What Management Said
Read the full Q3 2025 transcript ↗Certain portions of the discussion today may contain forward-looking statements, including the company's outlook and expectations for the fourth quarter and the rest of 2025 based on current beliefs and assumptions. We achieved another excellent quarter for CoStar Group, with third quarter 2025 revenue reaching $834 million, a 20% year-over-year increase. This is our 58th consecutive quarter of double-digit revenue growth, and we're one quarter closer to potentially 100 sequential quarters of double-digit revenue growth. Adjusted EBITDA in the third quarter rose to $115 million, up 51% over Q3 2024.
Profit margin in our commercial information and marketplace businesses increased to 47% for Q3 2025. Assuming we own Domain for the full third quarter, the revenue for the residential portals would now be $411 million in the quarter, or $1.644 billion annualized. We expect synergies across these residential portals will continue to drive improvement in our margin profile and believe that long-term margins can operate at more than 40% adjusted EBITDA margins. Apartments.com delivered another strong quarter, surpassing $1.2 billion in annual run-rate revenue and generating $303 million in Q3 revenue, an 11% increase year-over-year.
In Q3, the team conducted 200,000 client and prospect interactions, with nearly half of them occurring in person, a 66% year-over-year increase in Q3. Our total multifamily property count now exceeds 87,000, an increase of 12,000 in 2025. In the single-family rental segment, we had 1.4 million availabilities and 260,000 paid rentals, up 51% year-over-year. Homes.com rental traffic grew 55%, underscoring the synergy between Apartments.com and Homes.com.
What went well
- Third quarter revenue reached $834 million, up 20% year-over-year, marking the 58th consecutive quarter of double-digit revenue growth.
- Adjusted EBITDA rose 51% year-over-year to $115 million, meaningfully above the high end of the $75 million to $85 million guidance, with the commercial information and marketplace brand margin improving to 47% from 43% a year earlier.
- Net new bookings hit a record $84 million, up 92% year-over-year, with every major product contributing.
- Homes.com annualized net new bookings rose to $16 million, up 53% quarter-over-quarter and about 1,225% year-over-year, with 7,035 net new subscribers taking the base past 26,000 subscribing agents.
- Apartments.com surpassed $1.2 billion in annual run-rate revenue with $303 million in Q3 revenue up 11%, a 99% monthly renewal rate and a 93 NPS, while Homes.com network traffic rose 8.3% per Comscore as Zillow fell 6.5% and Realtor.com declined 0.7%.
What went wrong
- Analysts flagged that the sequential change in net bookings was down about 10% quarter-over-quarter, below the roughly 15% typical seasonal step, which management attributed to the timing of the Apartments.com NAA buying event in the prior quarter.
- Heavy Homes.com hiring, with classes of 100-plus reps, caused an expected drop-off in per-person sales productivity as onboarding and training catch up.
- Overall adjusted EBITDA margin remained modest at 14% given continued residential investment.
- Management noted continued volatility in the commercial real estate sector even as CoStar re-accelerated.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | FY2025 | $3.23 billion to $3.24 billion (raised, now including Domain and broadly in line with prior ex-Domain guidance plus the acquisition) |
| Adjusted EBITDA | FY2025 | $415 million to $425 million (raised, a $25 million increase excluding Domain reflecting strong Q3 performance, with Domain adding about $15 million) |
| Revenue | Q4 2025 | $885 million to $895 million (reiterated as new quarterly guide) |
| Adjusted EBITDA | Q4 2025 | $150 million to $160 million (reiterated as new quarterly guide) |
| CoStar product revenue growth | FY2025 | firmly in the 7% range (raised on steadily increasing net new bookings, the highest since 2022, with 8% to 9% growth expected in Q4) |
| LoopNet revenue growth | FY2025 | 10% to 11% (raised, aided by the Domain contribution, with organic Q4 growth of about 11%, its highest since 2023) |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Total revenue | up 20% to $834 million | Broad-based growth plus a $25 million stub-period contribution from the Domain acquisition; revenue excluding Domain of $808 million beat the high end of guidance |
| Adjusted EBITDA | up 51% to $115 million | Continued expense discipline, better than expected revenue, lower professional services costs and greater headcount savings |
| CoStar product revenue | up 8% | Renewed growth as net new bookings reached the highest level since 2022 despite CRE sector volatility |
| Apartments.com revenue | up 11% to $303 million | Surpassed $1.2 billion run rate with net new bookings up 37% and 4,200 communities added in the quarter |
