8-K: CoStar Group Q3 Revenue Jumps 20%, Boosts 2025 Outlook

CoStar Group reported a strong third quarter 2025 with 20% year-over-year revenue growth and a 92% surge in net new bookings, leading to an increased full-year adjusted EBITDA guidance.

Summary

• Revenue for Q3 2025 increased 20% year-over-year to $834 million, up from $693 million in Q3 2024.
• Net new bookings for Q3 2025 reached $84 million, marking a 92% increase year-over-year.
• Adjusted EBITDA for Q3 2025 was $115 million, a 51% increase from $75.9 million in Q3 2024.
• The company reported a GAAP net loss of $31 million, or $0.07 per diluted share, for Q3 2025, compared to a net income of $53 million, or $0.13 per diluted share, in Q3 2024.
• Non-GAAP net income rose 10% year-over-year to $97 million, with non-GAAP net income per diluted share at $0.23, up 6% year-over-year.
• The commercial information and marketplace businesses achieved a 47% profit margin in Q3 2025, a 400 basis point increase sequentially from Q2 2025 and year-over-year.
• Homes.com Members grew to over 26,000, a nearly 150% increase since Q3 2024, with 7,000 new members added in Q3.
• CoStar Group launched Smart Search on Homes.com, utilizing proprietary AI and natural language capabilities, and Community Boost for New Homes Builder membership.
• The Homes.com Network is now the second largest in the U.S. with 115 million average monthly unique visitors.

Sentiment

Score: 8

Explanation: The company demonstrated strong operational performance with double-digit revenue growth, significant increase in net new bookings, and raised full-year guidance. The growth of Homes.com and strategic acquisitions are positive indicators. While a GAAP net loss was reported, non-GAAP net income increased, suggesting the loss is influenced by non-cash or acquisition-related expenses. The overall outlook is positive.

Positives

• Achieved 58th consecutive quarter of double-digit revenue growth, with Q3 2025 revenue up 20% year-over-year to $834 million.
• Net new bookings surged 92% year-over-year to $84 million, indicating strong sales momentum.
• Adjusted EBITDA increased significantly by 51% year-over-year to $115 million in Q3 2025.
• Non-GAAP net income grew 10% year-over-year to $97 million, and non-GAAP net income per diluted share increased 6% to $0.23.
• Commercial information and marketplace businesses delivered a strong 47% profit margin, up 400 basis points sequentially and year-over-year.
• Homes.com membership grew by nearly 150% year-over-year to over 26,000 members, adding 7,000 in Q3 alone.
• Successful launch of innovative features like Smart Search on Homes.com and Community Boost for new home builders.
• Homes.com Network established itself as the second largest in the U.S. with 115 million average monthly unique visitors.
• Increased full-year 2025 adjusted EBITDA guidance by $40 million at the midpoint, reflecting strong performance and confidence.

Negatives

• Reported a GAAP net loss of $31 million for Q3 2025, a significant decline from a net income of $53 million in Q3 2024.
• GAAP net loss per diluted share was $0.07 in Q3 2025, compared to a net income per diluted share of $0.13 in Q3 2024.
• Net cash provided by operating activities decreased to $267.9 million for the nine months ended September 30, 2025, from $298.0 million in the prior year period.
• Net cash used in investing activities significantly increased to $(2,749.8) million for the nine months ended September 30, 2025, primarily due to acquisitions, leading to a substantial decrease in cash and cash equivalents.

Risks

• The Stock Repurchase Program may be suspended or discontinued at any time at the Company's discretion.
• Inability to attract and retain new clients.
• Inability to successfully develop and introduce new or updated online marketplace services, information, and analytics.
• Inability to compete successfully against existing or future competitors in attracting advertisers and in general.
• Effects of fluctuations and market cyclicality.
• Effects of global economic uncertainties and downturns or a downturn or consolidation in the real estate industry.
• Inability to hire qualified persons for, or retain and continue to develop the sales force, or unproductivity of the sales force.
• Inability to retain and attract highly capable management and operating personnel.
• Downward pressure that internal and external investments may place on operating margins.
• Inability to increase brand awareness.
• Inability to maintain or increase internet traffic to marketplaces, and the risk that methods used to measure unique visitors may misstate actual numbers or differ from competitors' methods.
• Inability to attract new advertisers.
• Inability to successfully identify, finance, integrate, and/or manage costs related to acquisitions, specifically Matterport and Domain.
• Inability to complete certain strategic transactions if a proposed transaction is subject to review or approval by regulatory authorities.
• Inability to realize the benefits of the acquisition of Matterport.
• Effects of cyberattacks and security vulnerabilities, and technical problems or disruptions.
• Significant costs associated with undertaking a large infrastructure project to build out the campus in Richmond, Virginia.
• Inability to generate increased revenues from current or future geographic expansion plans.
• Risks related to acceptance of credit cards and debit cards and facilitation of other customer payments.
• Effects of climate related events and other events beyond control.
• Effects related to attention to climate-related risks and opportunities.
• Inability to obtain and maintain accurate, comprehensive, or reliable data.
• Inability to obtain and maintain stable data feeds, or disruption of data feeds.
• Inability to enforce or defend ownership and use of intellectual property.
• Effects of use of new and evolving technologies, including artificial intelligence, on the ability to protect data and intellectual property from misappropriation by third parties.
• Inability to defend against potential legal liability for collecting, displaying, or distributing information.
• Inability to obtain or retain listings from real estate brokers, agents, property owners, and apartment property managers.
• Inability to maintain or establish relationships with third-party listing providers.
• Inability to comply with the rules and compliance requirements of Multiple Listing Services.
• Risks related to international operations and effects of foreign currency exchange rate fluctuations.
• Indebtedness.
• Effects of a lowering or withdrawal of the ratings assigned to debt securities by rating agencies.
• Effects of any actual or perceived failure to comply with privacy laws and standards.
• Effects of changes in tax laws, regulations, or fiscal and tax policies.
• Effects of third-party claims, litigation, regulatory proceedings, or government investigations.
• Risks related to return on investment.
• Inability of third-party suppliers upon which Matterport relies to fulfill its needs.
• Risks associated with the ability to integrate Domain Holdings Australia Limited and realize the benefits of the Domain Transaction.
• Risks related to open source software.

