COSTAR GROUP, INC. WASHINGTON, April 27, 2016 /PRNewswire/ -- CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, announced today that revenue for the quarter ended March 31, 2016 was $200 million, an increase of 26% over revenue of $159 million for the first quarter of 2015. EBITDA in the first quarter of 2016 increased to $48 million compared to $14 million in the first quarter of 2015, which represents an increase of $34 million or 234% year-over-year.
https://photos.prnewswire.com/prnvar/20160303/340120LOGO
"We had an excellent first quarter with strong revenue growth and margin expansion," said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. "We continue to deliver strong sales as net bookings in the first quarter of 2016 were $30 million, up 47% compared to first quarter of 2015. Net new sales on annual subscriptions were $25 million in the first quarter of 2016, up 53% compared to first quarter of 2015."
Florance continued, "CoStar Suite revenue grew 12.5% in the first quarter of 2016 compared to first quarter of 2015 and grew at a rate of 4.4% sequentially in the first quarter of 2016 over the fourth quarter of 2015. Our Multifamily marketplace revenue was up 100% in the first quarter of 2016 compared to first quarter of 2015, as we continue to expand our Apartments.com lead in unique visitors and consumer engagement versus other apartment listing sites, according to comScore. We remain confident that we are able to reach our goal of $1 billion in revenue with a 40% margin exiting 2018."
Year 2015-2016 Quarterly Results - Unaudited
(in millions, except per share data)
2015 2016
---- ----
Q1 Q2 Q3 Q4 Q1
--- --- --- --- ---
Revenues $159 $171 $189 $193 $200
EBITDA 14 (1) 22 55 48
Net income
(loss) (6) (15) (5) 23 17
Net income
(loss) per
share -
diluted (0.19) (0.47) (0.17) 0.71 0.52
Weighted
average
outstanding
shares -
diluted 31.8 31.9 32.0 32.3 32.4
Adjusted EBITDA 24 11 36 65 58
Non-GAAP Net
Income 11 2 17 36 31
Non-GAAP Net
Income per
share -
diluted 0.34 0.08 0.53 1.10 0.95
Adjusted EBITDA (which excludes stock-based compensation and other items as defined below) was $58 million for the first quarter of 2016 versus $24 million in the first quarter of 2015, which is an increase of 142% year-over-year.
Net income for the first quarter of 2016 increased to $17 million or $0.52 per diluted share compared to a net loss of $(6) million in the first quarter of 2015.
Non-GAAP net income (defined below) for the quarter ended March 31, 2016 was $31 million or $0.95 per diluted share, an increase of $20 million or 185% compared to non-GAAP net income of $11 million in the first quarter of 2015.
As of March 31, 2016, the Company had approximately $473 million in cash, cash equivalents and investments, which is an increase of $35 million since December 31, 2015. Short and long-term debt outstanding, net of debt issuance costs, totaled approximately $351 million as of March 31, 2016.
Revenues By Services
"In order to provide additional insight into our revenue, we will report Revenue by Services details in our quarterly financial results and press releases," said CoStar Group Chief Financial Officer Scott Wheeler. "As we continue to grow and expand our service offerings for commercial real estate, we believe this additional transparency will provide our investors with a better understanding of our performance and the drivers of growth."
CoStar Group, Inc.
Revenues by Services 2015-2016 Quarterly Results - Unaudited
(in millions)
2015 2016
---- ----
Q1 Q2 Q3 Q4 Q1
--- --- --- --- ---
Information and analytics
CoStar Suite $87 $89 $91 $94 $98
Information
services 19 19 19 19 19
Online marketplaces
Multifamily 26 35 49 50 52
Commercial
property and land 28 28 29 30 30
--- --- --- --- ---
Total revenues $159 $171 $189 $193 $200
Highlights
-- CoStar Suite: CoStar Suite was approximately 50% of CoStar's total
revenue in the first quarter of 2016, and grew 12.5% versus the first
quarter of 2015. CoStar Suite is comprised of our flagship CoStar
services in both North America and Europe, including CoStar Property
Professional, CoStar COMPS Professional, CoStar Tenant; CoStar Market
Analytics; and CoStar Portfolio Strategy.
-- Information Services: Information Services were approximately 10% of
total revenue in the first quarter, and are comprised of LoopNet Premium
Searcher; CoStar Real Estate Manager; CoStar Risk Analytics COMPASS;
CoStar Investment Analysis Portfolio Maximizer; CoStar Investment
Analysis Request; CoStar Brokerage Applications; PROPEX; Grecam and
Belbex.
