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CoStar Group (CSGP) Q3 Earnings Beat, Revenues Increase Y/Y

CoStar CSGP reported third-quarter 2020 adjusted earnings of $2.26 per share that beat the Zacks Consensus Estimate by 8.7%. However, the figure declined 13.4% year over year.

Revenues of $425.6 million outpaced the Zacks Consensus Estimate by 2% and improved 20.6% year over year.

North America revenues were $410.9 million, up 19.5% year over year. Moreover, international revenues were $14.7 million, up 63.1% year over year.

Markedly, CoStar had 69 million monthly unique visitors on its platforms in the quarter under review, up 33% year over year.

Quarter Details

Information and analytics revenues were $199.2 million, up 13.5% year over year.

CoStar Suite revenues increased 6.4% year over year to $166 million. Information services revenues surged 70.4% from the year-ago quarter to $33.2 million.
 

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

Online Marketplaces revenues increased 27.7% year over year to $226.5 million. Apartments.com grew 23% and LoopNet grew 19% year over year in the third quarter.

Moreover, per ComScore, Apartments.com attracted more than 25 million average monthly unique visitors, up 20% year over year. Further, Apartments.com had 2.3 times as many unique visitors as RentPath, nine times as many as Zumper, 12 times as many as Apartment List and 22% more than the Zillow rental network.

Multi-family revenues increased 23.4% year over year to $155.2 million. Commercial property and land revenues were $71.3 million, up 38.1%.

Operating Details

Gross margin expanded 190 basis points (bps) on a year-over-year basis to 81.7%.

Adjusted EBITDA margin of 31.4% contracted 530 bps on a year-over-year basis.

Selling and marketing expenses as a percentage of revenues increased 570 bps from the year-ago quarter to 34.5%.

General and administrative expenses as a percentage of revenues increased 240 bps on a year-over-year basis to 15.3%.

Non-GAAP operating margin contracted 870 bps on a year-over-year basis to18%.

Balance Sheet

As of Sep 30, 2020, CoStar’s cash and cash equivalents and restricted cash were $3.87 billion compared with $3.54 billion as of Jun 30.

CoStar had long-term debt of $986.4 million as of Sep 30 compared with $745 million as of Jun 30.

Guidance

For the fourth quarter of 2020, revenues are expected between $429 million and $435 million, suggesting growth of 15% year over year at mid-point. Adjusted EBITDA is expected in the range of $139-$144 million.

The Zacks Consensus Estimate for revenues is currently pegged at $430 million, which indicates growth of 14.8% from the year-ago quarter’s reported figure.

Non-GAAP earnings are expected between $2.34 and $2.44 per share. The consensus mark is pegged at $2.52 per share, implying a decline of 10.6% from the year-ago quarter’s reported figure.

CoStar currently expects revenues between $1.644 billion and $1.650 billion (up from previous guidance of $1.63-1.64 billion), suggesting growth of 18% year over year.

The Zacks Consensus Estimate for revenues is currently pegged at $1.64 billion, which indicates growth of 16.9% from the year-ago quarter’s reported figure.

Adjusted EBITDA is expected in the range of $525-$530 million for 2020, indicating 4% growth at the midpoint of the range compared with 2019.

Non-GAAP earnings are expected between $9.39 and $9.49 per share. The Zacks Consensus Estimate is pegged at $9.37 per share, implying a decline of 8.1% from the year-ago quarter’s reported figure.

Zacks Rank & Stocks to Consider

Currently, CoStar carries a Zacks Rank #3 (Hold).

Some better-ranked stocks in the broader technology sector are AMETEK AME, Digital Turbine APPS and Arrow Electronics ARW. All the three stocks have a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

All the three stocks are set to release their quarterly results on Oct 29.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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