CoStar Group Sees 15% Revenue Increase in Q2 as Rental Business Continues to Thrive

The commercial real estate, data services, and real estate marketplace operator CoStar Group saw revenue rise 15% in Q2 as it posted its fifty-seventh consecutive quarter of double-digit revenue growth. Notable points from the company's report for the three months ended June 30th included:

• Revenue of $781 million, up 15% year-on-year.
• Adjusted EBITDA of $85 million, up 108%.
• Net profit of $6.2 million.
• Residential revenue up 8.4% at $28.4 million.

Commenting on his company's performance, CoStar Group founder and CEO, Andy Florance, said:

"We achieved our all-time high net new bookings in Q2 of $93 million, a 65% increase from last quarter, powered by Apartments.com’s highest net new bookings quarter in two years. Our dedicated Homes.com sales team turned in its best net new bookings in Q2 as we added 6,300 Members, an increase of 56% from the end of Q1 2025. Our demo-to-close rate exceeded 50%. The investments in our sales force, mission critical products, and marketplaces are driving these outstanding results as our commercial information and marketplace brands realized a 43% profit margin for Q2 2025."

Rentals: Apartments.com posts best quarter in two years

CoStar’s rental business continues to drive company performance, with Apartments.com delivering its highest net new bookings quarter in two years. Revenue for the segment hit $292 million, up 11% year-on-year.

Inventory continues to grow despite competitive pressure from Zillow, which has allied with Realtor.com and Redfin to take on Apartments.com. “Greenfield TAM in this industry is still massive,” said Florance, suggesting the category has room for multiple winners.

Residential: Homes.com adds members, builds trust

Homes.com registered another quarter of incremental momentum as it continues to scale a residential platform being marketed as "agent-friendly" amid an ongoing debate and legal battle in the industry surrounding private listings. Annualised net new bookings for CoStar's residential business as a whole hit $12 million with a 56% quarter-on-quarter jump in agent memberships for Homes.com.

The upstart portal appears to be gaining some momentum following its billion-dollar marketing drive as its dedicated sales team (predicted to reach 750 by the end of the year) beds in. Homes.com's demo-to-close rate exceeded 50% in Q2, and Florance highlighted similarly positive signs seen in the portals' increasing Net Promoter Score, contract cancellation rate, unaided consumer awareness and conversion rates that "we believe are beating Rightmove’s.”

Despite the uptick in those metrics, CoStar is taking the long view when it comes to Homes.com's monetisation, with Florance's comments to investors highlighting the unique nature of Homes.com's marketing offering compared to the services offered by Homes.com's domestic competitors.

"We're pretty much rounding the first year and some number of months on the product. We are, we believe we're launching a vastly superior product offering to anything else offered in the United States, and we are inspired by some very successful and profitable businesses outside the United States and other countries..."

"One of the beauties of our business model is that unlike our competitors that can only really sell to 5% of the market, our business model can sell to 60, 70, 80% of the market. Is why we love it and why investors should too,” Florance said.

As revealed in the company's Q1 report, Homes.com is experimenting with a vendor-paid advertising (VPA) product dubbed Boost. According to Florance, the portal sold more than 1,200 Boost VPA packages and converted around 25% of agents using the product to fully paid members.

Traffic to CoStar’s residential network (which includes Apartments.com) reached 111 million visits in Q2. Although the figure is down significantly year-on-year, CoStar revealed at the start of the year that it has shifted from "pure volume" traffic to targeting more engagement. Competitors Zillow and Realtor.com have yet to disclose their respective traffic figures for the period.

As for product updates, the veteran CEO revealed that Homes.com is set to launch a dedicated new build segment of its site in August and has plans to roll out an AI-powered voice search feature, allowing users to search using natural language.

Also mentioned on the call with investors were CoStar Group's overseas residential portal interests.

In the UK, where CoStar owns OnTheMarket.com, the company reported that inventory surpassed 800,000 listings (a 20% year-over-year increase) in Q2 2025, and leads grew 12% year over year.

Florance also confirmed that the agreed acquisition of Australian number two portal, Domain, is expected to close in Q3 and alluded to the opportunity ahead for Domain, given the ongoing investigation into its main rival's pricing.

“We believe the situation creates an excellent opportunity for Domain to position itself as the more reasonable and stable service provider,”

Matterport: Resetting the model

Matterport, the digital twin specialist acquired by CoStar for $1.6 billion in March, remains in investment mode and is still not profitable. CoStar revealed plans to relaunch the brand with a new positioning and go-to-market strategy focused on B2B.

“We're relaunching the Matterport brand, adding the signature CoStar Group Star Wheel logo to the front of the Matterport name, and we're going to co-brand Matterport with our portal brands, appropriately to the property types,” Florance said.

An expansion of the Matterport sales team is also on the cards as CoStar looks to build traction with enterprise clients.