What Management Said

Read the full Q1 2026 transcript ↗

Hello everybody, and welcome to the CoStar earnings call for Q1 2026. The company's outlook and expectations are based on current beliefs and assumptions. Our adjusted EBITDA doubled, and we're on track for the highest full-year adjusted EBITDA in CoStar Group's history. With the noise gone, we have more focused energy than ever to spend on what matters, growing EBITDA.

Q1 2026 adjusted EBIT of $132 million doubled year-over-year and came in 26% above the midpoint of our guidance. After a record 2025 for annualized net new bookings, we started 2026 stronger still. Our commercial business generated $472 million of revenue in Q1, up 15% year-over-year, with adjusted EBITDA of $161 million. CoStar revenue was $331 million, let's get that extra million in there, in Q1, with annualized net new bookings from our core CoStar product up 16% year-over-year.

It integrates builder feeds, drone imagery, and other data sources to deliver insight into housing supply, demand, and market trends. CoStar Debt Solutions, formerly CoStar Lender, had a strong quarter, with net new bookings up 26% year-over-year as the business crossed $100 million in revenue. CoStar U.K.'s growth accelerated in Q1, with revenue up 25% and net new bookings up 44% year-over-year. This growth was supported by the release of new land registry lease modules that gave clients authoritative effective rent data sourced from government records and the recollapse of one of our primary competitors there.

What went well
  • CoStar Group delivered its 60th consecutive quarter of double-digit revenue growth, with Q1 2026 revenue up 23% year-over-year to $897 million and 10% organic growth.
  • Adjusted EBITDA of $132 million doubled year-over-year and came in $17 million above the high end of guidance, or 26% above the midpoint.
  • CoStar product users grew 22% year-over-year to 317,000, with broker sales up 29% and tenant sales up 27%, while quarterly net bookings rose 20% year-over-year to $67 million.
  • The residential segment improved adjusted EBITDA by $56 million year-over-year to negative $29 million and is on track to reach profitability in Q2 2026, with Homes.com paying members growing from about 10,000 a year ago to roughly 35,000.
  • LoopNet's new asset-based pricing drove outstanding early results, with the volume of silver listings sold at $300 or more per month growing 650% from February to March and listings sold below $40 growing over 1,100%.
What went wrong
  • Net new bookings declined sequentially for the third straight quarter, prompting repeated analyst pushback that current bookings sit below prior peaks despite a much larger sales force.
  • Apartments.com revenue growth moderated to 10% year-over-year, and management acknowledged rooftop ARPU has been dragged down for several quarters by lower-end advertisers won from the collapsing Rent.com and Apartment Guide.
  • Google data showed overall rental search demand remains soft, a headwind acknowledged even as Apartments.com gained unique-visitor share.
  • The Homes.com sales force remains largely a rookie team with few reps having more than a year of tenure, limiting near-term productivity.

Guidance Changes

MetricPeriodCurrent guidance
RevenueFY2026$3.78 billion to $3.82 billion (reiterated, held on strength of Q1 and unchanged commercial and residential ranges)
Adjusted EBITDAFY2026$780 million to $820 million (raised, up $30 million at midpoint and a full point of margin on Q1 strength and continued personnel expense efficiencies from AI and cost initiatives)
Adjusted EPSFY2026$1.32 to $1.39 (raised, up $0.09 at midpoint, driven by the accelerated share repurchase retiring more shares than forecast plus expense reductions)
RevenueQ2 2026$922 million to $932 million (reiterated as new quarterly guide, 18% to 19% growth or 10% organic at midpoint)
Adjusted EBITDAQ2 2026$160 million to $180 million (reiterated as new quarterly guide, a 17% to 19% margin, roughly 700 basis points above Q2 2025)
Adjusted EPSQ2 2026$0.27 to $0.30 (reiterated as new quarterly guide on 409 million weighted average shares)

Performance Breakdown

MetricYoYNote
Total revenue up 23% to $897 million Volume and price gains plus inorganic contributions from Matterport and Domain; organic growth was 10%
Adjusted EBITDA doubled to $132 million Lower personnel costs from AI-driven and other expense efficiencies plus revenue outperformance
Commercial revenue up 15% to $472 million 7% organic growth plus Matterport contribution; commercial adjusted EBITDA of $161 million at a 34% margin
CoStar product revenue up 9% to $331 million Volume and price, driven by strong double-digit international growth; core CoStar net new bookings up 16%
LoopNet revenue up 16% to $85 million 11% organic growth from increased paid listings and continued focus on selling silver ads
Residential revenue up 32% to $425 million 13% organic growth with double-digit contributions from Apartments, Homes and OnTheMarket driven by higher volumes
Apartments.com revenue up 10% to $312 million 15th consecutive quarter of double-digit growth; 99% monthly renewal rate maintained
Other commercial revenue up 81% to $56 million Primarily the inorganic contribution from Matterport, whose subscription revenue grew 19%

