PRESS RELEASE DETAIL


Feb 21, 2018

CoStar Group Bookings Up 47%, CoStar Suite Bookings Up 100% and Apartments.com Bookings Up 36% in Fourth Quarter 2017 Year-over-Year

WASHINGTON, Feb. 21, 2018 /PRNewswire/ -- CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, announced today that revenue for the year ended December 31, 2017 was $965 million, an increase of 15% over revenue of $838 million for the full year of 2016. Revenue for the fourth quarter of 2017 grew 16% year-over-year to $254 million. 

Net income for the year ended December 31, 2017 increased $38 million to $123 million or $3.66 per diluted share compared to $85 million for the full year of 2016, an increase of 44%. Net income for the fourth quarter of 2017 increased to $44 million or $1.22 per diluted share compared to $30 million for the fourth quarter of 2016, an increase of 49%. EBITDA (defined below) for the full year of 2017 was $237 million versus $215 million for the full year of 2016, an increase of 10%.

"We had an exceptional year and I am delighted that we reached $1 billion in revenue run rate in the fourth quarter of 2017, one full year ahead of our goal we announced in 2014," said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. "2017 was a year of successful investments for CoStar, as we expanded our research capabilities, improved product quality and in the fourth quarter completed the CoStar-LoopNet database integration. For the full year of 2017, we added $127 million in revenue and we achieved our best sales year ever with $148 million in net new bookings, up 32% over 2016."

Florance continued, "Our net new bookings for the fourth quarter of 2017 accelerated to $43 million, an increase of 47% year-over-year. CoStar Suite net new bookings for the same period were up 100% as we successfully converted 4,200 LoopNet users to CoStar.  We also converted nearly 400 former Xceligent clients during the 13-day period from December 18-31, 2017 after Xceligent, formerly our number one commercial real estate information competitor, filed for Chapter 7 bankruptcy in mid-December. Sales conversions continued to be robust into 2018. Through January 31, 2018, we have signed a total of over 5,400 LoopNet users and approximately 1,000 former Xceligent users to CoStar.  On the multifamily side of our business, in the fourth quarter of 2017 Apartments.com amazingly bucked the historically negative seasonality of the winter months and had its best net new bookings quarter ever, up 36% year-over-year."

Year 2016-2017 Quarterly Results - Unaudited

(in millions, except per share data)


2016


2017


Q1

Q2

Q3

Q4


Q1

Q2

Q3

Q4











Revenues

$

200


$

207


$

213


$

218



$

227


$

237


$

248


$

254


Net income

17


16


23


30



22


22


34


44


Net income per share - diluted

0.52


0.48


0.72


0.91



0.68


0.68


1.04


1.22


Weighted average outstanding shares - diluted

32.4


32.4


32.4


32.5



32.6


32.7


32.8


36.1












EBITDA

48


46


58


64



55


44


73


66


Adjusted EBITDA

58


56


67


75



64


54


84


78


Non-GAAP net income

31


29


36


42



34


28


46


45


Non-GAAP net income per share - diluted

0.95


0.91


1.11


1.29



1.05


0.86


1.41


1.25




"One of the key factors that contributed to our strong sales in 2017 was our investment in our Global Research Center in Richmond," said Florance. "In a little over a year, we elevated the industry's best database and analytics offering to new heights of excellence by updating active listings much more frequently and hiring 250 tenant researchers to vastly improve our tenant data.  We also launched CoStar Listing Manager at the beginning of the fourth quarter, which enables brokers to update their listings directly in CoStar. We believe this adds to the quality of data in the system as brokers have made hundreds of thousands of entries monthly since October 2017."

CoStar Suite revenue growth accelerated throughout the year to 15% for the fourth quarter of 2017. CoStar Suite revenue grew to $122 million for the fourth quarter of 2017, an increase of $16 million versus the fourth quarter of 2016. Multifamily revenue for the fourth quarter of 2017 increased 26% to $76 million versus $60 million in the fourth quarter of 2016.  Revenue by services can be found within the tables included in this release.

Non-GAAP net income (defined below) for the year ended December 31, 2017 was $154 million or $4.59 per diluted share, an increase of $16 million versus the full year of 2016.  Adjusted EBITDA (which excludes stock-based compensation and other items as defined below) was $280 million for the full year of 2017, an increase of 9% over adjusted EBITDA for the full year of 2016.