-- Multifamily: Our Multifamily marketplaces were approximately 25% of
CoStar's total revenue in the first quarter of 2016, and grew 100%
versus the first quarter of 2015. This includes the added revenue from
the Apartment Finder acquisition. The Multifamily marketplaces are
comprised of Apartments.com, ApartmentFinder.com and
ApartmentHomeLiving.com.
-- Commercial Property and Land: Our Commercial Property and Land
marketplaces were approximately 15% of CoStar's total revenue in the
first quarter and grew 10.5% versus the first quarter of 2015.
Commercial Property and Land marketplaces include LoopNet Premium
Lister; LoopLink; CoStar Advertising; BizBuySell and BizQuest;
LandsofAmerica and LandAndFarm; and CoStar Private Sale Network.
2016 Outlook
"Our strong sales growth and focus on controlling costs were evident in our first quarter 2016 results," stated Wheeler. "We expect to continue to grow the top line and deliver solid margin expansion throughout 2016."
The Company expects revenue of approximately $204 million to $206 million for the second quarter of 2016 and approximately $834 million to $840 million for the full year 2016, an increase of $2 million at the midpoint from the Company's prior outlook.
For the second quarter of 2016, the Company expects non-GAAP net income per diluted share (defined below) of approximately $0.80 to $0.84. Marketing costs are expected to increase in the second quarter of 2016 over the first quarter of 2016 to support sales efforts during the spring apartment rental season. Marketing costs are expected to decline in the second half of 2016, in line with our previously stated plan of reducing spend by $20 million in 2016 versus 2015. This is expected to result in additional margin expansion in the second half of the year. For the full year of 2016, the Company expects non-GAAP net income per diluted share in a range of approximately $4.00 to $4.10, an increase of approximately 100% at the mid-point over 2015.
The preceding forward-looking statements reflect CoStar Group's expectations as of April 27, 2016, including forward-looking non-GAAP financial measures on a consolidated basis. We are not able to forecast with certainty whether or when certain events, such as acquisition-related costs, the exact amounts or timing of investments, transition, restructuring, settlements or impairments will occur in any given quarter. Given the risk factors, uncertainties and assumptions discussed above, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.
Reconciliation of EBITDA, adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share and all of the disclosed non-GAAP financial measures to their GAAP basis results are shown in detail below, along with definitions for those terms.
Non-GAAP Financial Measures
For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the Company's financial condition and results of operations, please refer to the Company's latest periodic report.
EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before (i) interest income (expense), (ii) provision for income taxes, and (iii) depreciation and amortization.
Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before (i) stock-based compensation expense, (ii) acquisition and integration related costs, (iii) restructuring charges and related costs, and (iv) settlements and impairments incurred outside the Company's normal business operations.
Non-GAAP net income is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before (i) purchase amortization and other related costs, (ii) stock-based compensation expense, (iii) acquisition and integration related costs, (iv) purchase accounting adjustments, (v) restructuring charges and related costs, and (vi) settlements and impairments. From this figure, we then subtract an assumed provision for income taxes to arrive at non-GAAP net income. The company assumes a 38% tax rate in order to approximate our long-term effective corporate tax rate.
Non-GAAP net income per diluted share (also referred to as non-GAAP EPS) is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period. For periods with GAAP net losses and non-GAAP net income, the weighted-average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.
Earnings Conference Call
Management will conduct a conference call at 11:00 AM EDT on Thursday, April 28, 2016 to discuss earnings results for the first quarter of 2016 and the Company's outlook. The audio portion of the conference call will be broadcast live over the Internet at www.costargroup.com/investors/events. To join the conference call by telephone, please dial (800) 230-1951 (from the United States and Canada) or (612) 332-0335 (from all other countries) and refer to conference code 391087. An audio recording of the conference call will be available for replay approximately one hour after the call's completion and will remain available for a period of time following the call. To access the recorded conference call, please dial (800) 475-6701 (from the U.S. and Canada) or (320) 365-3844 (from all other countries) using access code 391087. The webcast replay will also be available in the Investors section of CoStar Group's website for a period of time following the call.
CoStar Group, Inc.
