BETHESDA, MD — April 23, 2008 - CoStar Group, Inc. (Nasdaq: CSGP), the number one provider of information services to the commercial real estate industry, today announced that net income for the quarter ended March 31, 2008 increased 178% to $5.0 million, or $0.26 per diluted share, compared to $1.8 million, or $0.09 per diluted share for the quarter ended March 31, 2007. EBITDA (earnings before interest, taxes, deprecation and amortization) for the first quarter of 2008 was $11.5 million, an increase of 128% compared to EBITDA of $5.0 million for the first quarter of 2007. Revenues for the first quarter of 2008 were $52.3 million, a 16.6% increase over first quarter 2007 revenues of $44.8 million.
“We are very pleased to report another quarter of robust earnings at CoStar resulting from the organization's continued focus on adding and renewing subscribers, growing earnings and effectively managing our cost structure as we work towards achieving both a 30% EBITDA margin in our U.S. operations and break-even in our international operations by 2008 year-end,” said President and CEO Andrew C. Florance. “Based on our strong first quarter performance, the outlook for our long-term revenue growth and profitability remains bullish.”
Demand for CoStar’s subscription-based products remained strong in the first quarter as the company signed 591 new subscribing firms, the highest number to subscribe in a single quarter, which contributed to the addition of 2,071 net new paying subscribers to the company’s expanded service platform. In addition, the customer renewal rate for CoStar’s subscription-based products remained strong at 90%. The high renewal rate and surge in new subscribers contributed to the increase in revenues for the quarter.
The company also confirmed the May 2008 release of CoStar Showcase®, a new online marketing service dedicated to helping commercial real estate professionals maximize the value of listing their properties online by presenting their listings before a large audience of prospective tenants and buyers.
CoStar’s first quarter 2008 results included non-cash charges for equity compensation of $1.2 million, primarily included in general and administrative costs, selling and marketing expenses and cost of revenues.
As of March 31, 2008, the company had $193.1 million in cash, cash equivalents, short-term and long-term investments. Also, as of March 31, 2008, the company had no long-term debt.
“CoStar continues to anticipate earnings growth from U.S. operations through 2008 as a result of consistent core revenue growth over a relatively fixed-cost base,” said CoStar Group Chief Financial Officer Brian J. Radecki. “Based on strong first quarter results and our ability to execute our plan, we are raising the outlook for net income for the full year 2008 to approximately $1.05 to $1.10 per diluted share. We also continue to anticipate 2008 overall revenue growth in the range of 14% to 16% over 2007,” added Radecki.
“For the second quarter of 2008, we continue to anticipate a sequential quarterly increase in revenue of 2.0% to 4.0% and fully diluted net income per share of approximately $0.24 to $0.26, which includes seasonally high selling and marketing expenses associated with the ICSC trade show and the pending release of CoStar Showcase,” Radecki said.
In addition, during the second quarter 2008, the company expects a charge of approximately $300,000 resulting from the termination of a lease and write-off of certain leasehold improvements that will save the company approximately $1.2 million over the remaining two-year term of the lease as it consolidates excess office space in Maryland.
Management will conduct a conference call to discuss earnings results for the quarter ended March 31, 2008, and the financial outlook for the second quarter of 2008 at 11:00 a.m. EDT on Thursday, April 24, 2008.
The audio portion of the conference call will be broadcast live over the Internet at http://www.costar.com/corporate/investor/. To join the conference call by telephone, please call (888) 688-0419 from within the United States and Canada, or (706) 634-0964 from outside the United States and Canada. A replay of the conference call will be available two hours after the live call concludes through midnight on May 8, 2008. The replay telephone number is (800) 642-1687 within the United States and Canada or (706) 645-9291 outside the United States and Canada. Refer to Conference ID 41904827. 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 number one provider of information services to commercial real estate professionals in the United States as well as the United Kingdom. CoStar's suite of services offers customers access via the Internet to the most comprehensive database of commercial real estate information throughout the U.S. as well as in the United Kingdom and France. Headquartered in Bethesda, MD, the company has approximately 1,300 employees, including the largest professional research organization in the industry. For more information, visit http://www.costar.com.