CoStar Group had an effective tax rate of 26% for the year ended December 31, 2017, a decrease of 1,200 basis points from 38% for the year ended 2016.  This year-over-year reduction in the effective tax rate is related to benefits for research and development tax credits, the change in accounting for share-based payments, and revaluation of deferred tax liabilities related to the Tax Cuts and Jobs Act of 2017.

As of December 31, 2017, the Company had approximately $1.22 billion in cash, cash equivalents and long-term investments, and no outstanding debt. Earlier today, the Company closed its previously announced acquisition of ForRent.com and paid approximately $350 million in cash and issued approximately $35 million in shares of CoStar Group common stock. The purchase price is subject to customary working capital and other post-closing adjustments.

"We are delighted we have completed the ForRent acquisition as it strengthens our position in multifamily," said Florance. "I welcome the ForRent team to the best multifamily marketing service in the United States. We continue to deliver unparalleled value to our advertisers and consumer users as a leader in the apartments industry in traffic, visits, leads, leases and revenue."

2018 Outlook 

"We believe our exceptional sales performance throughout the year and particularly in the fourth quarter of 2017 positions us well for accelerating revenue growth in 2018," stated Scott Wheeler, Chief Financial Officer of CoStar Group.

The Company expects revenue in the range of $1.170 billion to $1.190 billion for the full year of 2018, reflecting revenue growth of 22% at the midpoint of the range. This includes ForRent revenue in the range of $65 million to $70 million for 2018 and the reduction in LoopNet Premium Searcher revenue from approximately $32 million in 2017 to $4 million in 2018 as we accelerate the transition to CoStar.  The vast majority of LoopNet information subscribers have been notified that their service will be discontinued as of the end of February 2018. As a result, we will see a headwind to sales in February, but we expect to see offsetting gains in CoStar sales through the spring and summer of 2018. Excluding the ForRent acquisition, we expect revenue for the existing, organic business to be in the range of $1.105 billion to $1.120 billion, which implies an annual growth rate of 15% to 16% over 2017.

We expect revenue for the first quarter of 2018 in the range of $269 million to $272 million, representing revenue growth of 19% over the first quarter of 2017 at the midpoint of the range. Our revenue outlook for the first quarter of 2018 includes an assumption of $7 million to $8 million of revenue from For Rent, which is approximately one month of revenue.

We expect adjusted EBITDA in a range of $365 million to $375 million for the full year of 2018, which includes approximately $5 million to $7 million of adjusted EBITDA from the ForRent acquisition. Excluding the acquisition of ForRent, we expect full year adjusted EBITDA margins of approximately 33% at the midpoint of our guidance range.  As we proceed with the integration of ForRent throughout the year, we remain confident we will achieve our goal of 40% margin exiting 2018.

For the first quarter we expect adjusted EBITDA in a range of $70 million to $74 million, which includes approximately $3 million of negative adjusted EBITDA from the ForRent business.

We expect full-year 2018 non-GAAP net income per diluted share in a range of $7.01 to $7.21, based on 36.5 million shares.   For the first quarter we expect non-GAAP net income per diluted share in a range of $1.32 to $1.40 based on 36.3 million shares. These ranges include a revised non-GAAP tax rate of 25%, which has been reduced from 38% in prior years primarily due to the impact of recently passed federal tax legislation. The lower tax rate has the effect of increasing our non-GAAP net income for full year 2018 by approximately $44 million or $1.22 per diluted share at the midpoint of our guidance range.

The preceding forward-looking statements reflect CoStar Group's expectations as of February 21, 2018, including forward-looking non-GAAP financial measures on a consolidated basis. 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. A reconciliation of forward-looking non-GAAP guidance to the most directly comparable GAAP measure, net income, can be found within the tables included in this release.

