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A sluggish real estate market couldn’t keep CoStar down in the second quarter of this year, with the company revealing Tuesday that its revenue, profit and web traffic all increased between April and June.
In total, the commercial-giant-turned-residential-upstart brought in $606 million in revenue during the second quarter, according to the company’s newly published earnings report. That’s up 13 percent compared to a year ago and represents a repeat of the previous quarter when revenue also rose 13 percent year over year.
In addition, CoStar also earned $101 million in profit in the second quarter of this year. That’s up 20 percent compared to the same period in 2022, and it also bested Q1 of 2023 when the company earned $89 million in profit.
In the report, CEO Andy Florance said his company “achieved another great quarter of very strong results in terms of revenue, sales and traffic to our websites.”
“Achieving these results despite commercial property transactions plummeting 63 percent in the second quarter demonstrates the resilience of our platforms,” Florance added.
His company’s “impressive” performance came amid “one of the most difficult property markets in decades,” Florance went on to say during a call with investors.
Significantly, Tuesday’s report cited Google Analytics and revealed that CoStar saw 105 million unique visitors to its various websites in June. That represents a new best for the company. CoStar’s flagship residential site Homes.com saw 38 million unique visitors in June, which is a year-over-year jump of 130 percent.
In total, CoStar’s various residential sites saw 84 million average monthly unique visitors during the second quarter, the report reads.
In the report, Florance called these numbers a “monumental milestone” that vaulted CoStar into second place as the “most heavily trafficked residential network.” He went on to claim that CoStar’s network of residential sites has now surpassed both Redfin and Realtor.com — though it’s worth noting that CoStar groups different brands, such as the Homes.com sales portal and Apartments.com rental portal together when ranking portal “networks” by traffic.
Either way though, Florance celebrated his company’s traffic numbers, saying during the investor call that Homes.com “is the fastest-growing residential portal.”
“I’m very encouraged by the progress we are making with our Homes.com strategy, as our traffic growth continues ahead of our initial expectations,” he added in the report.
Heading into Tuesday’s earnings report, shares in CoStar were trading at just under $92. That was up for the day, as well as compared to six months ago, when shares were fetching prices in the high $70 range.
Shares dropped Tuesday in after-hours trading following the publication of CoStar’s earnings.
CoStar had a market cap of $37.5 billion when markets closed Tuesday.
Tuesday’s earnings come as CoStar actively works to beef up its residential business and build a consumer-focused portal. Those efforts have brought the company into direct competition with Zillow, and over the past couple of years, Florance has not been shy about criticizing his more-established rival. In 2021, for example, Florance compared Zillow’s business to blackmail and suggested the portal giant “hijacks” agents’ listings.
CoStar’s residential brands include Citysnap, a portal focused on New York City, and Homes.com, which Florance indicated earlier this year would be the company’s focus in the residential space going forward.
Though CoStar’s residential business remains far smaller than Zillow’s right now, the fact that the company saw significant traffic gains in the quarter suggests its strategy is finding traction with consumers. It also indicates that CoStar remains firmly committed to the so-called portal wars and its efforts to peel off market share from rivals.
Florance didn’t openly criticize Zillow during Tuesday’s call. But he did say that Homes.com is getting “twice the lead flow of some of our competitors,” with those leads being “super high quality.” Florance argued that Homes.com is resonating because it prominently features listing agents, rather than directing leads “into a call center and often syndicating the lead out” to agents who don’t represent the listing.
From the get-go, Florance has touted Homes.com’s foregrounding of listing agents as a major differentiating feature of the platform compared to other rival portals.
CoStar brought in $12.7 million in revenue during the second quarter just from its residential real estate efforts, according to the report. That’s down from about $20.2 million during the same period in 2022.
While speaking with investors, Florance predicted significantly more growth for CoStar’s residential business in the near future, with “significant progress” coming in the first quarters of 2024.
Among other remarks, he also said “we have a lot of runway ahead,” adding that “this is a marathon not a sprint.” Later during the call, Florance said that he has participated in numerous focus groups looking at CoStar’s residential business, and the response from those groups makes him “believe there will be a very positive consumer response” to the company’s residential products.
“I’m very confident,” Florance added, “that 18 months from now we will have very impressive rankings.”
Update: This story was updated after publication with additional information from CoStar’s earnings report, and from a call company leaders held with investors.