Print Release (pdf)
BETHESDA, Md., Feb. 18, 2009 -- CoStar Group, Inc. (Nasdaq:CSGP), the number one provider of information/marketing services to the commercial real estate industry, today announced that net income for the year ended December 31, 2008 increased 144.9% to $24.6 million, or $1.26 per diluted share, compared to $10.1 million, or $0.52 per diluted share, for 2007, excluding 2007's one-time gain on a lease settlement. EBITDA (earnings before interest taxes, depreciation and amortization) for the year ended December 31, 2008 was $56.6 million, an increase of 114.5% compared to EBITDA of $26.4 million for the year ended December 31, 2007, excluding 2007's one-time lease settlement gain.
Revenues for the year ended December 31, 2008 were $212.4 million, an increase of 10.2% over revenues of $192.8 million for the year ended December 31, 2007. Revenues in the fourth quarter 2008 increased approximately $125,000 from the third quarter of 2008, excluding the unfavorable impact of foreign exchange rate fluctuations on International revenue.
As of December 31, 2008, the company had $224.6 million in cash, cash equivalents, short-term and long-term investments, an increase of $37.2 million since December 31, 2007, and no long-term debt.
"CoStar Group completed another very successful year in 2008, delivering the earnings growth we projected by focusing on cost containment and earnings leverage," said CoStar Group CEO Andrew C. Florance. "I was especially pleased that in the fourth quarter of 2008 we attained our longstanding goal of a company-wide EBITDA margin of 30%. Moreover, we doubled earnings year over year excluding 2007's one-time lease settlement gain, and we added more than $37 million to cash and investments to maintain our company's strong financial position despite challenging economic conditions."
Revenues for the fourth quarter of 2008 were $52.9 million, a 4.1% increase compared to the same period a year ago. Fourth quarter 2008 revenue reflected the impact of unfavorable foreign currency exchange rates, declining non-subscription-based revenue combined with slower revenue growth for subscription-based services during the quarter. Subscription-based revenue accounts for more than 95% of the company's total revenue.
Excluding the unfavorable impact from year-over-year changes in exchange rates throughout the quarter, revenues for the fourth quarter of 2008 would have grown 6.9% compared with the fourth quarter of 2007. In the fourth quarter of 2008 alone, the unfavorable impact from quarter-over-quarter changes in exchange rates totaled approximately $1 million. On a functional currency basis, U.S. revenues in the fourth quarter of 2008 totaled $48.2 million, as compared to $48.0 million in the third quarter of 2008, and international revenues totaled GBP 3.0 million in the fourth quarter of 2008, consistent with the third quarter of 2008.
Net income increased to $7.5 million, or $0.38 per diluted share, for the fourth quarter of 2008 compared to net income of $3.8 million, or $0.20 per diluted share, for the fourth quarter of 2007, excluding the one-time lease settlement gain in the fourth quarter of 2007. EBITDA was $16.7 million for the fourth quarter of 2008 compared to $9.2 million for the fourth quarter 2007, excluding the one-time lease settlement gain in the fourth quarter of 2007.
"As we reported last quarter, the current economic environment and continued financial instability have had an adverse effect on our near-term revenue growth," said Florance. "Certainly, we expect 2009 will present difficult challenges for many businesses. However, with our strong balance sheet and industry-leading market position, we fully expect to manage through the current environment and to capitalize on our subscription-based business model."
"In addition, CoStar Showcase, the innovative new Internet marketing service we launched last May, has proven to be a major hit with our clients and we believe has the potential to be a significant contributor to revenue," added Florance.
At the end of the fourth quarter 2008, CoStar had 89,712 paying subscribers to the company's subscription-based information services, an increase of 961 compared to the end of the fourth quarter 2007. The 12-month trailing customer renewal rate for CoStar's subscription-based services was approximately 89%.
"For the first quarter of 2009, we expect fully diluted net income per share of approximately $0.28 to $0.30," stated CoStar Group Chief Financial Officer Brian J. Radecki. "For the full year of 2009, we expect fully diluted net income per share of approximately $1.00 to $1.05, which includes approximately $5.5 million in pre-tax, non-cash equity compensation charges related to the vesting of restricted stock and stock option grants. For 2009, we also anticipate our overall effective tax rate to be approximately 45%, and the interest rate for interest income to be approximately 0.5% to 0.8%."
"Given the uncertainties surrounding foreign exchange rate fluctuations, we are providing revenue guidance separately for our U.S. and International operations. In the U.S., we expect first quarter of 2009 quarterly revenue in the range of $47.0 to $48.0 million, and International revenue in the range of GBP 2.7 to GBP 2.9 million. For the full year 2009, we expect U.S. revenue in the range of $185.0 to $190.0 million and International revenue in the range of GBP 11.5 to GBP 12.0 million," said Radecki.
In this press release, we include disclosure of net income, excluding 2007's one-time lease settlement gain, and EBITDA, excluding 2007's one-time lease settlement gain, which are non-GAAP financial measures. We believe these numbers provide useful information to investors as they provide a means for a more accurate comparison of our results of operations over historical periods. We also believe these measures provide more meaningful insight into the company's performance, as they exclude a non-recurring item that is not considered by management to be directly related to on-going business operations.
Management will conduct a conference call to discuss earnings results for the fourth quarter and full year ended December 31, 2008, and the financial outlook for the first quarter of 2009 at 11:00 a.m. EST on Thursday, February 19, 2009. The audio portion of the conference call will be broadcast live over the Internet at www.costar.com/corporate/investor/. To join the conference call by telephone, please call (800) 398-9386 from within the United States and Canada, or (612) 288-0340 from outside the United States and Canada. Refer to Conference reservation number 984704. A replay of the conference call will be available approximately one hour after the live call concludes and remain available through midnight on March 5, 2009. The replay telephone number is (800) 475-6701 within the United States and Canada, or (320) 365-3844 outside the United States and Canada. Refer to Conference reservation number 984704. The replay will also be available over the Internet at 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/marketing 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, CoStar has approximately 1,300 people working for the company worldwide, including the largest professional research organization in the industry. For more information, visit www.costar.com.
CONTACT: CoStar Group, Inc.
Brian J. Radecki - Chief Financial Officer
Timothy J. Trainor, Communications Director