PRESS RELEASE DETAIL


Feb 24, 2016

CoStar Group Grows Fourth Quarter Net Income 65% and Revenue 24% Year-Over-Year

Revenue for the year ended December 31, 2015 was $712 million, an increase of 24% over revenue of $576 million for the full year of 2014. Revenue for the fourth quarter also grew 24% year- over-year to $193 million. Net income for the fourth quarter of 2015 grew 65% year-over-year to $23 million or $0.71 per diluted share.

WASHINGTON, Feb. 24, 2016 -- 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, 2015 was $712 million, an increase of 24% over revenue of $576 million for the full year of 2014. Revenue for the fourth quarter also grew 24% year- over-year to $193 million. Net income for the fourth quarter of 2015 grew 65% year-over-year to $23 million or $0.71 per diluted share. 

“In 2015 we focused on building the premier marketplace for renting an apartment in the United States,” said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. “According to comScore, Apartments.com enjoyed more visitor traffic in 2015 than any other apartment rental website. Revenue from Apartments.com was up approximately 30% year-over-year in the fourth quarter. In 2015 we added $136 million of overall revenue and $100 million of net new annual subscriptions sales. In the fourth quarter of 2015 alone, CoStar Group generated $29 million of net new sales on annual subscriptions, a 69% year-over-year increase.”

Florance continued, “We invested aggressively during 2015 to integrate CoStar, Apartments.com, and Apartment Finder in order to achieve sustainable long-term cost savings. EBITDA more than doubled from the third quarter to the fourth quarter of 2015 while EBITDA margin for the fourth quarter of 2015 expanded to 29%. We believe these strong results plainly demonstrate that we are on target to achieve our goal of $1 billion in revenue and 40% margin exiting 2018.”

Year 2014-2015 Quarterly Results - Unaudited
(in millions, except per share data)
    2014     2015  
  Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4
                   
Revenues $ 119.1   $ 147.7   $ 153.1   $ 156.1     $ 159.0   $ 170.7   $ 189.1   $ 193.0  
EBITDA   27.0     37.6     43.7     43.0       14.3     (1.5 )   22.1     55.0  
Net income (loss)   9.7     8.2     13.0     13.9       (6.1 )   (15.0 )   (5.4 )   23.0  
Net income (loss) per share - diluted   0.34     0.28     0.40     0.43       (0.19 )   (0.47 )   (0.17 )   0.71  
Weighted average outstanding shares - diluted   28.8     29.5     32.1     32.1       31.8     31.9     32.0     32.3  
                   
Adjusted EBITDA   37.0     45.3     51.8     54.3       23.8     11.3     35.5     65.1  
Non-GAAP Net Income   19.8     23.5     27.9     29.8       10.8     2.4     17.2     35.5  
Non-GAAP Net Income per share - diluted   0.69     0.80     0.87     0.93       0.34     0.08     0.53     1.10  
                   

EBITDA in the fourth quarter of 2015 increased to $55 million compared to $43 million in the fourth quarter of 2014, which represents an increase of $12 million or 29% year-over-year.

Adjusted EBITDA (which excludes stock-based compensation and other items as defined below) was $65 million for the fourth quarter of 2015 versus $54 million in the fourth quarter of 2014, which is an increase of 20% year-over-year.

Non-GAAP net income (defined below) for the year ended December 31, 2015 was $66 million or $2.04 per diluted share. Non-GAAP net income in the fourth quarter of 2015 was $35 million or $1.10 per diluted share, compared to $30 million or $0.93 per diluted share in the fourth quarter of 2014.

As of December 31, 2015, the Company had approximately $437 million in cash, cash equivalents and long-term investments, which is an increase of $46 million since September 30, 2015. Short and long-term debt outstanding, net of debt issuance costs, totaled approximately $355 million as of December 31, 2015.

2016 Outlook

“We believe our investments in Apartments.com and Apartment Finder in 2015 provide a strong platform for future revenue growth, and are additive to the consistent double-digit revenue growth contribution from our core business,” stated CoStar Group Chief Financial Officer Scott Wheeler. “We expect the success of our integration and cost management efforts will deliver continued profit improvements in 2016.” The Company expects revenue of approximately $196 million to $198 million for the first quarter of 2016 and approximately $830 million to $840 million for the full year 2016. 