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) and loss on debt extinguishment, (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) amortization of acquired intangible assets, (ii) stock-based compensation expense, (iii) acquisition and integration related costs, (iv) purchase accounting adjustments, (v) restructuring charges and related costs, (vi) settlements and impairments and (vii) loss on debt extinguishment. From this figure, we then subtract an assumed provision for income taxes to arrive at non-GAAP net income. In 2016 and 2017, the company assumed a 38% tax rate, and in 2018 the company is assuming a 25% tax rate in order to approximate our statutory 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 EST on Thursday, February 22, 2018 to discuss earnings results for the fourth quarter of 2017 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) 230-1074 (from the United States and Canada) or (612) 234-9959 (from all other countries) and refer to conference code 444420. 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 444420. 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)












Three Months Ended
December 31,


Twelve Months Ended
December 31,



2017


2016


2017


2016



















Revenues


$

253,991



$

218,311



$

965,230



$

837,630


Cost of revenues


58,301



46,013



220,403



173,814


Gross profit


195,690



172,298



744,827



663,816











Operating expenses:









Selling and marketing (excluding customer base amortization)


77,529



65,397



318,362



296,483


  Software development


21,796



19,861



88,850



76,400


  General and administrative


41,578



35,022



146,128



123,297


  Customer base amortization


4,029



5,129



17,671



22,731




144,932



125,409



571,011



518,911











Income from operations


50,758



46,889



173,816



144,905


Interest and other income


2,455



1,186



4,044



1,773


Interest and other expense


(734)



(2,554)



(9,014)



(10,016)


Loss on debt extinguishment


(3,788)





(3,788)




Income before income taxes


48,691



45,521



165,058



136,662


Income tax expense


4,487



15,948



42,363



51,591


Net income


$

44,204



$

29,573



$

122,695



$

85,071











Net income per share - basic


$

1.24



$

0.92



$

3.70



$

2.64


Net income per share - diluted


$

1.22



$

0.91



$

3.66



$

2.62











Weighted average outstanding shares - basic


35,675



32,213



33,200



32,167


Weighted average outstanding shares - diluted


36,119



32,473



33,559



32,436




CoStar Group, Inc.

Reconciliation of Non-GAAP Financial Measures - Unaudited

(in thousands, except per share data)










Reconciliation of Net Income to Non-GAAP Net Income




Three Months Ended
December 31,


Twelve Months Ended
December 31,



2017


2016


2017


2016










Net income


$

44,204



$

29,573



$

122,695



$

85,071


Income tax expense


4,487



15,948



42,363



51,591


Income before income taxes


48,691



45,521



165,058



136,662


Amortization of acquired intangible assets


8,660



10,829



37,391



45,550


Stock-based compensation expense


9,827



9,368



39,030



36,349


Acquisition and integration related costs


1,990





4,061



2,258


Restructuring and related costs




1,779





1,845


Settlements and impairments






(760)




Loss on debt extinguishment


3,788





3,788




Non-GAAP income before income taxes


72,956



67,497



248,568



222,664


Assumed rate for income tax expense *


38

%


38

%


38

%


38

%

Assumed provision for income tax expense


(27,723)



(25,649)



(94,456)



(84,612)


Non-GAAP net income


$

45,233



$

41,848



$

154,112



$

138,052











Net income per share - diluted


$

1.22



$

0.91



$

3.66



$

2.62


Non-GAAP net income per share - diluted


$

1.25



$

1.29



$

4.59



$

4.26











Weighted average outstanding  shares - basic


35,675



32,213



33,200



32,167


Weighted average outstanding  shares - diluted


36,119



32,473



33,559



32,436











* A 38% tax rate is assumed, which approximates our statutory corporate tax rate.










Reconciliation of Net Income to EBITDA and Adjusted EBITDA




Three Months Ended
December 31,


Twelve Months Ended
December 31,



2017


2016


2017


2016










Net income


$

44,204



$

29,573



$

122,695



$

85,071


Amortization of acquired intangible assets in cost of revenues


4,618



5,700



19,707



22,819


Amortization of acquired intangible assets in operating expenses


4,042



5,129



17,684



22,731


Depreciation and other amortization


6,706



6,295



26,252



24,615


Interest and other income


(2,455)



(1,186)



(4,044)



(1,773)


Interest and other expense


734



2,554



9,014



10,016


Loss on debt extinguishment


3,788





3,788




Income tax expense


4,487



15,948



42,363



51,591


EBITDA


$

66,124



$

64,013



$

237,459



$

215,070


Stock-based compensation expense


9,827



9,368



39,030



36,349


Acquisition and integration related costs


1,990





4,061



2,258


Settlements and impairments






(760)




Restructuring and related costs




1,779





1,845


Adjusted EBITDA


$

77,941



$

75,160



$

279,790



$

255,522




CoStar Group, Inc.