Future Outlook

CoStar Group expects full-year 2025 revenue in the range of $3.23 billion to $3.24 billion, representing approximately 18% year-over-year growth at the midpoint. The company increased its full-year 2025 adjusted EBITDA guidance to a range of $415 million to $425 million, an increase of $40 million at the midpoint from previous guidance. For Q4 2025, revenue is projected to be between $885 million and $895 million, with adjusted EBITDA in the range of $150 million to $160 million. Full-year 2025 non-GAAP net income per diluted share is expected to be $0.82 to $0.84, and Q4 2025 non-GAAP net income per diluted share is expected to be $0.26 to $0.28.

Management Comments

• Andy Florance, Founder and CEO: "We had an outstanding Q3 2025 as we delivered our 58th consecutive quarter of double-digit revenue growth with a 20% year-over-year increase in revenue."
• Andy Florance, Founder and CEO: "We achieved net new bookings in the third quarter of $84 million, up 92% year-over-year. The dedicated Homes.com sales team achieved its best net new bookings quarter."
• Andy Florance, Founder and CEO: "I am extremely excited about the launch of Smart Search on Homes.com. Using proprietary AI and natural language capabilities designed by our engineers and developers, Smart Search lets consumers use their own voice to precisely search for a home."
• Christian Lown, CFO: "We delivered strong revenue growth and adjusted EBITDA growth well ahead of our guidance, in this quarter."

Industry Context

CoStar Group's strong Q3 performance, particularly the 20% revenue growth and 92% increase in net new bookings, demonstrates robust demand for its online real estate marketplaces, information, and analytics services. The significant growth of Homes.com, now the second-largest network in the U.S. by unique visitors, positions CoStar as a formidable competitor in the residential real estate market, challenging established players. The integration of recent acquisitions like Domain and Matterport, alongside the launch of AI-powered Smart Search, indicates a strategic focus on expanding market share and leveraging advanced technology to enhance user experience and data offerings across both commercial and residential segments. This aggressive expansion and innovation are key trends in the evolving real estate technology sector, where data, analytics, and user engagement are critical differentiators.

Comparison to Industry Standards

• Homes.com Network's 115 million average monthly unique visitors for Q3 2025 positions it as the second largest in the U.S. residential real estate industry.
• This compares favorably to Realtor.com's 72 million average monthly unique users (Q2 2025) and Redfin's 50 million monthly active visitors (Q2 2025).
• Zillow Group remains the industry leader with 243 million average monthly unique users (Q2 2025), indicating CoStar's Homes.com still has significant room for growth to challenge the top position.
• The 20% year-over-year revenue growth and 51% adjusted EBITDA increase demonstrate strong operational leverage and market penetration, particularly in a competitive real estate technology landscape.

Stakeholder Impact

• Shareholders: Positive outlook due to strong revenue growth, increased adjusted EBITDA guidance, and robust performance in key segments like Homes.com, despite a GAAP net loss.
• Customers: Benefit from new product launches like Smart Search on Homes.com and Community Boost, enhancing user experience and service offerings.
• Employees: Ongoing integration of recent acquisitions (Domain, Matterport) may lead to organizational changes or new opportunities.
• Competitors: CoStar Group's aggressive growth and market share expansion, particularly with Homes.com, intensify competition in the real estate technology sector.

Next Steps

• Management will conduct a conference call to discuss the third quarter 2025 results and the company's outlook at 5:00 PM ET on Tuesday, October 28, 2025.
• The company intends to utilize its corporate website (investors.costargroup.com) as a channel for distributing material company information, including investor presentations.

Key Dates

Recommendation

CoStar Group's Q3 2025 results demonstrate robust operational strength, highlighted by 20% year-over-year revenue growth and a remarkable 92% surge in net new bookings. The company's decision to raise its full-year adjusted EBITDA guidance by $40 million at the midpoint signals strong confidence in its future performance. While a GAAP net loss was reported, the increase in non-GAAP net income suggests that the underlying business is healthy, with the GAAP loss likely influenced by non-cash or acquisition-related expenses. The rapid expansion of Homes.com, now the second-largest network in the U.S., and strategic integrations of Matterport and Domain, position CoStar for continued market leadership and growth in the evolving real estate technology landscape. These factors, combined with innovative product launches like AI-powered Smart Search, indicate a strong growth trajectory and justify a 'buy' recommendation for long-term investors.

Keywords

Real Estate Technology, Commercial Real Estate, Online Marketplaces, Financial Results, Earnings, CoStar Group, Homes.com, Matterport, Domain, Adjusted EBITDA, Revenue Growth, Net New Bookings, AI Search, Property Tech, Digital Twin Technology