BETHESDA, MD -- CoStar Group, Inc. (NASDAQ: CSGP) revenues increased 16.5% and pro forma earnings increased 220% in the first quarter of 2004 over the first quarter of 2003, the Company announced today. (Pro forma earnings is net income before purchase amortization included in cost of revenues and in operating expenses and the related income tax benefit.) The Company also reported GAAP-basis net income of $0.08 per share in the first quarter of 2004 compared to a GAAP-basis net loss of $(0.05) per share in the first quarter of 2003.
Revenues for the first quarter of 2004 were $26.3 million, increasing sequentially by 4.0% for the first quarter of 2004 over the fourth quarter of 2003. CoStar has reported revenue increases in 23 consecutive quarters since its IPO.
"A number of factors contributed to our strong revenue and earnings growth in the first quarter of 2004," stated CoStar President & CEO Andrew C. Florance. "Our new service platform provides a clear technology advantage over other services in the marketplace and is paying off in sales to new customers and renewal rates that are substantially higher than a year ago. In addition, improving market conditions and renewed optimism among our customers are providing us with a more favorable sales environment than we have seen in several years."
The renewal rate for CoStar's subscription services increased approximately five percentage points to over 90% in the first quarter of 2004 compared to the first quarter of 2003. In addition, during the first quarter of 2004, CoStar Property Professional™ and CoStar COMPS Professional™ recorded their highest usage levels since CoStar began tracking usage activity in December 2002.
For the quarter ended March 31, 2004, GAAP-basis net income increased to $1.5 million or $0.08 per share, compared to a net loss of $(843,000) or ($0.05) per share for the first quarter of 2003. Pro forma earnings improved to $3.1 million or $0.17 per share for the first quarter of 2004 compared to pro forma earnings of $972,000 or $0.06 per share for the same quarter in 2003. EBITDA (earnings before interest, taxes, depreciation and amortization) increased 93.5% to $4.5 million for the first quarter of 2004 compared to EBITDA of $2.4 million for the first quarter of 2003.
As of March 31, 2004, the Company had $104.6 million in cash, cash equivalents, and short-term investments, an increase of $7.2 million compared to December 31, 2003. This increase resulted from growing EBITDA, improved cash collections and $1.9 million of proceeds from stock option exercises of approximately 240,000 shares of common stock during the first quarter. The Company has no long-term debt.
"For the second quarter of 2004, we expect continued overall sequential quarterly revenue growth of approximately 4%, and pro forma earnings of approximately $0.17 per share," stated Frank A. Carchedi, CoStar's Chief Financial Officer. "Adjusting these pro forma amounts for purchase amortization and the related income tax benefit, which we expect to be consistent with the amounts for the first quarter of 2004, we expect GAAP- basis net income of approximately $0.08 per share in the second quarter of 2004. In the second quarter, we are beginning to invest in our 21-market expansion and we continue to focus on balancing that investment in long-term growth with continued earnings from the existing platform. Our expectations for the second quarter of 2004 do not include the planned PeerMark acquisition, which is expected to close in May," Carchedi stated.
"We continue to expect pro forma earnings for 2004 to grow by over 80% compared to 2003 and expect pro forma earnings of approximately $0.71 to $0.73 per share for 2004," Carchedi continued. "Adjusting these pro forma amounts for purchase amortization and the related income tax benefit which we expect to total approximately $6.3 million in 2004, the Company now expects GAAP- basis net income of approximately $0.37 to $0.39 per share in 2004."
Management will conduct a conference call to discuss earnings results for the quarter ended March 31, 2004, and the financial outlook for 2004 at 11:00 am ET, Wednesday, April 21, 2004. This conference call will be broadcast live over the Internet at http://www.costar.com/corporate/investor. If you would like to join by telephone, please call (800) 329-4405 within the United States or (706) 634-0964 outside the United States. A telephonic replay of the conference call will be available two hours after the live call concludes through midnight on April 30, 2004. The replay telephone number is (800) 642-1687 within the United States or (706) 645-9291 outside the United States. Refer to Conference ID 6769831. The replay will also be available over the Internet at http://www.costar.com/corporate/investor for a period of time following the call.
About CoStar Group, Inc.
CoStar Group, Inc., (NASDAQ: CSGP) is the leading provider of information services to commercial real estate professionals in the United States and the United Kingdom. CoStar's suite of services offers customers access via the Internet to the most comprehensive database of commercial real estate information on 50 U.S. markets, London and the United Kingdom. Based in Bethesda, MD, the company has approximately 850 employees in 35 offices throughout the United States and the United Kingdom, including the largest professional research organization in the industry.