BETHESDA, MD -- CoStar Group, Inc. (NASDAQ: CSGP), http://www.costargroup.com, the Internet-based, leading provider of information services to the U.S. commercial real estate industry, today reported first quarter 2001 financial results that reflected strong revenue growth and a further narrowing of losses.
Revenues for the first quarter were $17.4 million, an increase of 53 percent over first quarter 2000 revenues of $11.4 million. The pro forma net loss for the first quarter of 2001 which excludes purchase price amortization and the related income tax benefit was $4.6 million or $0.29 per share.
"We are extremely pleased with our results. Revenue growth was driven by our increasingly productive sales force and coupled with strong demand for our innovative products. Now that we have successfully completed our national expansion and recently executed several key product launches, our cost structure is significantly lower than in prior quarters," said Andrew C. Florance, CEO and president of CoStar Group. "We reduced pro forma net loss per share by 31 percent from the previous quarter. This represents the third consecutive quarter that we have narrowed losses. At the same time, we are profitable in 40 of our markets. These results reflect outstanding achievement in sales and exceptional expense management, and highlight the strength of our business model, leading us to believe that we remain on track to reach our stated goal and objective of achieving pro forma earnings before year end."
(in millions except per share data)
CoStar's energized, productive sales force contributed to the increased sales volume this quarter and in March, delivered the highest level of new contract value in the Company's history. Overall, in the first quarter, gross sales production per quota carrying account executive increased by 18.9% from the fourth quarter. Sales in the first quarter were the result of subscriptions for both new and existing customers. In the first quarter, sales to existing customers increased by 45.6% from the fourth quarter 2000, and represent penetration of additional products, markets and site licenses into CoStar's existing customer base. Additionally, 13 sales professionals joined CoStar's sales force during the first quarter and completed a new and intensive training program.
In the first quarter of 2001, Comps, Inc. contributed $4.8 million to total revenues. In addition, Comps, Inc. achieved positive cash flow during the first quarter. Acquired just 14 months ago, the successful integration of Comps, Inc. across all functional areas spurred this strong performance.
Competitive pressures have dramatically shifted. In the last six months, capital sources that last year funded several commercial real estate startups, this year have refrained from investing in unproven business models. As a result, many competitors found difficulty in sustaining their operations, significantly downsized staff or went into bankruptcy. During the first quarter, a Goldman Sachs backed firm, Zethus, filed for bankruptcy. PropertyFirst announced it will be merged with LoopNet. This week, after its database asset was sold to a consortium of brokers, RealtyIQ discontinued its Internet service, shut down its operations and offered refunds to customers. CoStar believes that many of these firms failed to understand the complexity of providing commercial real estate information to customers and underestimated the investment necessary to build the appropriate infrastructure to deliver value-added products and services, as well as the significant value CoStar's products have in the marketplace and their proven ability to generate millions of dollars in revenues.
"We expect revenue growth of approximately 30 percent year over year in 2001. We believe sequential quarterly revenue growth for the second quarter of 2001 will be in the range of four to six percent, and that sequential quarterly revenue growth rates after the second quarter will trend toward our target range of seven to 10 percent," added Florance. "We also expect to further narrow our pro forma net losses by $0.10 to $0.12 per share in the second quarter. The Company believes that achieving these objectives in the second quarter would keep the Company well positioned to reach our goals for the year."
(a) Includes purchase amortization of $1,334 and $844 for the three month periods ended March 31, 2001 and 2000, respectively
(b) Pro forma net loss excludes purchase amortization, the related income tax benefit, and acquired in-process development
Management will conduct a conference call to discuss earnings results for the quarter ended March, 31, 2001, at 11:00 am EDT, Thursday, April 26, 2001. This conference call will be broadcast live over the Internet at http://costargroup.com/corporate/investor/. If you would like to join by telephone, please call (800) 682-5640 within the United States or (816) 650-0621 outside the United States. A replay of the conference call will be available on April 26, 2001 through midnight on May 3, 2001. The replay telephone number is (800) 252-6030 within the United States or (402) 220-2491 outside the United States. Refer to conference ID number 8671706. The replay will also be available over the Internet through midnight on May 3, 2001.
About CoStar Group, Inc.
Headquartered in Bethesda, MD, CoStar Group, Inc. (Nasdaq: CSGP), is the leading provider of information services to the U.S. commercial real estate industry. CoStar's suite of products offers customers access via the Internet to the most comprehensive, verified database of commercial real estate information in over 50 U.S. markets. The company has more than 900 employees and contractors nationally, including approximately 700 highly trained commercial real estate research professionals in 27 offices.