CoStar Q3 2026: Residential EBITDA Hits $16m as $730m Vexcel Deal Agreed

CoStar Group has reported third-quarter results, and its residential segment posted positive reported EBITDA for the first time in the segment series CoStar now publishes. On the same day the company agreed to buy aerial imagery business Vexcel for around $730m in cash.

Highlights from the third quarter of 2026 include:

• Group revenues of $952m, up 14%
• Net income of $74m, against a $31m loss a year earlier
• EBITDA of $179m, up from $13m
• Adjusted EBITDA of $229m, up from $114m and above the $190m to $210m guidance range
• Residential revenues of $460m, up 23%, or 8% organically
• Residential EBITDA of $16m, or $49m adjusted, against losses of $101m and $69m a year earlier
• Commercial revenues of $492m, up 7%, with LoopNet up 13% to $89m
• Full-year adjusted EBITDA guidance raised to $820m to $840m

Founder and CEO Andy Florance said: "CoStar Group generated outstanding profitability growth in the third quarter, delivering on our commitment to expand margins as we exit a period of investment."

In Q2 the milestone was residential adjusted EBITDA turning positive, at $12m. This quarter the reported line followed, at $16m against a $5m loss in Q2 and a $101m loss a year ago. Adjusted EBITDA reached $49m, or $46m excluding Zonda, according to CFO Robin Rossmann. Revenue rose 23% to $460m, but only 8% organically, because Zonda has been consolidated since 21 August. Even with Zonda's costs included, the segment's costs fell by about $30m year on year, to $444m.

Homes.com itself is still a small slice of that, with Florance telling analysts on the call that its revenue rose 50% to about $31m, from more than 36,000 members. That is up 47% year on year but roughly flat on Q2. CoStar has cut Homes.com's inside sales team to 267 reps from a peak of 655 a year ago, and the portal added $7m of annualised net new bookings in the quarter.

The pricing push started in September, when CoStar introduced Platinum premium advertising. Florance said average subscriber pricing reached $271 in September and the average sales price rose 58% to $429 in October. Product teams from Domain and Homes.com are planning a combined platform, which CoStar expects to release in 2027.

Residential is now carrying the group's profit growth on its own. Group adjusted EBITDA rose $115m year on year. Residential contributed $118m of that, while commercial adjusted EBITDA slipped to $180m from $183m. Commercial revenue grew 7%, with the CoStar product up 8% to $344m, LoopNet up 13% and other commercial revenues down 8% to $59m.

Some of the forward numbers are softer as CoStar reported net new bookings of $37m, against $69m in Q2 and $84m a year earlier, the latter figure given by Rossmann on the call. Its Q4 revenue guidance of $976m to $996m implies growth of around 10%, down from 14% this quarter and 18% in Q2. Profit guidance went the other way: full-year adjusted EBITDA is now $820m to $840m, up $30m at the midpoint from July and $60m from February.

Florance put this year's savings at around $150m against original guidance, up from roughly $100m at Q2, and said an expense review has found at least $200m more over the next 12 to 18 months. He tied both to the 2028 target of $1.25bn in adjusted EBITDA.

Vexcel is the third deal this year, after the $800m purchase of new homes data provider Zonda, which closed in August, and a 30% stake in Italian portal operator Wikicasa. Vexcel runs a survey-grade aerial imagery programme and builds its own UltraCam cameras. CoStar says it captures more than 60 million images a year across more than 45 countries and 320 metros.

On CoStar's figures, Vexcel generated more than $140m of revenue in the last twelve months, up over 30%, at an adjusted EBITDA margin of around 20%. That puts the price at roughly five times trailing revenue. The deal is expected to close in the first quarter of 2027 and is to be funded from cash and CoStar's revolving credit facility. Cash stood at $500m at the end of September, down from $1,633m at the end of 2025.

Florance's case is about data rather than imagery sales: "Combining these high-resolution images with the rapidly evolving capabilities of AI to semantically recognize and extract information and features from properties, we believe we can capture hundreds of data fields per property, across the approximately half a billion properties captured by Vexcel."

Vexcel's margin is below the group's 24% adjusted EBITDA margin this quarter, and CoStar's own Q4 guidance has revenue growth slowing to about 10%. The next few quarters will show whether residential EBITDA keeps rising once the cost savings are in the base.