What Management Said
Read the full Q2 2026 transcript ↗The company's outlook and expectations are based on current beliefs and assumptions. Our second quarter 2026 financial results marked a profitability inflection point for CoStar Group as adjusted EBITDA more than doubled year-over-year to $184 million. We generated $925 million of revenue in the second quarter, an 18% increase year-over-year. We held our increase in operating costs to just 2% year-over-year, all while continuing to invest in numerous long-term growth initiatives.
We expect to deliver the highest full-year adjusted EBITDA in CoStar Group's history in 2026, and we're confirming our full-year guidance range of $780 million-$820 million. Along the way, we expect to deliver two consecutive quarters of our highest ever adjusted EBITDA. Our commercial real estate business generated $481 million of revenue in Q2, an increase of 8% year-over-year, and it generated adjusted EBITDA of $172 million, up 7% year-over-year. CoStar revenue was $337 million, up 9% year-over-year, and net new bookings accelerated up 24%.
That subscriber base creates a powerful demand for commercial property sale and lease listings, and it makes the platform extremely valuable to the brokers and owners who list with us. Overall, commercial revenue accelerating growth was partly offset by Ten-X, where we have been restructuring the business for future growth and cost control, and it enabled us to reduce costs by $7 million year-to-date. Going forward, Ten-X will be separated from LoopNet with dedicated sales, marketing, and leadership to more effectively drive growth. For our third CoStar product launch in Q2, we launched public record search in the U.K., providing extensive transparency into 6.9 million freehold and leasehold ownership titles and 6.8 million properties and parcel groups.
What went well
- The second quarter marked a profitability inflection point: adjusted EBITDA more than doubled year over year to $184 million (the second-highest quarterly level in company history) and came in above the high end of guidance, delivering a 20% adjusted EBITDA margin a full quarter ahead of plan.
- Revenue grew 18% year over year to $925 million, CoStar Group's 61st consecutive quarter of double-digit revenue growth, while operating costs were held to just a 2% increase; net income rose 817% and EBITDA rose 441%.
- The residential segment turned profitable for the first time since Homes launched in Q1 2024, generating a record $12 million of adjusted EBITDA (up $41 million sequentially) on revenue of $444 million, up 33% year over year.
- The flagship CoStar product grew revenue 9% to $337 million with net new bookings accelerating 24%, subscribers up 19% to 327,000, a 93% renewal rate and an NPS of 68; CoStar Debt Solutions delivered a second consecutive record sales quarter with net new monthly bookings up 96%.
- Management took roughly $100 million out of the projected 2026 expense base, establishing a lower expense baseline, and raised the midpoint of full-year adjusted EBITDA guidance by $30 million versus February while affirming the $780-$820 million range and the 2026-2030 targets.
- LoopNet revenue rose 14% to $87 million with U.S. paid listings up 9% to 220,000, and Matterport subscription revenue grew 16% with its best-ever month of enterprise customer acquisition in June.
What went wrong
- Net new bookings of $69 million were up only 3% sequentially but down roughly 26% year over year, and management cut full-year revenue guidance, reflecting slower near-term top-line momentum.
- The Ten-X transactional auction business was restructured, with revenue declining $4 million in the quarter; Ten-X accounted for about 25% of the full-year revenue guidance reduction and is being separated from LoopNet.
- Apartments.com average revenue per property fell about 3.6% year over year on a mix shift toward smaller communities, as an elevated multifamily vacancy environment and a competitor discounting aggressively to buy share pressured pricing.
- Management reduced average Homes.com sales headcount 21% sequentially to prioritize productivity and hitting EBITDA targets over top-line growth, and organic revenue growth is now expected to run only ~8.5-9% in the second half.
