies, including potential delays or changes to the CoStar AI launch.
• Risks include the inability to successfully identify, finance, integrate, and manage costs related to acquisitions, including the potential inability to complete the Vexcel acquisition.
• Potential risks involve the inability to realize benefits from acquisitions of Matterport, Domain, Zonda, or Vexcel.
• Risks include the inability to attract and retain new clients, advertisers, or qualified sales and management personnel.
• Market cyclicality, global economic uncertainties, and downturns in the real estate industry are cited as potential risks.
• Risks associated with cyberattacks, security vulnerabilities, and technical problems or disruptions are noted.
• The company faces risks related to the inability to maintain or increase internet traffic to its marketplaces and the accuracy of visitor measurement methods.
• Risks include the inability to enforce or defend intellectual property ownership and the effects of new technologies on data protection.
• Risks related to compliance with Multiple Listing Services rules, open source software, international operations, and foreign currency fluctuations are mentioned.
• The company's indebtedness and the effects of rating agency actions on debt securities are noted as risks.
• Risks related to privacy or data protection laws and changes in tax laws are included.
• The Stock Repurchase Program may be suspended or discontinued at the Company's discretion.

Management Commentary and Tone:

• Andy Florance, Founder and CEO, stated the company generated "outstanding profitability growth" and delivered on its commitment to expand margins.
• Management expressed confidence in the strategy to fuel future growth through AI and proprietary data.
• Florance noted that Adjusted EBITDA was "considerably above the high end" of the previous guidance range.
• Management highlighted significant additional efficiencies achieved in the quarter.
• The tone reflects confidence in the ability to improve efficiency without sacrificing revenue growth.

Other Key Points:

• The company changed its segment composition from geography-based to product portfolio-based in the fourth quarter of 2025 and recast prior period disclosures.
• Major brands include CoStar, LoopNet, Apartments.com, Homes.com, Domain, Matterport, STR, Zonda, Ten-X, and OnTheMarket.
• The company acquired Zonda and has an agreement to acquire Vexcel Group, Inc.
• The company repurchased $668 million of stock during the nine months ended September 30, 2026.
• Litigation accrual was reduced to $0 from $99 million at December 31, 2025.
• The assumed tax rate for non-GAAP measures is 26% for the full year and fourth quarter of 2026.
• Management will conduct a conference call on October 27, 2026, at 5:00 PM ET.