BETHESDA, MD -- CoStar Group, Inc. (CoStar) (NASDAQ: CSGP) www.costargroup.com, the leading provider of information services to the U.S. commercial real estate industry, today reported financial results for the fourth quarter and year ended 1999. The Company also unveiled its broader Internet strategy, facilitated by its commitment to harness dynamic technologies and deliver an unprecedented level of information to its customers.
Revenues for the fourth quarter were $8.9 million, compared to $4.1 million for the fourth quarter of 1998, an increase of 115%. The net loss for the fourth quarter of 1999 was $4.2 million, or $0.33 per share, compared to a net loss of $1.5 million, or $0.17 per share for the same quarter of 1998.
Revenues for the year ended December 31, 1999 were $30.2 million compared to $13.9 million in 1998, an increase of 118%. The net loss in 1999 was $12.3 million, or $1.05 per share, compared to a net loss of $3.2 million, or $0.44 per share for 1998.
"Our impressive results this quarter, and in 1999 overall, provide further evidence of CoStar's ability to execute on our growth strategy and deliver exceptional returns to shareholders," said Andrew C. Florance, President and CEO of CoStar. "We continue to have profitability in our established markets and we have successfully integrated several acquisitions during the year, more than doubling our market presence nationally."
CoStar Accelerates Industry-Leading Internet Strategy
"For CoStar, the Internet represents an important vehicle to leverage the depth of our content with massive reach and allows us to arm real estate professionals with the knowledge they need to make smart decisions," commented Florance. "We've taken aggressive steps to rapidly move our business model to the Internet in 2000."
Key Achievements and Initiatives of Internet Strategy
The completed acquisition of COMPS.COM, Inc. (now Comps, Inc., a wholly-owned subsidiary of CoStar), a company with approximately 50% of its revenues generated from Web-based products, significantly increased the resources of CoStar, enlarging its database to more than 700,000 properties and approximately 1 million tenants in over 50 markets nationwide. Additionally, CoStar's database now includes over 660,000 digital images and tracks more than 490,000 sales transactions valued at over $600 billion.
In a decisive effort to identify and eliminate low margin, non-Internet based products and print-based advisory offerings, the Company discontinued several product lines and terminated approximately 80 employees on February 25, 2000. At Comps, specifically, the lay-offs affected approximately 25% of the workforce.Management reaffirmed its commitment to maintain the goal of positive cash flow from operations by mid-2001. With a vast majority of CoStar's customers relying on Internet delivery of data updates, the Company announced its intention to curtail distribution of its data via diskettes by May 1, 2000.
Product development for desktop-based products has ceased; development teams are 100% dedicated to Web-enabled, browser based product offerings.
In the second quarter of 2000, CoStar expects to release CoStar Exchange™, an Internet solution that will provide brokers an unprecedented level of highly secure information on commercial properties for sale. A patent application has been filed with respect to this product.
CoStar committed an additional investment of $15 million in 2000 to developing and marketing its fully integrated Internet product, CoStar Exchange™. The incremental investment will be funded from the proceeds of the Company's 1999 follow-on offering.
Over the next 12 months, the Company plans to migrate its remaining electronic information products to an integrated Web-enabled, browser-based platform - giving customers access to independent, verified information on approximately 15 billion square feet of commercial real estate, over 490,000 sales transactions and approximately 1 million tenants via the Internet.
Currently, clients can complete data entry and updates of their listings online. The Company intends to also conduct all of the internal data collection operations managed by its research staff over the Web within the next 18 months.
CoStar's web site, which will become the primary interface for customers and products in 2000, experienced an increase of 225% of unique user sessions from 15,000 in January 1999 to 49,000 in January 2000 with an average usage of 17:33 minutes per session. With the Comps acquisition, the combined companies' web sites had a total of 84,000 unique user sessions in January 2000, an increase of 460% from CoStar's unique user sessions in January 1999.
"We've spent 13 years building and acquiring the premier databases on leasing, sales, tenants, demand statistics and digital images," stated Florance. "As demonstrated by CoStar Exchange™, the Internet enables us to fully integrate our massive content and offer a completely unprecedented knowledge base to commercial real estate professionals."
CoStar also expects that CoStar Exchange™, an interactive marketplace, will enable brokers to reach a larger and more qualified universe of buyers and sellers faster, thus helping them complete transactions more rapidly, efficiently and cost effectively - through the Internet.
It is expected that CoStar Exchange™ will feature information on approximately 40,000 properties for sale, including correlating content on comparable sales, for-lease space availability, commercial real estate inventory and market statistics, tenant information, and an image library of building photographs, floor plans, aerials, and maps. It also expected that CoStar Exchange™ will include background information on buyers, sellers, lenders, owners, principals and service providers.
"We expect to report revenues from CoStar Exchange™ in the second quarter of 2000, and by 2001, we anticipate that the product will significantly contribute to our overall growth," added Florance. "Coupling CoStar Exchange™ revenues with the strong revenue growth attributable to our existing products, CoStar is uniquely positioned to be the long-term, leading provider of information and critical knowledge to the commercial real estate industry via the Internet."
CoStar Group, Inc.
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CoStar Group, Inc.
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Source: CoStar Group, Inc.
Headquartered in Bethesda, MD, CoStar Group, Inc., http://www.costargroup.com is the leading provider of information services to the U.S. commercial real estate industry. CoStar's suite of products offers customers access to the most comprehensive, verified database of U.S. commercial real estate information in 54 markets. The Company has over 1,000 employees nationally, including over 700 highly trained commercial real estate research professionals in 23 offices.