Condensed Consolidated Balance Sheets

(in thousands)








December 31,
2017


December 31,
2016



(Unaudited)



ASSETS





Current assets:





  Cash and cash equivalents


$

1,211,463



$

567,223


  Accounts receivable, net


60,900



48,537


  Income tax receivable




129


  Prepaid expenses and other current assets


15,572



11,602


Total current assets


1,287,935



627,491







Long-term investments


10,070



9,952


Deferred income taxes, net


5,431



7,273


Property and equipment, net


84,496



87,568


Goodwill


1,283,457



1,254,866


Intangible assets, net


182,892



195,965


Deposits and other assets


6,179



1,948


Income tax receivable


12,981




Total assets


$

2,873,441



$

2,185,063







LIABILITIES AND STOCKHOLDERS' EQUITY





Current liabilities:





  Accounts payable, accrued expenses and other current liabilities


$

100,980



$

83,916


  Current portion of long-term debt




31,866


  Deferred revenue


45,686



39,164


Total current liabilities


146,666



154,946







Long-term debt, less current portion




306,473


Deferred gain on sale of building


16,192



18,715


Deferred rent


33,909



31,589


Deferred income taxes, net


12,070



18,386


Income taxes payable


13,354



741







Stockholders' equity


2,651,250



1,654,213


Total liabilities and stockholders' equity


$

2,873,441



$

2,185,063




CoStar Group, Inc.

Condensed Consolidated Statements of Cash Flows - Unaudited

(in thousands, unaudited)




Twelve Months Ended
December 31,


2017


2016

Operating activities:




Net income

$

122,695



$

85,071


Adjustments to reconcile net income to net cash provided by operating activities:




Depreciation and amortization

63,643



70,165


Amortization of debt issuance costs

2,303



3,227


Debt extinguishment loss

3,788




Impairment loss



23


Realized gain on investments



(808)


Property and equipment write-off

129



839


Stock-based compensation expense

39,030



36,349


Deferred income tax (benefit) expense, net

(2,903)



15,635


Bad debt expense

5,690



7,358


Changes in operating assets and liabilities, net of acquisitions:




Accounts receivable

(17,524)



(16,044)


Prepaid expenses and other current assets

(3,672)



(1,157)


Income tax receivable

(12,981)




Accounts payable and other liabilities

11,525



(1,520)


Income taxes payable

16,937



2,816


Deferred revenue

6,004



(2,070)


Deposits and other assets

39



758


Net cash provided by operating activities

234,703



200,642






Investing activities:




Proceeds from sale and settlement of investments



5,950


Purchases of property and equipment and other assets

(24,499)



(18,766)


Acquisitions, net of cash acquired

(47,768)



(10,443)


Net cash used in investing activities

(72,267)



(23,259)






Financing activities:




Payments of long-term debt

(345,000)



(20,000)


Payments of debt issuance costs

(3,467)




Repurchase of restricted stock to satisfy tax withholding obligations

(14,902)



(16,424)


Proceeds from equity offering, net of transaction costs

833,911




Proceeds from exercise of stock options and employee stock purchase plan

9,888



5,861


Net cash provided by (used) in financing activities

480,430



(30,563)






Effect of foreign currency exchange rates on cash and cash equivalents

1,374



(1,415)


Net increase in cash and cash equivalents

644,240



145,405


Cash and cash equivalents at the beginning of period

567,223



421,818


Cash and cash equivalents at the end of period

$

1,211,463



$

567,223




CoStar Group, Inc.

Results of Segments - Unaudited

(in thousands)










Three Months Ended
December 31,


Twelve Months Ended
December 31,


2017


2016


2017


2016

Revenues








North America

$

245,760



$

210,735



$

934,464



$

809,492


International








    External customers

8,231



7,576



30,766



28,138


    Intersegment revenues *

15



16



42



40


Total International revenues

8,246



7,592



30,808



28,178


Intersegment eliminations

(15)



(16)



(42)



(40)


Total revenues

$

253,991



$

218,311



$

965,230



$

837,630










EBITDA








North America

$

66,842



$

62,605



$

236,906



$

210,901


International

(718)



1,408



553



4,169


Total EBITDA

$

66,124



$

64,013



$

237,459



$

215,070










* Intersegment revenues recorded were 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. Intersegment revenues are recorded at an amount the Company believes approximates fair value. North America EBITDA includes a corresponding cost for the services performed by Grecam for CoStar Portfolio Strategy.