For the first quarter of 2016, the Company expects non-GAAP net income per diluted share (defined below) of approximately $0.66 to $0.70. First quarter 2016 expenses include increased marketing for Apartments.com compared to fourth quarter 2015, in order to increase customer awareness and engagement ahead of the spring rental season. For the full year of 2016, the Company expects non-GAAP net income per diluted share in a range of approximately $3.62 to $3.72, an increase of approximately 80% at the mid-point over 2015.

The preceding forward-looking statements reflect CoStar Group’s expectations as of February 24, 2016, including forward-looking non-GAAP financial measures on a consolidated basis. We are not able to forecast with certainty whether or when certain events, such as acquisition-related costs, the exact amounts or timing of investments, transition, de-emphasis or discontinuation of services, restructuring, settlements or impairments will occur in any given quarter. 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.

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), (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) purchase amortization and other related costs, (ii) stock-based compensation expense, (iii) acquisition and integration related costs, (iv) purchase accounting adjustments, (v) restructuring charges and related costs, and (vi) settlements and impairments. From this figure, we then subtract an assumed provision for income taxes to arrive at non-GAAP net income. The company assumes a 38% tax rate in order to approximate our long-term effective 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 ET on Thursday, February 25, 2016 to discuss earnings results for the fourth quarter of 2015 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) 288-0329 (from all other countries) and refer to conference code 385653. 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 385653. 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)  
                   
    For the Three Months   For the Twelve Months  
    Ended December 31,   Ended December 31,  
      2015       2014       2015       2014    
                   
                   
Revenues   $  193,009     $  156,096     $  711,764     $  575,936    
Cost of revenues     45,127       42,923       188,885       156,979    
Gross margin     147,882       113,173       522,879       418,957    
                   
Operating expenses:                  
Selling and marketing     59,808       41,003       302,226       150,305    
Software development     16,720       13,705       65,760       55,426    
General and administrative     29,161       27,381       115,507       103,916    
Purchase amortization     6,671       7,736       27,931       28,432    
      112,360       89,825       511,424       338,079    
                   
Income from operations     35,522       23,348       11,455       80,878    
Interest and other income     64       271       537       516    
Interest and other expense     (2,351 )     (2,415 )     (9,411 )     (10,481 )  
Income before income taxes     33,235       21,204       2,581       70,913    
Income tax expense, net     10,245       7,281       6,046       26,044    
Net income (loss)   $   22,990     $   13,923     $   (3,465 )   $   44,869    
                   
Net income (loss) per share - basic   $   0.72     $   0.44     $   (0.11 )   $   1.48    
Net income (loss) per share - diluted   $   0.71     $   0.43     $   (0.11 )   $   1.46    
                   
Weighted average outstanding shares - basic   31,999       31,761       31,950       30,215    
Weighted average outstanding shares - diluted   32,284       32,142       31,950       30,641    
                   

 

                     
CoStar Group, Inc.    
Reconciliation of Non-GAAP Financial Measures-Unaudited    
(in thousands, except per share data)    
                     
                     
Reconciliation of Net Income (Loss) to Non-GAAP Net Income    
                   
   For the Three Months    For The Twelve Months    
   Ended December 31,    Ended December 31,    
    2015       2014       2015       2014      
                     
Net income (loss)   $   22,990     $   13,923     $   (3,465 )   $   44,869      
Income tax expense, net     10,245       7,281       6,046       26,044      
Income before income taxes       33,235         21,204         2,581         70,913      
Purchase amortization and other related costs     13,861         15,479         58,008         54,722      
Stock-based compensation expense       9,368         7,361         34,537         28,267      
Acquisition and integration related costs       1,023         624         6,370         3,802      
Restructuring and related costs       (311 )       1,976         1,968         1,976      
Settlements and impairments       -         1,374         2,778         3,173      
Non-GAAP income before income taxes       57,176         48,018         106,242         162,853      
Assumed rate for income tax expense, net *   38 %     38 %     38 %     38 %    
Assumed provision for income tax expense, net     (21,727 )       (18,247 )       (40,372 )       (61,885 )    
Non-GAAP net income   $   35,449     $   29,771     $   65,870     $   100,968      
                     
Net income (loss) per share - diluted   $   0.71     $   0.43     $   (0.11 )   $   1.46      
Non-GAAP net income per share - diluted   $   1.10     $   0.93     $   2.04     $   3.30      
                     
Weighted average outstanding  shares - basic**     31,999         31,761         31,950         30,215      
Weighted average outstanding  shares - diluted**     32,284         32,142         32,243         30,641      
                     
* A 38% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate.    
** 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.     
                     