| LoopNet revenue | up 12% | Organic performance in line with guidance plus a two-point lift from the Domain acquisition |
| Residential revenue (product line) | $55 million with $23 million from Domain | The $32 million organic portion was consistent with prior guidance; Homes.com revenue grew 20% |
| Other revenue | $78 million with $44 million from Matterport | Matterport contribution, with Q4 expected slightly lower on Ten-X revenue recognition timing and the Pro2 camera sunset |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Homes.com business model advantage | Building audience and member base post-launch | Framed as able to sell to more than 50% of agents versus roughly 5% for lead-diversion portals, with 130,000 active listings marketed or boosted representing 6% of the for-sale market, well ahead of a cited Zillow showcase estimate | — |
| AI product acceleration | AI used internally across the organization | Launched AI Smart Search on Homes.com in partnership with Microsoft, enabling conversational multi-geography queries and producing improved user engagement | — |
| Homes.com monetization streams | Primarily agent memberships | Boost sales rose 136% quarter-over-quarter to $617,000 with 25% of buyers converting to memberships, and new-home-builder enhanced exposure generated $743,000 in annualized bookings since August 25 | — |
| Domain acquisition | Held a 16.9% stake, deal pending | Closed August 27 for $1.9 billion total consideration, contributing $25 million of stub-period revenue with about 90% residential mix | — |
| Sales force scaling | Aggressive hiring across brands | Over 2,000 reps company-wide, with Apartments.com past 500 reps and Homes.com at 500 in production plus 150 in pre-production, tempering the growth pace to let training catch up | — |
Q&A Summary
The sequential change in bookings was down about 10% versus a roughly 15% historical norm, so what seasonal behaviors are you seeing, especially on the residential side, and are agents canceling?
Florance said Apartments.com carries seasonality from the prior-quarter NAA event where property managers do annual purchasing, and some limited residential seasonality is expected around year-end holidays with the spring selling season being the peak. He noted the Homes.com sales production line is very linear with no seasonality yet beyond weekends.
Can you give more detail on sequential booking trends across the core businesses and the Q4 trajectory given the bigger sales force?
Lown pointed to the raised full-year guidance and said bookings are pleasing with the sales force expansion just getting started, as much of it arrived late in Q1 and Q2 and productivity takes time to ramp. Florance highlighted Homes.com bookings up 53% quarter-over-quarter, and Lown added CoStar is re-accelerating and Apartments.com trends are as modeled.
How did Apartments.com bookings perform sequentially versus the roughly $45 million in Q2, and what drives the 11% to 12% Q4 guidance despite the sales force ramp?
Lown cited continued rooftop expansion and sales force growth, with historical seasonality showing Q2 largest and Q3 and Q4 relatively similar though Q4 can tick up. He noted growth across all rooftop segments, with the 1-to-49-unit tier up significantly year-over-year and larger tiers also growing at or above recent trends.
You are investing 50% of software costs into AI, so where are those expenses redirected from, and how should we think about total Homes.com expenses for 2026?
Florance said the 50% of software development going into Homes.com AI features is an allocation of existing resources, not an increase in total spend. He indicated same or lower Homes.com investment spend in 2026, with costs not materially rising beyond the already-baked-in larger sales force.
Can you unpack the Homes.com bookings number in terms of rep productivity and pricing?
Florance described remarkable headcount growth with classes of 100-plus reps that naturally pressures per-person productivity, yet bookings kept growing with positive ROI on each incremental rep. He said the company has capped headcount growth to let training catch up and noted a slight price increase quarter-over-quarter while prioritizing penetration.
How do you view the residential portfolio and its path toward target margins?
Florance said the residential portals share a uniform model built around marketing real estate, pointing to global precedents like Rightmove, Idealista and REA Group operating at margins typically around 50% and as high as 75%. He said the combined residential group is making good progress toward intermediate- to long-term margin goals through continued blocking and tackling.
More on Costar Group, Inc.
Reported 2025-10-28 · figures from the Costar Group, Inc. Q3 2025 earnings call.
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