Earnings Call Themes & Trends

TopicPrevious mentionCurrent periodTrend
Sales force productivity rampLarge hiring wave through 2025 across all brandsManagement fielded multiple questions on cohort productivity, expects productivity to build over the year and the flywheel to accelerate in the second half of 2027, with Apartments reps twice as productive by year five—
Homes.com monetization and pricingPrioritized penetration over ARPU during launchWith about 35,000 members and strong ROI evidence, planning a May 1 price increase for new members, believing the product is underpriced given close rates north of 50%—
Matterport as a differentiatorRecently acquired, integration underwaySubscription revenue up 19%, embedded across Apartments, Homes, LoopNet and Domain; new X-ray and Gaussian-splat features and a Pro4 camera in development as a razor-and-razor-blade SaaS strategy—
Activist and distraction overhangActivist pressure was a recent overhangManagement stated the activist distraction is behind them, freeing focus on growing EBITDA—
International expansionUK, Canada established; France and Australia in buildUK revenue up 25% and bookings up 44%, Canada up 22%, France launches in Q2, and CoStar and LoopNet planned for Australia in Q3 and Q4—

Q&A Summary

Was the $67 million of net new bookings in line with expectations, and how should we think about the percentage of revenue that is bookings-driven and the bookings level needed to hit the low- to mid-teens revenue growth targets?
Bookings were broadly in line and guidance was reaffirmed with EBITDA raised. About 15% of revenue is now non-subscription; of roughly $550 million of expected revenue growth at the midpoint, about 40% comes from acquisitions or non-subscription, leaving roughly $330 million driven by net new. Management stressed commitment to the 2028 and 2030 adjusted EBITDA targets, achievable through the 15% revenue CAGR, overachievement, or cost rationalization.
What has been the pricing impact at Apartments.com from winning back share, and how is it affecting overall bookings production?
The company picked up many lower-ARPU rooftops from the collapse of Rent.com and Apartment Guide, which tend to have lower rental rates and smaller unit counts, pulling rooftop ARPU down for several quarters. Management does not see a major shift in depth or signature advertising levels beyond that mix effect.
Apartments.com revenue growth moderated to 10% year-over-year, so what would need to change to drive re-acceleration and is this the right long-term run rate?
Continued growth in the sales force is the key re-accelerator since a larger revenue base needs more reps, and penetration remains relatively early. Homes.com traffic, already the biggest syndication partner into Apartments.com, adds single-family renters and should help improve on the current growth rate.
With the sales headcount additions, what are you seeing in ramp times and quota attainment by cohort, and how does it inform the hiring pace?
It varies by brand. CoStar is accelerating productivity per rep, Apartments needs continued growth to offset absolute cancellations even at 99% renewal, and Homes.com remains a very rookie sales force. The hiring push started about a year ago, cohorts are tracked on six-, 12- and 18-month bases and are developing as expected, though full productivity takes time.
This is the third straight quarter of sequential decline in net bookings even though hiring began a year ago, so help put the trend in context.
Management pointed to normal seasonality, with Q1 typically lighter and Q2 the strongest quarter, plus lag effects from a large hiring wave. They feel good about the opportunity set and underlying productivity, expect the flywheel to start in the second half of next year, and noted Homes.com reps are still largely under a year of tenure.
How is Homes.com member engagement translating into revenue momentum, and would you provide Q2 bookings guidance to reduce the mismatch with investor expectations?
With members up from about 10,000 to 35,000 and strong data on earnings impact, management is confident it can raise ARPU materially and build revenue momentum with Apartments.com synergies. However, they will not guide to bookings, a number they have never guided to, and reiterated bookings were up 20% year-over-year.
Why raise Homes.com pricing for new members on May 1 rather than waiting a year to build the user base?
Management believes it can do both, growing the member base while capturing more value, especially among agents earning under $250,000 where close rates for well-trained reps run north of 50%. A few limited cohorts may see prices come down slightly, but the biggest cohorts are leaving too much value on the table.
How do you balance Matterport pricing and distribution to improve products generally while also using it as proprietary data differentiation?
Matterport pricing is partly embedded in monthly subscription or advertising fees across Apartments, Homes, LoopNet and Land, and is used in Domain to drive depth upgrades. The strategy shifts toward higher SaaS subscription pricing and lower hardware pricing on the Pro3 and coming Pro4 cameras, while X-ray and exterior 3D features provide competitive differentiation the company believes no rival is matching.

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Q1 2026 call
Reported 2026-04-28 · figures from the Costar Group, Inc. Q1 2026 earnings call.

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