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA              
                     
     For the Three Months    For The Twelve Months    
     Ended December 31,    Ended December 31,    
      2015       2014       2015       2014      
                     
Net income (loss)   $   22,990     $   13,923     $   (3,465 )   $   44,869      
Purchase amortization in cost of revenues     7,190       7,743       30,077       26,290      
Purchase amortization in operating expenses   6,671       7,736       27,931       28,432      
Depreciation and other amortization     5,664       4,160       20,524       15,650      
Interest income     (64 )     (271 )     (537 )     (516 )    
Interest expense     2,351       2,415       9,411       10,481      
Income tax expense, net     10,245       7,281       6,046       26,044      
EBITDA   $   55,047     $   42,987     $   89,987     $   151,250      
Stock-based compensation expense     9,368       7,361       34,537       28,267      
Acquisition and integration related costs       1,023         624         6,370         3,802      
Restructuring and related costs       (311 )       1,976         1,968         1,976      
Settlements and impairments       -         1,374         2,778         3,173      
Adjusted EBITDA   $   65,127     $   54,322     $   135,640     $   188,468      
                     

 

CoStar Group, Inc.  
Condensed Consolidated Balance Sheets - Unaudited  
(in thousands)  
           
    December 31,   December 31,  
      2015       2014    
    (Unaudited)      
ASSETS          
Current assets:          
Cash and cash equivalents   $   421,818     $   527,012    
Accounts receivable, net     40,276       38,694    
Deferred and other income taxes, net       -        20,007    
Income tax receivable       430         1,027    
Prepaid expenses and other current assets     10,209       9,736    
Total current assets     472,733       596,476    
           
Long-term investments     15,507       17,151    
Deferred income taxes, net       9,107         -     
Property and equipment, net     88,311       73,753    
Goodwill     1,252,945       1,138,805    
Intangible assets, net     238,318       241,622    
Deposits and other assets     2,650       2,676    
Total assets   $   2,079,571     $   2,070,483    
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
Current liabilities:          
Accounts payable and accrued expenses   $   76,397     $   61,287    
Current portion of long-term debt       16,746         16,665    
Deferred revenue     42,138       38,003    
Total current liabilities     135,281       115,955    
           
Long-term debt, less current portion     338,366       355,136    
Deferred gain on sale of building     21,239       23,762    
Deferred rent     29,628       27,032    
Deferred income taxes, net       4,585         30,349    
Income taxes payable       6,692         4,703    
           
Stockholders' equity     1,543,780       1,513,546    
Total liabilities and stockholders' equity   $   2,079,571     $   2,070,483    
           

 

                         
CoStar Group, Inc.      
Results of Segments-Unaudited      
(in thousands)      
                         
      For the Three Months   For the Twelve Months      
      Ended December 31,   Ended December 31,      
        2015       2014       2015       2014        
Revenues                        
North America     $  186,514     $  150,067     $  686,573     $  552,141        
International                        
External customers         6,495         6,029         25,191         23,795        
Intersegment revenue *         16         16         41         57        
Total International revenue         6,511         6,045         25,232         23,852        
Intersegment eliminations         (16 )       (16 )       (41 )       (57 )      
Total revenues     $  193,009     $  156,096     $  711,764     $  575,936        
                         
EBITDA                        
North America **     $   54,276     $   42,526     $   87,092     $  148,913        
International ***         771         461         2,895         2,337        
Total EBITDA     $   55,047     $   42,987     $   89,987     $  151,250        
                         
*Intersegment revenue recorded during 2015 was 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.      
                         
