CoStar reported strong Q1 earnings this week, as the commercial real estate conglomerate saw its stock spike following a 13% year-over-year revenue increase at $516 million, beating projections.
“We are off to an outstanding start to 2022 with our best sales quarter ever,” said Andrew C. Florance, founder and CEO of CoStar Group, in a statement. “Both revenue and profit in the first quarter of 2022 were ahead of forecast and we are raising our guidance for the year.”
Starting as a commercial real estate database more than two decades ago, CoStar now claims a variety of online marketplaces and other data companies under its umbrella, including Apartments.com and Homes.com.
Reacting to the earnings, Florance highlighted Apartments.com’s recent performance as helping drive the company’s goals forward.
“Apartments.com sales are rebounding as the first quarter sales increased 36% sequentially compared to the fourth quarter of 2021,” Florance said. “This is the result of improving market conditions and high sales productivity.”
CoStar raised its guidance a modest $5 million for 2022 following the earnings call, from $2.165 billion to $2.70 billion. It ended Q1 with about $3.9 billion in cash and $1 billion in outstanding debt.
In an earnings call following the release, Florance also highlighted CoStar “flagship” product—its database platform for commercial real estate—for increasing sales by 96% last year, bringing in $199 million in revenue in Q1 of 2022.
“We added 20 new sellers to the team so far this year and intend to continue expanding our sales teams in the U.S., Canada and United Kingdom,” he said. “I look forward to the day when we’ll be able to tell you about hiring CoStar salespeople in Germany, Spain and France.”
CoStar also launched a new lending product in February, and Florance said the company envisions that tool as “as a market opportunity…of well over $300 million.” CoStar also recently acquired the French real estate news company Business Immo.
Florance spent even more time in the call highlighting rental-related businesses, again focusing on Apartments.com, which brought in $175 million in revenue of Q1 2022, he said.
“The dramatic drop in vacancy rates pushed national rent growth to a record high of 11% on a year-over-year basis in ’21. This made it a tough environment to sell advertising,” Florance said. “We still sold a lot of advertising.”
An initial foray into residential real estate has also been successful so far, Florance claimed, with a modest $18 million in revenue last quarter—a 63% increase year-over-year. The company plans a ”relaunch” Homes.com in June with a “modern integrated technology platform.”
“Overall, I’m very happy with the progress of our residential initiatives,” he said.
In response to a question from an investor, Florance said Homes.com and CoStar’s residential businesses would not be affected by ongoing lawsuits related to antitrust and agent commissions because the company’s platforms had been designed to be “agnostic” regarding the buy or sell side of a transaction.
“So I think we can sit back and watch these lawsuits develop as just an academic interest,” Florance said.
Jesse Williams is RISMedia’s associate online editor. Email him your real estate news to email@example.com.