The American real estate giant CoStar has released its results for Q4 of the financial year 2022. Highlights of the company's performance include:
Washington-based CoStar is one of the largest real estate companies in the world and is the largest player in the U.S. in terms of commercial property data and marketplaces. The company reports six business segments which are:
According to CEO and founder, Andy Florance, 2022 was an "outstanding" year for the group with Apartments.com singled out for praise in his comments accompanying the report's release:
“I’m particularly pleased with the revenue growth acceleration in Apartments.com, which began the year with 6% year-over-year revenue growth in the first quarter and ended the year with 16% year-over-year revenue growth in the fourth quarter,”
Several of the company's other segments also saw the double-digit quarterly year-on-year growth in revenue which shareholders have come to expect from CoStar. There were notable sales increases in CoStar Suite (16% on a quarterly year-on-year basis and 22% on a yearly basis) and Information Services (13% and 38%) segments.
Despite its financial success and inclusion on the prestigious S&P 500 index, CoStar was among a cohort of real estate tech businesses that reduced staff numbers in 2022 although it did not cut as deep as many of its peers. In December the company announced that it was to lay off 100 'duplicative roles' from its residential operations while also committing to hire 700 more to build out Homes.com.
CoStar's rivals in the residential space saw differing fortunes through 2022. While Zillow's stock has been upgraded by several analysts on the back of better-than-expected results, the narrative around both Redfin and News Corp-owned Realtor.com has been negatively affected by revenue and market share drop-offs at both companies.
In an earnings call with investors, Andy Florance made the announcement that CoStar would no longer be pursuing a deal to buy Realtor.com parent Move Inc from News Corp.
The deal was rumoured to value Move Inc at around $3 billion and had generated plenty of headlines and speculation about power shifts in the residential real estate market when talks came to light at the end of January.
The news was confirmed in a press release by News Corp which said that the Murdoch-owned company would "continue to actively assess opportunities to support the Company’s strategy to optimize the value of its Digital Real Estate Services segment and otherwise maximize shareholder value."
The cessation of talks comes as something of a surprise to the industry and CoStar's share price fell in after-hours trading on the back of the revelation.
The reason given by Florance for not buying Realtor.com was the faith placed in CoStar's own Homes.com portal, which it acquired in 2020.
"we continue to believe that the Homes.com business model and principles are well aligned with [National Association of Realtors] members and real estate agents generally.”
According to CoStar, Homes.com has seen big leaps in traffic and now claims 20 million unique monthly visitors. CoStar has been investing heavily in "crazy projects" to build out its residential portal's traffic acquisition strategy including the in-person capturing of rich neighbourhood data.
Although Florance said that he does not rule out the role of acquisitions in growing CoStar's residential segment, the company feels that it has "a unique offering on the organic side that no one else is offering out there" and a "viable organic path".