Guidance Changes
| Metric | Period | Current guidance |
|---|---|---|
| Revenue | Q3 2026 | $935M-$945M (+13% YoY at the midpoint) |
| Adjusted EBITDA | Q3 2026 | $190M-$210M (21% margin, ~700 bps above Q3 2025) |
| Adjusted EPS | Q3 2026 | $0.31-$0.34 (assumes 403M weighted-average shares) |
| Revenue | FY2026 | Revised to $3.715B-$3.755B (+15% YoY at the midpoint) |
| Adjusted EBITDA | FY2026 | Affirmed $780M-$820M ($30M higher at the midpoint than February guidance) |
| Adjusted EPS | FY2026 | Affirmed $1.32-$1.39 ($0.08 / 6% higher than February) |
Performance Breakdown
| Metric | YoY | Note |
|---|---|---|
| Total revenue | +18% to $925M | 61st consecutive quarter of double-digit growth, led by residential (+33%) and steady commercial (+8%) growth. |
| Adjusted EBITDA | +116% to $184M | Profitability inflection driven by ~2% cost growth, personnel-cost actions, operating efficiencies and early AI benefits; 20% margin, up ~900 bps. |
| Commercial revenue | +8% to $481M | CoStar +9% and LoopNet +14% growth, partly offset by lower Ten-X transaction volume; commercial adjusted EBITDA $172M (36% margin). |
| Residential revenue | +33% to $444M | Strength from Domain, Apartments.com and Homes.com; segment reached its first-ever positive adjusted EBITDA of $12 million. |
| Apartments.com revenue | +9% to $318M | Paid properties up 12% to ~93,000 with 99% monthly renewal, offset by ~3.6% lower ARPU from mix shift to smaller communities. |
| Net income | +817% | Revenue growth combined with tight cost control; EBITDA up 441% year over year. |
| Net new bookings | -26% (to $69M, +3% QoQ) | Homes.com sales-force optimization, Ten-X restructuring and Apartments competition weighed on bookings. |
Earnings Call Themes & Trends
| Topic | Previous mention | Current period | Trend |
|---|---|---|---|
| Profitability inflection and cost discipline | Heavy investment phase in Homes.com and marketplaces | Pivot to committing to EBITDA targets over pure revenue growth; ~$100M taken out of the 2026 expense base, op costs +2%, and a 20% adjusted EBITDA margin reached a quarter early. | — |
| Apartments.com competition and pricing integrity | Dominant multifamily marketplace | A competitor is discounting aggressively amid elevated multifamily vacancy; CoStar is holding price on the strength of a ~2.5x lead-to-lease conversion advantage, with June the third-best gross-sales month ever. | — |
| Homes.com sales-force strategy | Rapid build of a large centralized inside-sales team in Richmond | Shift toward higher-productivity field sales (about 2x inside-sales productivity), headcount cut 21% sequentially while delivering similar bookings, with depth advertising as a new revenue driver. | — |
| AI economics | Early AI deployment | AI cost savings currently exceed incremental token costs; 2026 token consumption is running under budget, with proprietary-data 'expert model' content seen as a high-gross-margin opportunity and coding efficiencies from LLMs. | — |
| International expansion | Europe integration | Launched CoStar in France (290,000+ properties) and U.K. public-record search (6.9M titles), with Australia launch targeted for H2 2026; LoopNet Australia and Australia expansion prioritized for margin. | — |
| CFO transition | Chris Lown as CFO | Chris Lown departs for Allstate; Robin Rossmann, who cut ~$50M (25%) from the European cost structure while growing double digits, promoted to CFO. | — |
Q&A Summary
George Tong (Goldman Sachs) asked what drove the ~26% year-over-year decline in net new bookings and what gives confidence bookings can improve.
Management attributed it to the strategic Homes.com sales-force efficiency drive, Ten-X (about 25% of the revenue guide change) and Apartments competition, expressing confidence from upcoming commercial product launches over the next four to six quarters and continued sales-force expansion and productivity gains.
Stephen Sheldon (William Blair) asked what organic growth the updated guidance assumes for the back half and what it implies for 2027.
Lown said organic growth for the second half is expected within about 1-1.5% of the ~10% first-half organic rate, and declined to give a 2027 forecast.
Ryan Tomasello (KBW) asked how much of the Apartments deceleration reflects tier downgrades versus mix, and macro versus competition.
Florance said it is a combination of an elevated-vacancy macro environment stressing owners and a competitor buying share with low pricing; CoStar is maintaining price integrity, keeping ARPU roughly flat, and recapturing business over time via a 2.5x lead-to-lease conversion advantage.
Surinder Thind (Jefferies) asked whether the Homes.com field-sales shift raises customer-acquisition cost and how assumptions changed.
Florance said the core strategy is unchanged; there is no material cost difference between centralized and field reps (infrastructure already exists), field reps are ~2x more productive, and the shift reflects prioritizing EBITDA goals while still pursuing the large greenfield opportunity.
Brett Huff (Stephens) asked what the rate-limiting step is in getting agents to adopt Homes.com given the strong ROI.
Florance said the June demo-to-close rate was about 45% and renewals are rising, so the limiting factor is getting more 'at-bats' (demos), which field sales and industry-event presence improve; close rate and renewal rate are the key metrics and both are strong.
Faiza Alwy (Deutsche Bank) asked how confident CoStar is it can maintain Apartments pricing as macro and competitive pressures build.
Florance said the ~2.5x lead-to-lease conversion supports the price, that competitive runs follow familiar patterns (here worsened by adverse multifamily conditions and a competitor's contested acquisition), and pointed to roughly flat ARPU and June being the third-best sales month as evidence.
Nick Jones (BNP Paribas) asked how AI investment is being balanced against midterm EBITDA targets and whether token cost is a concern.
Florance and Lown said AI savings currently exceed token costs, 2026 token consumption is under budget, optimization engines seek the best token pricing, and proprietary-data expert models can be resold at high gross margin, so AI is viewed as a net positive across all businesses.
Ashish Sabadra (RBC) asked how the $50 million residential guidance cut splits between Homes.com and multifamily.
Lown said roughly a quarter of the total revenue reduction came from Ten-X with the remainder on the residential side, and noted Q2 Homes.com net new bookings were similar to Q1, leaving the split to be inferred.
More on Costar Group, Inc.
Reported 2026-07-28 · figures from the Costar Group, Inc. Q2 2026 earnings call.
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