BETHESDA, MD -- CoStar Group, Inc. (NASDAQ: CSGP ) revenues increased 20.1% and EBITDA (earnings before interest, taxes, depreciation and amortization) increased 140% in the third quarter of 2003 over the third quarter of 2002, the Company announced today. The Company also reported GAAP-basis net income of $0.02 per share in the third quarter of 2003 compared to GAAP-basis net loss of $(0.07) per share in the third quarter of 2002. Cash and short-term investments grew by $4.3 million during the third quarter of 2003, the Company reported.
Revenues for the third quarter of 2003 were $24.1 million. In addition, revenues increased sequentially by 4.0% for the third quarter of 2003 over the second quarter of 2003. CoStar has reported revenue increases in 21 consecutive quarters since its IPO.
"We have seen a clear acceleration of revenue growth, which is largely attributable to the strength of our new product platform," stated CoStar President & CEO Andrew C. Florance. "Customers seem to enjoy using CoStar Property 8.0, and I believe we are reaching a broader base of active users within our customer sites." Property views in CoStar Property 8.0, one of the key ways the Company measures usage, increased 40% in the third quarter of 2003 compared to the previous quarter.
"We also are beginning to see signs of recovery in the commercial real estate markets," Florance added. "The national vacancy rate for office space declined in the third quarter of 2003 after increasing for 12 consecutive quarters."
For the quarter ended September 30, 2003, GAAP-basis net income increased to $281,000 or $0.02 per share, compared to a net loss of $(1.1) million or ($0.07) per share for the third quarter of 2002. Pro forma earnings, which is net income (loss) before purchase amortization in cost of revenues and operating expenses, improved to $2.1 million or $0.13 per share for the third quarter of 2003 compared to pro forma earnings of $418,000 or $0.03 per share for the same quarter in 2002. EBITDA increased 140% to $3.7 million for the third quarter of 2003 compared to EBITDA of $1.6 million in the third quarter of 2002.
As of September 30, 2003, the Company had $35.9 million in cash, cash equivalents, and short-term investments, an increase of $4.3 million compared to June 30, 2003. This substantial increase resulted from strong operating cash flows and proceeds of approximately $1.3 million from stock option exercises for approximately 62,000 shares of common stock. The Company has no long-term debt.
"For the fourth quarter of 2003, we expect overall sequential quarterly revenue growth of approximately 3.5% to 4% over the third quarter of 2003," said Frank Carchedi, CoStar's Chief Financial Officer. "In addition, for the fourth quarter of 2003, we expect pro forma earnings of approximately $0.15 per share, and we expect approximately $0.44 of pro forma earnings per share for 2003. Adjusting these pro forma amounts for purchase amortization, which we anticipate will be consistent with the charges for the third quarter of 2003, we expect to have GAAP-basis net income of approximately $0.04 per share for the fourth quarter of 2003, which would enable us to nearly break even with respect to GAAP-basis net income for 2003. These per share numbers assume we issue 1.25 million shares of common stock during the fourth quarter of 2003 in a public offering."
In connection with CoStar's planned public offering, the Company's Registration Statement on Form S-3 filed on July 2, 2003, as amended, was selected for review by the Securities and Exchange Commission. This review has not resulted in any changes to CoStar's previously reported financial results. CoStar filed Amendment No. 3 to its Registration Statement on October 10, 2003, and expects to commence its road show later this week. In response to comments received from the SEC, CoStar will file an amended Annual Report on Form 10-K for the year ended December 31, 2002, and an amended Quarterly Report on Form 10-Q for the quarter ended June 30, 2003, to conform the disclosure in certain items in these reports to the disclosure in the Company's Registration Statement.
Management will conduct a conference call to discuss earnings results for the quarter ended September 30, 2003 and the financial outlook for 2003 at 11:00 am ET, Wednesday, October 15, 2003. This conference call will be broadcast live over the Internet at http://www.costar.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 telephonic replay of the conference call will be available two hours after the live call concludes through midnight on October 26, 2003. The replay telephone number is (800) 642-1687 within the United States or (706) 645-9291 outside the United States. Refer to Conference ID 3263774. 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 leading provider of information services to commercial real estate professionals in the United States and the United Kingdom. CoStar's suite of services offers customers access via the Internet to the most comprehensive database of commercial real estate information on 50 U.S. markets, London and the United Kingdom. Based in Bethesda, MD, the company has approximately 850 employees in 35 offices throughout the United States and the United Kingdom, including the largest professional research organization in the industry.