In a fourth quarter and full year 2024 earnings call February 18, CoStar Group Founder and CEO Andy Florance touted the company’s revenue growth and offered insights into the company’s goals for 2025.
A large investment, CoStar Group intends to grow the salesforce from 1,390 in December 2024 to reach 1,890 by the end of the year—a 35% increase.
CoStar Group’s full year revenue for 2024 was $2.74 billion, up 11% year-over-year. The fourth quarter’s revenue was $709 million, and the average unique visitors on its global websites was 134 million, each increasing 11% and 17%, respectively, from the final quarter results in 2023.
A big focus of the earnings call was on Homes.com, which, in less than a year, became the second-largest real estate portal in the U.S., Florance said, with an audience of 110 million average monthly unique visitors in the fourth quarter. This is nearly double Realtor.com®’s for that same quarter, he further added.
“I think that’s remarkable. Realtor.com launched 30 years ago, in its predecessor form back in 1995, and we passed them in apples-to-apples traffic in our first year of the relaunch.”
One analyst asked whether Homes.com’s costs in 2025 would match 2024 levels. Christian M. Lown, CoStar chief financial officer, said that spending in 2025 will remain the same as in 2024, but emphasized that even though Homes.com technically launched a year ago, they are only now in full launch mode.
The company is in “no way increasing” investments in content or other initiatives in 2025, but will instead focus on controlling costs and investing in revenue generation, like increasing its salesforce, said Florance.
Noting how “people never really talk about the numbers,” Lown said, “In 2024, we produced $153 million of additional revenue. Our next biggest competitor, I think, was $96 million. We have over 75,000 properties on our platform; they have 50,000 properties. Our revenue basis reached $1.1 billion; their revenue basis is sub $500 million. Any growth rate that they put on the table—you have to more than halve because we’re more than twice the size. And so inevitably, there was a distraction of the salesforce and because that happened in the first or second quarter, from a roll rate or a renewal perspective, it’ll impact us a little more in 2025.”
Taking a dig at Zillow, Florance noted how the recent agreement with Redfin to acquire Rent.com is essentially a way to avoid FTC regulatory review. CoStar had previously sought to purchase that business, but had been blocked by the FTC, according to Florance.
“While the announcement called the deal a partnership, I believe it’s effectively a sale of the asset,” Florance said. “I find it hard to believe the FTC will ultimately surrender their authority to investigate the potential loss of competition that this deal appears to achieve. We believe that if presented to the FTC as a transaction, the FTC would obviously block such a deal.”
He further teased, asking if the FTC was listening in on the call.
“As part of the deal, Zillow pays Redfin $100 million upfront. Redfin will be terminating 450, or the vast majority of the Rent.com staff, and Redfin will attempt to transfer its apartment property management clients to Zillow. Effectively going forward, Rent.com will no longer operate as a normal independent competing website, but rather will only operate as a shell syndication site, sending leads to Zillow,” he said. “We do not know the terms and costs of the lead syndication deal, but I would not be surprised if Zillow ultimately has to pay Redfin hundreds of millions, if not a billion, dollars for what we see as relatively low-converting leads. This would not sound like an attractive transaction. Certainly, apartment property managers will have less choice now.”
To close, he said CoStar Group sees a large opportunity to win away many of the properties formerly on Rent.com without paying Redfin a large sum of money.
By the numbers
The company’s net new bookings were $53 million in the final quarter, up 21% from the previous quarter and a full year of $250 million. Net bookings are increasing, said Florance, because CoStar’s salesforces are now optimized and back to selling their respective core product offerings.
“When we launched Homes.com sales just 12 months ago, we only had 41 Homes.com sales professionals to prospect over a million real estate agents,” said Florance. “To backstop this very small team, we temporarily tasked all of our salesforces to sell Homes.com. We no longer need to do that because, over the past year, we’ve grown the Homes.com salesforce nearly sixfold to 277 salespeople. We anticipate having 500 Homes salespeople by year-end 2025.”
Offering an update on Matterport—a product offering virtual tours of homes that CoStar Group has been in the works of acquiring since last April—Florance said the deal should be closed by the end of Q1 2025.
Florance said the company intends to grow the CoStar sales team by 20% in 2025.
CoStar generated $1.02 billion in 2024 and grew 10% year-over-year. Once the sales teams were readjusted, December 2024 showed the highest month of net bookings for CoStar in almost two years, added Florance.
“We are pleased to report accelerating CoStar sales in the year as we cross $1 billion in CoStar revenue,” he said. “The CoStar subscriber base has grown to over 240,000.”
Apartments.com also crossed the $1 billion mark in 2024, at $1.07 billion in revenue, growing 17% year-over-year.
In 2024, added Florance, Apartments.com produced 1.5 times more leases than all of their competitors combined. “Most importantly, Apartments.com delivered three times the number of leads that converted to leases, compared to our competitors. So with the most leads and the best conversion rate, we delivered 4.8 times more leases than other rental networks.”
Brand awareness is also higher, Florance said.
“With consumers, we have dominated brand awareness with two out of three apartment seekers saying they will use Apartments.com,” he said. “That is nearly double Zillow and five times more than Rent.com. We have higher brand awareness than Zillow and Rent.com combined among apartment seekers.”
Florance said that CoStar is monitoring net promoter scores (NPS) very closely to maintain high renewal rates. He highlighted the UK’s high NPS–which increased by 35% to 65—and hinted that EG, or Estates Gazette—a primary UK competitor—to close after 166 years of business due to the “irreparable impact of headwinds that have struck the whole of the commercial real estate industry hard.”
Noting how CoStar has dealt with headwinds during the last four years due to the economy, Florance predicted that these headwinds might turn to tailwinds as the demand for office space has increased.
“Demand and absorption for office space turned meaningfully positive at the end of 2024 for the first time since 2021. Availability rates are falling; total available space is declining. Sublet vacancy rates are falling. Sublet rents are climbing,” he said. “The economy is strong and resilient. We read stories about major corporations mandating five days a week in the office and then the observation that there’s not enough space for the company and their offices to allow everyone to return to work.”
The CoStar for Lenders product, said Florance, had a total annual revenue of $75 million and has signed up 370 institutions.
“Despite a challenging high interest rate environment and cautious lending landscape over the past couple of years, we have continued to demonstrate consistent revenue growth in our lender solution,” said Florance. “Corporate real estate departments are increasingly subscribing to CoStar as well to manage their costs, find the best spaces to support their operations and efficiently renew their leases.”
Some new corporate subscribers to CoStar include Amazon, Visa, United Healthcare, Salesforce and more, shared Florance.
Historically, added Florance, it is difficult to access accurate and useful rent information. To combat this, the company has begun to integrate CoStar Real Estate Manager and the newly acquired Operation Visual Lease.
“Our intention is to build the next generation and corporate real estate digital solutions by integrating these two products with CoStar and empowering our clients with the anonymized aggregated information we and this community of corporates can bring together,” he said. “Just as CoStar STR (a database within the hospitality sector) aggregates and anonymizes the confidential pricing and occupancy information for the world’s major hotels and creates invaluable, accurate and precise hospitality revenue information that that industry relies on—we intend to do the same thing for corporate real estate.”
Within the global sector, Florance said the company intends to release CoStar France by year-end 2025.
For LoopNet, moving to asset-based pricing is one of CoStar Group’s primary objectives for 2025, shared Florance. Removing the “one-size-fits-all” model would make lower-value properties more affordable, he said.
When asked how this might affect sales, Florance said that it will take a while to see overall, year-over-year growth, and Lown agreed but noted that the early stages are looking positive.
