BETHESDA, MD -- CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of information services to the U.S. commercial real estate industry, today reported significant progress toward profitability. The pro forma net loss for the third quarter of 2001, which excludes purchase amortization and the related income tax benefit, was $862,000 or $0.06 per share, an improvement of $7.6 million or $0.49 per share over the third quarter of 2000. Revenues for the third quarter were $18.5 million, a $2.8 million increase when compared with revenues of $15.7 million in the third quarter of 2000.
"Our performance this quarter demonstrates that in spite of a difficult economic environment, the Company continues to make steady progress toward achieving profitability. A very important milestone the Company achieved in the third quarter was positive EBITDA (earnings before interest, taxes, depreciation and amortization). EBITDA was $212,000, a $7.8 million improvement over third quarter 2000 EBITDA," said Andrew C. Florance, CEO and president of CoStar Group. "At the same time, we dramatically reduced pro forma per share losses by 90 percent from the third quarter of 2000 to the third quarter of 2001. We believe that accomplishing these objectives in the third quarter means the Company can reach its stated goal of achieving pro forma earnings before year end."
(in millions except per share data)
CoStar's cash burn rate continues to slow. In the third quarter of 2001, it was the lowest since the Company's 1998 IPO. During the third quarter, CoStar used $552,000 of cash, compared to $1.7 million in the second quarter of 2001, and $8.5 million in the third quarter of 2000. As of September 30, 2001, CoStar had $41.5 million in cash and cash equivalents.
"We have taken advantage of a difficult funding environment for competitors and we believe we have solidified the strongest market position we have ever had," stated Florance. "At the same time, however, the impact of current economic conditions and world events on the commercial real estate industry, and steps we have taken to reach profitability have affected our near term growth expectations. We expect that sequential quarterly revenue growth for the fourth quarter of 2001 will be approximately one percent. With a growing sales force, an unparalleled product line and an advantageous competitive position, we believe we are well positioned to grow through the current economic climate. As economic conditions improve, we believe that we will see the return of higher sequential quarterly growth."
In the third quarter, CoStar executed several national contracts with leading real estate services firms, including Grubb & Ellis, one of the largest commercial real estate firms in the U.S. These agreements not only represent CoStar's commitment to work closely with clients to continue to develop productivity enhancing database tools for their employees, but also to help clients to control their information costs. By entering into longer term contracts with volume purchasing plans, CoStar believes it can help clients realize cost savings in a difficult economic environment.
CoStar also expanded its CoStar Advisory™ product line with the launch of the CoStar Office Report. Incorporating the full content of its massive database, CoStar produced the first independent, comprehensive analytic report on U.S. office markets ever published, covering over 1,100 sub-markets in the nation's 36 largest office markets. CoStar believes its report is the only independent, actively researched report available in the industry. Since CoStar's in-house research staff gives CoStar direct access to building level data as it is collected and verified, CoStar believes that its report provides value to the marketplace by making available the actual, unbiased source information that reveals the true market conditions.
CoStar Group, Inc.
Condensed Consolidated Statements of Operations
(in thousands, except per share data)
(a) Includes purchase amortization of $1,324 and $1,277 for the three month periods and $3,987 and $3,398 for the nine month periods ended September 30, 2001 and 2000, respectively
(b) Pro forma net loss excludes purchase amortization, the related income tax benefit, and acquired in-process development
CoStar Group, Inc.
Condensed Consolidated Balance Sheet
Management will conduct a conference call to discuss earnings results for the quarter ended September 30, 2001, and outlook for fourth quarter 2001, at 11:00 am EDT, Thursday October 25, 2001. This conference call will be broadcast live over the Internet at http://www.costargroup.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 replay of the conference call will be available two hours after the call concludes through midnight on November 1, 2001. The replay telephone number is (800) 642-1687 within the United States or (706) 645-9291 outside the United States. Refer to conference ID 1992243. The replay will also be available over the Internet through midnight on November 1, 2001.
About CoStar Group, Inc.
Headquartered in Bethesda, Md, CoStar Group, Inc. (NASDAQ: CSGP), is the leading provider of information services to the U.S. commercial real estate industry. CoStar's suite of products offers customers access via the Internet to the most comprehensive, verified database of commercial real estate information in approximately 50 U.S. markets. The company has approximately 900 employees and contractors nationally, including approximately 650 highly trained commercial real estate research professionals in 27 offices.