Condensed Consolidated Statements of Operations-Unaudited
(in thousands, except per share data)
For the Three Months
Ended March 31,
2016 2015
---- ----
Revenues $199,739 $159,020
Cost of
revenues 42,900 45,396
------ ------
Gross margin 156,839 113,624
Operating
expenses:
Selling and
marketing 75,204 69,478
Software
development 17,635 15,148
General and
administrative 27,476 25,363
Purchase
amortization 6,223 7,142
126,538 117,131
------- -------
Income
(loss) from
operations 30,301 (3,507)
Interest and
other
income 84 294
Interest and
other
expense (2,509) (2,343)
------ ------
Income
(loss)
before
income
taxes 27,876 (5,556)
Income tax
expense,
net 11,155 571
------ ---
Net income
(loss) $16,721 $(6,127)
======= =======
Net income
(loss) per
share -
basic $0.52 $(0.19)
===== ======
Net income
(loss) per
share -
diluted $0.52 $(0.19)
===== ======
Weighted
average
outstanding
shares -
basic 32,085 31,831
====== ======
Weighted
average
outstanding
shares -
diluted 32,382 31,831
====== ======
CoStar Group, Inc.
Reconciliation of Non-GAAP Financial Measures-Unaudited
(in thousands, except per share data)
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
For the Three Months
Ended March 31,
2016 2015
---- ----
Net income (loss) $16,721 $(6,127)
Income tax expense, net 11,155 571
------ ---
Income (loss) before income
taxes 27,876 (5,556)
Purchase amortization and
other related costs 11,919 13,489
Stock-based compensation
expense 8,331 7,442
Acquisition and integration
related costs 1,447 624
Settlements and impairments - 1,402
--- -----
Non-GAAP income before income
taxes 49,573 17,401
Assumed rate for income tax
expense, net * 38% 38%
Assumed provision for income
tax expense, net (18,838) (6,612)
Non-GAAP net income $30,735 $10,789
======= =======
Net income (loss) per share -
diluted $0.52 $(0.19)
===== ======
Non-GAAP net income per share
- diluted $0.95 $0.34
===== =====
Weighted average outstanding
shares -basic** 32,085 31,831
Weighted average outstanding
shares -diluted** 32,382 32,172
* A 38% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate.
** For periods with GAAP net losses and non-GAAP net income, the weighted-average outstanding shares
used to calculate non-GAAP net income per share includes potentially dilutive securities that were
excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
For the Three Months
Ended March 31,
2016 2015
---- ----
Net income (loss) $16,721 $(6,127)
Purchase amortization in cost
of revenues 5,696 6,347
Purchase amortization in
operating expenses 6,223 7,142
Depreciation and other
amortization 5,602 4,324
Interest income (84) (294)
Interest expense 2,509 2,343
Income tax expense, net 11,155 571
------ ---
EBITDA $47,822 $14,306
------- -------
Stock-based compensation
expense 8,331 7,442
Acquisition and integration
related costs 1,447 624
Settlements and impairments - 1,402
Adjusted EBITDA $57,600 $23,774
======= =======
CoStar Group, Inc.
Condensed Consolidated Balance Sheets - Unaudited
(in thousands)
March 31, December 31,
2016 2015
---- ----
(Unaudited)
ASSETS
Current assets:
Cash and cash equivalents $461,720 $421,818
Short-term investments 1,092 0
Accounts receivable, net 47,315 40,276
Income tax receivable 154 430
Prepaid expenses and other current
assets 9,656 10,209
Total current assets 519,937 472,733
Long-term investments 9,944 15,507
Deferred income taxes, net 8,890 9,107
Property and equipment, net 85,962 88,311
Goodwill 1,252,484 1,252,945
Intangible assets, net 226,392 238,318
Deposits and other assets 2,404 2,650
Total assets $2,106,013 $2,079,571
========== ==========
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable and accrued
expenses $83,460 $76,397
Current portion of long-term debt 16,777 16,746
Deferred revenue 43,105 42,138
------ ------
Total current liabilities 143,342 135,281
Long-term debt, less current
portion 334,146 338,366
Deferred gain on sale of building 20,608 21,239
Deferred rent 29,630 29,628
Deferred income taxes, net 6,074 4,585
Income taxes payable 6,737 6,692
Stockholders' equity 1,565,476 1,543,780
--------- ---------
Total liabilities and stockholders'
equity $2,106,013 $2,079,571
========== ==========
CoStar Group, Inc.
