CoStar Group Q1: Revenue Up 12% as Homes.com Experiments with Vendor-Paid Advertising

CoStar Group has reported strong Q1 2025 results, with the U.S.-based real estate data and marketplaces giant posting $732 million in revenue for the quarter ended March 31, a 12% year-on-year increase. Highlights include:

• $732 million in revenue, up 12% on Q1 2024.
• Adjusted EBITDA was $66 million, up from $12 million in Q1 2024.
• Net loss of $15 million for the quarter was driven by costs associated with the firm's acquisition of Matterport.

CoStar is one of the most reliable companies in the world for increasing revenues quarter on quarter, with this set of results marking the Group's 56th consecutive quarter of double-digit revenue growth.

Commenting on the results, Andy Florance, Founder and CEO at CoStar Group, said:

“CoStar Group delivered another strong quarter of results achieving 12% year-over-year revenue growth in Q1 2025, our 56th quarter of double-digit revenue growth as we met the top-end of our revenue guidance and exceeded the top-end of our Adjusted EBITDA guidance.

"Once again, CoStar Group's commercial information and marketplace brands delivered exceptional results with a 43% profit margin for Q1 2025. We are gaining sales momentum across the board.

"In Q1 2025, our commercial real estate businesses, CoStar and LoopNet, had very strong annualized net new bookings with CoStar up 68% year-over-year, the highest level since Q3 2023 and LoopNet generating an impressive 200% increase year-over-year, which was LoopNet’s highest level since Q3 2022. In Q1 2025, Apartments.com added 4,300 properties, the most properties in one quarter since Q1 2016.

"Today, our dedicated Homes.com salesforce has grown to 370 representatives and we believe we will be at 500 sales reps by the end of June, as we continue to gain sales momentum. In April, Homes.com's demo-to-close rate increased to over 50%, the highest ever by any CoStar Group sales team. This demonstrates the strong demand for Homes.com."

Homes.com, the company’s U.S. residential challenger portal, continues to expand aggressively. CoStar added 2,000 new customers to the platform in April alone, and Florance described Homes.com as experiencing "the strongest demand for a product launch in CoStar Group history."

Florance said the acquisition of Matterport will help extend CoStar’s visual data capabilities across all real estate categories. "Matterport is the best way to present physical real estate spaces online and transform them into data... we plan to deploy Matterport across CoStar Group and meaningfully expand this unique data set."

Meanwhile, the Group also highlighted momentum across its key marketplace and data brands. CoStar and LoopNet saw their strongest net new bookings since Q3 2023 and Q3 2022 respectively, with CoStar up 68% year-on-year and LoopNet bookings up 200%. Apartments.com added 4,300 properties—its highest quarterly total since Q1 2016.

CoStar is trialling vendor-paid advertising in the USA

On an earnings call with investors and analysts, Florance revealed that Homes.com is still experimenting with and launching new products including a one-time listing visibility package named 'Boost' intended for agents who perhaps aren't ready to subscribe to a membership package.

Significantly, Florance also revealed that Homes.com is rolling out a version of the product for vendors to maximise the visibility of their homes on the platform—similar to Australia and Sweden's vendor-paid advertising model.

Trialled in Southern California, Boost has received "universally positive" feedback, according to Florance.

"We're also offering the Boost option directly to home sellers. These are home sellers with agents but often home sellers want [more].

We've seen in Australia, it's really successful where home sellers regularly add marketing tailwinds to their home for sale, purchasing tens of thousands of dollars’ worth of Boost from portals to market their home for sale online.

We tested the Boost option with home sellers and listing agents and focus groups in Southern California recently. The feedback was universally positive with almost all participants saying they would purchase a boost for their home or listing at about the $500 price point."

There was also a reiteration of the claim that Homes.com is now the second most visited residential portal network in the market with Florance citing unaided brand awareness for the portal of 36%, up from 4% in February 2024. Interestingly CoStar executives now feel that Homes.com is secure enough in its market position to shift its traffic acquisition strategy "away from pure volume to targeting quality engaged traffic". Florance said that the portal's bounce rate improved as a result and session duration was up 200%.

Acquisition of Domain moving closer with Nine Entertainment backing

The longtime CEO also revealed that majority shareholder Nine Entertainment has backed CoStar's acquisition offer for its Australian portal Domain, with the takeover now in its due diligence phase. Florance said that CoStar sees "numerous opportunities to create additional value for Domain following the potential acquisition" while claiming that market-leader REA Group is "not incentivised" to improve its product.

In the UK, where CoStar owns the challenger portal OnTheMarket, annualised revenue stood at $7.2 million in Q1 while lead volumes were up 17% year-on-year and listings volumes up 23%.