BETHESDA, Md., July 15 -- CoStar Group, Inc. (Nasdaq: CSGP ), the number one provider of information/marketing services to the commercial real estate industry, today announced that its second quarter 2008 net income increased 363% to $5.4 million, or $0.28 per diluted share, compared to $1.2 million, or $0.06 per diluted share for the same period a year ago. EBITDA (earnings before interest, taxes, depreciation and amortization) for the second quarter of 2008 was $12.8 million, an increase of 204% compared to EBITDA of $4.2 million for the second quarter of 2007. Revenues for the second quarter of 2008 were $53.5 million compared to $47.8 million for the second quarter of 2007 and $52.3 million for the first quarter of 2008. Core U.S. subscription revenue increased 2.9% from the first quarter to the second quarter 2008, consistent with the past several quarters.
"Excluding the fourth quarter of 2007 and other quarters with one-time gains, our second quarter 2008 earnings results are the strongest ever for CoStar Group, and we anticipate even stronger results in the third quarter," said CoStar Group President and CEO Andrew C. Florance. "These results reflect our commitment to profit from accelerated earnings growth following the investments we made over the past several years expanding our market coverage in the U.S. and U.K. At this time last year, we announced our intention to dramatically increase our then-companywide 9% EBITDA margin to achieve a 30% EBITDA margin in the U.S. by the fourth quarter of 2008. With this quarter's results showing a 29% EBITDA margin in the U.S., we have almost reached that goal. As a result, we are again raising our earnings outlook for the rest of this year."
"Having established a pattern of increasing profitability driven by our strong subscription-based business model and relatively fixed cost structure, coupled with the stable demand we see for our core information products and the newly launched CoStar Showcase®, we believe we have positioned the company for sustained earnings leverage for many years," Florance continued. "Our primary focus moving forward will be working toward $100 million of annualized EBITDA for the company by the end of 2010. We believe this goal of doubling our EBITDA is achievable based on our current revenue growth rates and current economic and commercial real estate environments."
Demand for CoStar's subscription-based products remained strong in the second quarter as the company executed agreements with 587 new subscribing firms, the second highest number of new subscribers the company has added in a single quarter and the most added in consecutive quarters. In addition, CoStar added approximately 785 net new paying subscribers during the quarter, for a total of 91,607. Also, the customer renewal rate for CoStar's subscription- based services remained solid at approximately 90%.
The company also confirmed that orders for CoStar Showcase, its new marketing service that provides commercial real estate professionals with the ability to market their listings to the large business audience using the Internet to search for commercial real estate, has reached approximately $4.0 million. To date, more than 500 firms have signed on for the new service, which just launched in the second quarter and has quickly become one of the most successful new product launches in CoStar's history. Additionally, CoStar's sales team has scheduled thousands of CoStar Showcase presentations and follow-up meetings with prospects across the U.S. over the next two months. The company expects to begin recognizing revenue from CoStar Showcase contracts following the conclusion of trial periods and cancellation options offered to subscribers as part of the initial launch.
As of June 30, 2008, the company had $198.3 million in cash, cash equivalents, short-term and long-term investments. Also, as of June 30, 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 half of the year results and our ability to execute our plan, we are raising the outlook for net income for the full year 2008 to approximately $1.10 to $1.15 per diluted share," added Radecki.
"For the third quarter of 2008, we continue to anticipate a sequential quarterly increase in revenue of 2.0% to 4.0% and now we expect fully diluted net income per share of approximately $0.28 to $0.30," Radecki said.
Management will conduct a conference call to discuss earnings results for the second quarter ended June 30, 2008, and the financial outlook for the third quarter of 2008 at 11:00 a.m. EDT on Wednesday, July 16, 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. Refer to Conference ID 54237246. A replay of the conference call will be available approximately two hours after the live call concludes and remain available through midnight on July 30, 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 54237246. 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/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