Results of Segments-Unaudited
(in thousands)
For the Three Months
Ended March 31,
2016 2015
---- ----
Revenues
North America $193,261 $153,017
International
External customers 6,478 6,003
Intersegment revenue * 11 8
--- ---
Total International
revenue 6,489 6,011
Intersegment eliminations (11) (8)
Total revenues $199,739 $159,020
======== ========
EBITDA
North America ** $46,864 $13,677
International *** 958 629
--- ---
Total EBITDA $47,822 $14,306
======= =======
*Intersegment revenue recorded during 2015 and 2016 was attributable to services performed for the Company's
wholly owned subsidiary, CoStar Portfolio Strategy by Grecam S.A.S. ("Grecam"), a wholly owned subsidiary
of CoStar Limited, the Company's wholly owned U.K. holding company.
**North America EBITDA includes an allocation of approximately $167,000 and $202,000 for the three months
ended March 31, 2016 and 2015, respectively. This allocation represents costs incurred for International
employees involved in development activities of the Company's North America operating segment.
***International EBITDA includes a corporate allocation of approximately $55,000 and $58,000 for the three
months ended March 31, 2016 and 2015, respectively. This corporate allocation represents costs incurred
for North America employees involved in management and expansion activities of the Company's International
operating segment.
CoStar Group, Inc.
Revenues by Services-Unaudited
(in thousands)
For the Three Months
Ended March 31,
2016 2015
---- ----
Information and analytics
CoStar Suite $97,634 $86,810
Information services 19,425 18,537
Online marketplaces
Multifamily 52,238 26,133
Commercial property and land 30,442 27,540
------ ------
Total revenues $199,739 $159,020
CoStar Group, Inc.
Reconciliation of Non-GAAP Financial Measures with 2015-2016 Quarterly Results - Unaudited
(in millions, except per share data)
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
2015 2016
---- ----
Q1 Q2 Q3 Q4 Q1
--- --- --- --- ---
Net income (loss) $(6.1) $(15.0) $(5.4) $23.0 $16.7
Income tax expense (benefit),
net 0.6 (7.4) 2.6 10.2 11.2
Income (loss) before income
taxes (5.5) (22.4) (2.8) 33.2 27.9
Purchase amortization and
other related costs 13.5 13.5 17.1 13.9 11.9
Stock-based compensation
expense 7.4 8.4 9.3 9.4 8.3
Acquisition and integration
related costs 0.6 2.9 1.8 1.0 1.5
Restructuring and related
costs - - 2.3 (0.3) -
Settlements and impairments 1.4 1.4 - - -
Non-GAAP income before income
taxes 17.4 3.9 27.7 57.2 49.6
Assumed rate for income tax
expense, net * 38% 38% 38% 38% 38%
Assumed provision for income
tax expense, net (6.6) (1.5) (10.5) (21.7) (18.9)
Non-GAAP net income $10.8 $2.4 $17.2 $35.5 $30.7
===== ==== ===== ===== =====
Non-GAAP net income per share
- diluted $0.34 $0.08 $0.53 $1.10 $0.95
===== ===== ===== ===== =====
Weighted average outstanding
shares -basic** 31.8 32.0 32.0 32.0 32.1
Weighted average outstanding
shares -diluted** 32.2 32.3 32.2 32.3 32.4
* A 38% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate.
** For periods with GAAP net losses and non-GAAP net income, the weighted-average outstanding shares used to calculate non-GAAP net income per
share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-
dilutive.
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA
2015 2016
---- ----
Q1 Q2 Q3 Q4 Q1
--- --- --- --- ---
Net income (loss) $(6.1) $(15.0) $(5.4) $23.0 $16.7
Purchase amortization 13.5 13.5 17.1 13.9 11.9
Depreciation and other
amortization 4.3 5.1 5.4 5.7 5.6
Interest income (0.3) (0.1) (0.0) (0.1) (0.1)
Interest expense 2.3 2.4 2.4 2.3 2.5
Income tax expense (benefit),
net 0.6 (7.4) 2.6 10.2 11.2
EBITDA $14.3 $(1.5) $22.1 $55.0 $47.8
----- ----- ----- ----- -----
Stock-based compensation
expense 7.4 8.4 9.3 9.4 8.3
Acquisition and integration
related costs 0.6 2.9 1.8 1.0 1.5
Restructuring and related
costs - - 2.3 (0.3) -
Settlements and impairments 1.4 1.4 - - -
Adjusted EBITDA $23.7 $11.2 $35.5 $65.1 $57.6
===== ===== ===== ===== =====
CoStar Group, Inc.