**North America EBITDA includes an allocation of approximately $191,000 and $170,000 for the three months ended December 31, 2015 and 2014, respectively. North America EBITDA includes an allocation of approximately $954,000 and $1.1 million for the twelve months ended December 31, 2015 and 2014, respectively. This allocation represents costs incurred for International employees involved in development activities of the Company’s North America operating segment.       
                         
***International EBITDA includes a corporate allocation of approximately $56,000 and $64,000 for the three months ended December 31, 2015 and 2014, respectively.  International EBITDA includes a corporate allocation of approximately $256,000 and $261,000 for the twelve months ended December 31, 2015 and 2014, respectively. This corporate allocation represents costs incurred for North America employees involved in management and expansion activities of the Company’s International operating segment.       
                         

 

                       
CoStar Group, Inc.  
Reconciliation of Non-GAAP Financial Measures with 2014-2015 Quarterly Results - Unaudited  
(in millions, except per share data)  
                     
Reconciliation of Net Income (Loss) to Non-GAAP Net Income
 
                     
      2014       2015    
Q1 Q2 Q3 Q4   Q1 Q2 Q3 Q4  
                     
Net income (loss)   $   9.7   $   8.2   $   13.0   $   13.9     $   (6.1 ) $   (15.0 ) $   (5.4 ) $   23.0    
Income tax expense (benefit), net        5.9       5.0       7.8       7.3         0.6       (7.4 )     2.6       10.2    
Income (loss) before income taxes       15.6       13.2       20.8       21.2         (5.5 )     (22.4 )     (2.8 )     33.2    
Purchase amortization and other related costs       6.2       17.0       16.1       15.5         13.5       13.5       17.1       13.9    
Stock-based compensation expense       7.9       6.3       6.7       7.4         7.4       8.4       9.3       9.4    
Acquisition and integration related costs       1.1       1.4       0.7       0.6         0.6       2.9       1.8       1.0    
Restructuring and related costs       -        -        -        2.0         -        -        2.3       (0.3 )  
Settlements and impairments       1.0       -        0.7       1.3         1.4       1.4       -        -     
Non-GAAP income before income taxes       31.8       37.9       45.0       48.0         17.4       3.9       27.7       57.2    
Assumed rate for income tax expense, net *     38 %   38 %   38 %   38 %     38 %   38 %   38 %   38 %  
Assumed provision for income tax expense, net       (12.0 )     (14.4 )     (17.1 )     (18.2 )       (6.6 )     (1.5 )     (10.5 )     (21.7 )  
Non-GAAP net income   $   19.8   $   23.5   $   27.9   $   29.8     $   10.8   $   2.4   $   17.2   $   35.5    
                       
Non-GAAP net income per share - diluted   $   0.69   $   0.80   $   0.87   $   0.93     $   0.34   $   0.08   $   0.53   $   1.10    
                       
Weighted average outstanding  shares - basic**       28.3       29.1       31.7       31.8         31.8       32.0       32.0       32.0    
Weighted average outstanding  shares - diluted**       28.8       29.5       32.1       32.1         32.2       32.3       32.2       32.3    
                     
* A 38% tax rate is assumed in order to approximate the Company's long-term effective corporate tax rate.   
** 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.   
                       
                       
Reconciliation of Net Income (Loss) to EBITDA and Adjusted EBITDA   
                       
      2014       2015    
Q1 Q2 Q3 Q4   Q1 Q2 Q3 Q4  
                       
Net income (loss)   $   9.7   $   8.2   $   13.0   $   13.9     $   (6.1 ) $   (15.0 ) $   (5.4 ) $   23.0    
Purchase amortization       6.2       17.0       16.1       15.5         13.5       13.5       17.1       13.9    
Depreciation and other amortization       3.7       3.7       4.1       4.2         4.3       5.1       5.4       5.7    
Interest income       (0.1 )     (0.1 )     (0.0 )     (0.3 )       (0.3 )     (0.1 )     (0.0 )     (0.1 )  
Interest expense       1.6       3.8       2.7       2.4         2.3       2.4       2.4       2.3    
Income tax expense (benefit), net        5.9       5.0       7.8       7.3         0.6       (7.4 )     2.6       10.2    
EBITDA   $   27.0   $   37.6   $   43.7   $   43.0     $   14.3   $   (1.5 ) $   22.1   $   55.0    
Stock-based compensation expense       7.9       6.3       6.7       7.4         7.4       8.4       9.3       9.4    
Acquisition and integration related costs       1.1       1.4       0.7       0.6         0.6       2.9       1.8       1.0    
Restructuring and related costs       -        -        -        2.0         -        -        2.3       (0.3 )  
Settlements and impairments       1.0       -        0.7       1.3         1.4       1.4       -        -     
Adjusted EBITDA   $   37.0   $   45.3   $   51.8   $   54.3     $   23.7   $   11.2   $   35.5   $   65.1    
                       