CoStar Group, Inc.

Revenues by Services - Unaudited

(in thousands)












Three Months Ended
December 31,


Twelve Months Ended
December 31,



2017


2016


2017


2016










Information and analytics









  CoStar Suite


$

122,098



$

106,487



$

463,185



$

408,456


  Information services


17,254



18,842



72,618



77,178


Online marketplaces









  Multifamily


75,531



60,083



279,855



224,835


  Commercial property and land


39,108



32,899



149,572



127,161


Total revenues


$

253,991



$

218,311



$

965,230



$

837,630




CoStar Group, Inc.
Reconciliation of Non-GAAP Financial Measures with 2016-2017 Quarterly Results - Unaudited

(in millions, except per share data)












Reconciliation of Net Income to Non-GAAP Net Income














2016


2017



Q1

Q2

Q3

Q4


Q1

Q2

Q3

Q4












Net income


$

16.7


$

15.6


$

23.2


$

29.6



$

22.1


$

22.2


$

34.2


$

44.2


Income tax expense


11.2


10.2


14.2


16.0



13.3


3.6


21.0


4.5


Income before income taxes


27.9


25.8


37.4


45.5



35.4


25.8


55.2


48.7


Amortization of acquired intangible assets


11.9


11.5


11.3


10.8



10.9


9.3


8.5


8.7


Stock-based compensation expense


8.3


9.3


9.3


9.4



9.4


10.1


9.7


9.8


Acquisition and integration related costs


1.5


0.8





0.4


0.4


1.2


2.0


Restructuring and related costs




0.1


1.8







Settlements and impairments







(0.8)





Loss on debt extinguishment










3.8


Non-GAAP income before income taxes


49.6


47.5


58.1


67.5



55.3


45.6


74.6


73.0


Assumed rate for income tax expense *


38

%

38

%

38

%

38

%


38

%

38

%

38

%

38

%

Assumed provision for income tax expense


(18.9)


(18.0)


(22.1)


(25.6)



(21.0)


(17.3)


(28.4)


(27.7)


Non-GAAP net income


$

30.7


$

29.4


$

36.0


$

41.8



$

34.3


$

28.3


$

46.3


$

45.2













Non-GAAP net income per share - diluted


$

0.95


$

0.91


$

1.11


$

1.29



$

1.05


$

0.86


$

1.41


$

1.25













Weighted average outstanding  shares - basic


32.1


32.2


32.2


32.2



32.3


32.4


32.4


35.7


Weighted average outstanding  shares - diluted


32.4


32.4


32.4


32.5



32.6


32.7


32.8


36.1













* A 38% tax rate is assumed, which approximates our statutory corporate tax rate.








Reconciliation of Net Income to EBITDA and Adjusted EBITDA














2016


2017



Q1

Q2

Q3

Q4


Q1

Q2

Q3

Q4












Net income


$

16.7


$

15.6


$

23.2


$

29.6



$

22.1


$

22.2


$

34.2


$

44.2


Amortization of acquired intangible assets


11.9


11.5


11.3


10.8



10.9


9.3


8.5


8.7


Depreciation and other amortization


5.6


5.9


6.8


6.3



6.4


6.5


6.6


6.7


Interest and other income


(0.1)


(0.2)


(0.3)


(1.2)



(0.4)


(0.6)


(0.6)


(2.5)


Interest and other expense


2.5


2.5


2.5


2.6



2.7


2.7


2.9


0.7


Loss on debt extinguishment










3.8


Income tax expense


11.2


10.2


14.2


15.9



13.3


3.6


21.0


4.5


EBITDA


$

47.8


$

45.6


$

57.7


$

64.0



$

55.0


$

43.7


$

72.6


$

66.0


Stock-based compensation expense


8.3


9.3


9.3


9.4



9.4


10.1


9.7


9.8


Acquisition and integration related costs


1.5


0.8





0.4


0.4


1.2


2.0


Restructuring and related costs




0.1


1.8







Settlements and impairments







(0.8)