Reconciliation of Forward-Looking Guidance-Unaudited
(in thousands, except per share data)
Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income
Guidance Range Guidance Range
For the Three Months For the Twelve Months
Ended June 30, 2016 Ended December 31, 2016
Low High Low High
--- ---- --- ----
Net income $11,700 $13,900 $73,000 $79,000
Income tax expense, net 7,800 9,300 48,600 52,600
----- ----- ------ ------
Income before income taxes 19,500 23,200 121,600 131,600
Purchase amortization and
other related costs 11,400 11,400 45,000 45,000
Stock-based compensation
expense 10,000 9,000 40,000 36,000
Acquisition and integration
related costs 1,000 500 2,500 2,000
Restructuring and related
costs - - 500 500
Non-GAAP income before income
taxes 41,900 44,100 209,600 215,100
Assumed rate for income tax
expense, net * 38% 38% 38% 38%
Assumed provision for income
tax expense, net (15,900) (16,800) (79,600) (81,700)
Non-GAAP net income $26,000 $27,300 $130,000 $133,400
======= ======= ======== ========
Net income per share - diluted $0.36 $0.43 $2.25 $2.43
===== ===== ===== =====
Non-GAAP net income per share
- diluted $0.80 $0.84 $4.00 $4.10
===== ===== ===== =====
Weighted average outstanding
shares -diluted 32,500 32,500 32,500 32,500
* A 38% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate.
Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA
Guidance Range Guidance Range
For the Three Months For the Twelve Months
Ended June 30, 2016 Ended December 31, 2016
Low High Low High
--- ---- --- ----
Net income $11,700 $13,900 $73,000 $79,000
Purchase amortization and
other related costs 11,400 11,400 45,000 45,000
Depreciation and other
amortization 6,200 6,200 24,600 24,600
Interest and other expense
(income), net 2,400 2,400 10,300 10,300
Income tax expense, net 7,800 9,300 48,600 52,600
Stock-based compensation
expense 10,000 9,000 40,000 36,000
Acquisition and integration
related costs 1,000 500 2,500 2,000
Restructuring and related
costs - - 500 500
Adjusted EBITDA $50,500 $52,700 $244,500 $250,000
======= ======= ======== ========
About CoStar Group, Inc.
CoStar Group, Inc. (Nasdaq: CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. LoopNet is the most heavily trafficked commercial real estate marketplace online with more than 10 million registered members. Apartments.com, ApartmentFinder.com and ApartmentHomeLiving.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. Through an exclusive partnership with Move, a subsidiary of News Corporation, Apartments.com is the exclusive provider of apartment community listings across Move's family of websites, which include realtor.com®, doorsteps.com and move.com. CoStar Group's websites attracted an average of approximately 24 million unique monthly visitors in aggregate in the first quarter of 2016. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of approximately 2,600 worldwide, including the industry's largest professional research organization. For more information, visit www.costargroup.com.
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group's financial expectations, the Company's plans, objectives, expectations and intentions and other statements including words such as "hope," "anticipate," "may," "believe," "expect," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar Group and are subject to significant risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the risk that the trends stated or implied by this release cannot or will not be sustained at the current pace, including trends related to sales, earnings, revenue, unique visitors and consumer engagement; the risk that the Company is unable to sustain current growth rates or increase them; the possibility that the Company modifies the additional Revenues by Services disclosure it expects to provide to investors or the frequency of that disclosure; the risk that the additional revenue disclosure does not provide the expected understanding of the Company's performance and drivers of growth; the risk that top line growth and/or solid margin expansion do not continue throughout 2016; the risk that revenues for the second quarter and full year 2016 will not be as stated in this press release; the risk that net income for the second quarter and full year 2016 will not be as stated in this press release; the risk that non-GAAP net income and non-GAAP net income per diluted share for the second quarter and full year 2016 will not be as stated in this press release; the risk that adjusted EBITDA for the second quarter and full year 2016 will not be as stated in this press release; the risk that actual marketing costs for the second quarter, second half and full year 2016 differ from current expectations stated in this release; the risk that the Company is unable to achieve additional margin expansion in the second half of 2016; and the risk that the Company is unable to achieve the revenue and margin goals stated in this press release. Additional factors that could cause results to differ materially from those anticipated in the forward-looking statements can be found in CoStar's Annual Report on Form 10-K for the year ended December 31, 2015, which is filed with the SEC, including in the "Risk Factors" section of that filing, and the Company's other filings with the SEC available at the SEC's website (www.sec.gov). CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
Logo - http://photos.prnewswire.com/prnh/20160303/340120LOGO
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/costar-group-grows-first-quarter-revenue-26-year-over-year-and-ebitda-234-year-over-year-300258678.html
SOURCE CoStar Group, Inc.