 

                     
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, 2016   Ended December 31, 2016    
  Low   High   Low   High    
                     
Net income   $   6,200     $   9,000     $   62,400     $   68,600      
Income tax expense, net      4,100       6,000       41,600       45,700      
Income before income taxes       10,300         15,000         104,000         114,300      
Purchase amortization and other related costs       12,000         12,000         43,000         43,000      
Stock-based compensation expense       11,000         9,000         42,000         38,000      
Acquisition and integration related costs       1,500         1,000         2,500         1,500      
Non-GAAP income before income taxes       34,800         37,000         191,500         196,800      
Assumed rate for income tax expense, net *     38 %     38 %     38 %     38 %    
Assumed provision for income tax expense, net       (13,200 )       (14,100 )       (72,800 )       (74,800 )    
Non-GAAP net income   $   21,600     $   22,900     $   118,700     $   122,000      
                     
Net income per share - diluted   $   0.19     $   0.28     $   1.90     $   2.09      
Non-GAAP net income per share - diluted   $   0.66     $   0.70     $   3.62     $   3.72      
                     
Weighted average outstanding  shares - diluted       32,700         32,700         32,800         32,800      
                     
* A 38% tax rate is assumed in order to approximate the Company's long-term effective 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, 2016   Ended December 31, 2016    
    Low   High   Low   High    
Net income   $   6,200     $   9,000     $   62,400     $   68,600      
Purchase amortization and other related costs       12,000         12,000       43,000       43,000      
Depreciation and other amortization       6,000         6,000         25,500         25,500      
Interest and other expense (income), net       2,500         2,500       10,200       10,200      
Income tax expense, net        4,100         6,000       41,600       45,700      
Stock-based compensation expense       11,000         9,000       42,000       38,000      
Acquisition and integration related costs       1,500         1,000       2,500       1,500      
Adjusted EBITDA   $   43,300     $   45,500     $   227,200     $   232,500      
                     

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 more than 10 million registered members. Apartments.com, ApartmentFinder.com and ApartmentHomeLiving.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. Through an exclusive partnership with Move, a subsidiary of News Corporation, Apartments.com is the exclusive provider of apartment community listings across Move’s family of websites, which include realtor.com®, doorsteps.com and move.com. CoStar Group’s websites attracted an average of more than 22 million unique monthly visitors in aggregate throughout 2015. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Toronto with a staff of approximately 2,600 worldwide, including the industry’s largest professional research organization. For more information, visit www.costargroup.com.
 

All Contacts
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 sales, earnings, and revenue; the risk that the Company is unable to sustain current growth rates or increase them; the risk that the Company’s investments and marketing do not produce the expected results, including sustainable long term cost savings and a platform for future revenue growth; the risk that the Company’s integration and cost management efforts do not deliver continued profit improvements in 2016; the risk that synergies from the acquisitions of Apartments.com and Apartment Finder will not be as expected, may not be fully realized, may take longer to realize than expected or may not drive revenue and earnings growth as expected; the risk that the businesses of Apartments.com, Apartment Finder and CoStar may not be combined successfully or in a timely and cost-efficient manner; the risk that revenues for the first quarter and full year 2016 will not be as stated in this press release; the risk that net income for the first quarter and full year 2016 will not be 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 2016 will not be as stated in this press release; the risk that Adjusted EBITDA for the first quarter and full year 2016 will not be as stated in this press release; and the risk that the Company is unable to achieve the revenue and margin goals stated in this press release. 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, 2014, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2015, 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.

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