Adjusted EBITDA


$

57.6


$

55.7


$

67.1


$

75.2



$

63.9


$

54.3


$

83.6


$

77.9




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 March 31, 2018


Ended December 31, 2018


Low


High


Low


High









Net income

$

28,000



$

32,000



$

166,000



$

178,000


Income tax expense

9,000



11,000



56,000



60,000


Income before income taxes

37,000



43,000



222,000



238,000


Amortization of acquired intangible assets

11,000



11,000



53,000



53,000


Stock-based compensation expense

11,000



10,000



45,000



42,000


Acquisition and integration related costs

5,000



4,000



20,000



17,000


Restructuring and related costs





1,000



1,000


Non-GAAP income before income taxes

64,000



68,000



341,000



351,000


Assumed rate for income tax expense *

25

%


25

%


25

%


25

%

Assumed provision for income tax expense

(16,000)



(17,000)



(85,300)



(87,800)


Non-GAAP net income

$

48,000



$

51,000



$

255,700



$

263,200










Net income per share - diluted

$

0.77



$

0.88



$

4.55



$

4.88


Non-GAAP net income per share - diluted

$

1.32



$

1.40



$

7.01



$

7.21










Weighted average outstanding  shares - diluted

36,300



36,300



36,500



36,500










* A 25% tax rate is assumed, which approximates our statutory 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 March 31, 2018


Ended December 31, 2018


Low


High


Low


High

Net income

$

28,000



$

32,000



$

166,000



$

178,000


Amortization of acquired intangible assets

11,000



11,000



53,000



53,000


Depreciation and other amortization

7,000



7,000



26,000



26,000


Interest and other expense, net

(1,000)



(1,000)



(2,000)



(2,000)


Income tax expense

9,000



11,000



56,000



60,000


Stock-based compensation expense

11,000



10,000



45,000



42,000


Acquisition and integration related costs

5,000



4,000



20,000



17,000


Restructuring and related costs





1,000



1,000


Adjusted EBITDA

$

70,000



$

74,000



$

365,000



$

375,000




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 over 5 million monthly unique visitors per month. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.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.  CoStar Group's websites attracted an average of approximately 34 million unique monthly visitors in aggregate throughout 2017. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of over 3,700 worldwide, including the industry's largest professional research organization. For more information, visit www.costargroup.com.

CONTACT: Scott Wheeler, Chief Financial Officer, (202) 336-6920, swheeler@costar.com; Richard Simonelli, Vice President, Investor Relations, (202) 346-6394, rsimonelli@costar.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 revenue, bookings, sales, site traffic and visits, and leads, leases and revenue in the apartments industry; the risk that the Company is unable to sustain current revenue and earnings growth rates or increase them; the risk that the Company is unable to achieve accelerating revenue growth in 2018; the risk that revenues for the first quarter and full year 2018 will not be as stated in this press release; the risk that the ForRent revenue and adjusted EBITDA for first quarter and full year 2018 will not be as expected and stated in this press release; the risk that the reduction of the LoopNet Premium Searcher revenue for 2018 could differ from expectations and stated in this press release; the risk that the Company is unable to offset the discontinued LoopNet Premium Searcher revenue with CoStar sales through the spring and summer of 2018; the risk that net income for the first quarter and full year 2018 will not be as stated in this press release; the risk that adjusted EBITDA for the first quarter and full year 2018 will not be as stated in this press release; the risk that adjusted EBITDA margins for the full year 2018 will not be as expected and as stated in this press release; the risk that non-GAAP net income and non-GAAP net income per diluted share for the first quarter and full year 2018 will not be as stated in this press release; the risk that the tax rate estimate stated in this press release is incorrect or may change; the risk that new tax laws, regulations or guidance may be enacted or issued impacting our effective tax rate; the risk that the impact of the tax rate on our non-GAAP net income for the full year 2018 is not as expected and as stated in this press release; the risk that the Company is unable to achieve its goal of 40% margin exiting 2018; the risk that the businesses of ForRent, Apartments.com, and CoStar may not be combined successfully or in a timely and cost-efficient manner; the risk that the combination does not produce the expected results or benefits; the risk that business disruption relating to the ForRent acquisition may be greater than expected; the risk that synergies and expected operating efficiencies from the acquisition of ForRent may not be as expected, may not be fully realized, may take longer to realize than expected or may not drive revenue and earnings growth; the risk that the combination and integration of ForRent will disrupt CoStar's operations or result in the loss of consumers, property owners or key employees; and the risk that the company's estimates and assumptions regarding ForRent change from current expectations.  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, 2016, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2017, each of which is filed with the SEC, including in the "Risk Factors" section of those filings, 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.