CoStar, the commercial real estate and data giant that has recently been making forays into residential and rentals, saw its stock pop after posting 12% year-over-year revenue growth in a Q2 earnings call yesterday, exceeding projections amid strong growth in multifamily spaces.
“With net new bookings of $84 million, we easily surpassed the record sales results we set in the first quarter of this year,” said CoStar CEO and Founder Andrew Florance in a statement. “In addition, both revenue and profit in the second quarter of 2022 were ahead of forecast, and we are raising our guidance for the year.”
CoStar also added 1,000 “new team members,” according to Florance, with many of those coming on the residential side.
With $536 million in revenue, $83 million in net income and $4 billion in cash, CoStar tweaked its full-year expectations from $2.17 billion to $2.18 billion on the high-end (with revenue from residential at $73 million, up from $70 million). CoStar stock was up over 8% in early trading Wednesday following the post-market close earnings call Tuesday.
Even as single-family residential sales and new construction nosedive, new multifamily permits and starts have climbed in recent months. The outlook for commercial spaces is also much better, according to many economists and stakeholders. In a conference call following the earnings call, Florance reiterated this positive outlook on multifamily, projecting 9% growth in that sector this year.
“The trends appear to be clear and obvious, and expected,” he said.
Apartments.com, which CoStar bought back in 2014, continues to be a huge part of the company’s strategic growth going forward, with Florance highlighting 130% new bookings on the platform. Scott Wheeler, CoStar CFO, claimed that sales performance is outpacing the market.
“I’ve been encouraged that even as the industry recovers, and the vacancies start to move up slightly, our sales performance is recovering faster than the industry, which speaks to the strength of the platform,” he said.
Another big question has centered on when, where and to what degree CoStar is going to commit to investments in residential, with consumer-focused real estate portal City Snap launching in New York City this summer. In response to an investor question on mergers and acquisitions, Florance said that his company is in the right place to explore those options.
“We have a great balance sheet with a lot of cash. I think we’ve just turned in a really strong quarter. We’ve got strength in all of our businesses, and I believe that we’re seeing valuations across a half-dozen/dozen interesting companies…become more and more attractive,” he said.
Homes.com, another consumer-focused portal, has seen traffic “up slightly.” That product is on track for a rethinking and relaunch focused on proprietary written and visual content that is “important to consumers,” Florance said. That launch is expected later this year.