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CoStar Group 2018 Net Income Increases 94% Year-Over-Year on Revenue Growth of 23%

Business Wire 26-Feb-2019 4:01 PM

CoStar Group, Inc. (NASDAQ:CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, announced today that revenue for the year ended December 31, 2018, was $1.2 billion, an increase of 23% over revenue of $965 million for the full year of 2017. Revenue for the fourth quarter ended December 31, 2018, was $316 million, an increase of 24% over revenue of $254 million for the fourth quarter of 2017.

Net income for the year ended December 31, 2018, was $238 million, an increase of 94% compared to net income of $123 million for the full year of 2017. Net income for the fourth quarter ended December 31, 2018, was $84 million or $2.29 per diluted share, an increase of 89% compared to net income of $44 million for the fourth quarter of 2017. EBITDA for the full year of 2018, was $351 million, an increase of 48% compared to EBITDA of $237 million for the full year of 2017. EBITDA for the fourth quarter of 2018, was $125 million, an increase of 90% compared to EBITDA of $66 million for the fourth quarter of 2017.

"2018 was an outstanding year for CoStar with strong revenue growth and substantial margin expansion," said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. "We achieved $1.2 billion in revenue for the full year and 44% adjusted EBITDA margin in the fourth quarter which significantly exceeded the long-term goals we set way back in 2014 of $1 billion in annual revenue in 2018 and 40% adjusted EBITDA margin in the fourth quarter. With these important milestones behind us, we are setting a new goal to exit 2023 with a $3 billion revenue run rate with adjusted EBITDA margin at or above 40% for the full year."

Florance continued, "In the fourth quarter of 2018, we achieved our best ever sales result with company-wide net new bookings of $50 million, an increase of 15% year-over-year. Apartments.com had a very strong sales quarter, turning in its best quarterly net new bookings ever. For the full year of 2018, we turned in another top performance with $169 million in net new bookings."

 
Year 2017-2018 Quarterly Results - Unaudited
(in millions, except per share data)
 
      2017   2018
Q1   Q2   Q3   Q4 Q1   Q2   Q3   Q4
           
Revenues $ 227 $ 237 $ 248 $ 254 $ 274 $ 297 $ 306 $ 316
Net income 22 22 34 44 52 44 59 84
Net income per share – diluted 0.68 0.68 1.04 1.22 1.44 1.20 1.61 2.29

Weighted average outstanding shares – diluted

32.6

32.7 32.8 36.1 36.4 36.5 36.5 36.5
 
EBITDA 55 44 73 66 70 64 91 125
Adjusted EBITDA 64 54 84 78 84 85 110 139
Non-GAAP net income 34 28 46 45 60 60 79 102
Non-GAAP net income per share – diluted 1.05 0.86 1.41 1.25 1.65 1.66 2.16 2.81
 

"Our flagship CoStar Suite business had an outstanding year as revenue grew 18% for the full year of 2018 versus 2017," said Florance. "In addition, we successfully completed the integration of ForRent in the fourth quarter. In less than ten months, we have achieved our financial objectives for the acquisition. For the full-year of 2018, Multifamily revenue grew 45% versus 2017 to $406 million."

"In the coming years, we see a huge opportunity to further monetize LoopNet," said Florance. "Over the course of 2018, we positioned LoopNet.com as a pure marketing site and began selling marketing services directly to owners using our CoStar information sales team. On a year-over-year basis, net new bookings for the LoopNet marketplace increased 74%. I believe LoopNet, along with our network of commercial real estate marketing assets, has the potential to reach the size of Apartments.com."

Adjusted EBITDA (which excludes stock-based compensation, acquisition and integration related costs and other items as described below) for the full year of 2018, was $418 million, an increase of 49% compared to adjusted EBITDA of $280 million for the full year of 2017. Adjusted EBITDA for the fourth quarter of 2018, was $139 million, an increase of 78% compared to adjusted EBITDA of $78 million for the fourth quarter of 2017. Adjusted EBITDA margin for the fourth quarter of 2018 was 44%.

Non-GAAP net income for the quarter ended December 31, 2018 (which excludes amortization of acquired intangible assets, stock-based compensation and other items as described below), was $102 million or $2.81 per diluted share, an increase of $57 million or 126% versus the fourth quarter of 2017.

As of December 31, 2018, the Company had approximately $1.1 billion in cash, cash equivalents and long-term investments, and no outstanding debt.

2019 Outlook

The Company expects revenue in the range of $1,370 billion to $1,380 billion for the full year of 2019, representing growth of 15% to 16%. We expect revenue for the first quarter of 2019 in the range of $325 million to $329 million, representing revenue growth of 19% over the first quarter of 2018 at the midpoint of the range.

The Company expects adjusted EBITDA in a range of $495 million to $505 million for the full year of 2019 up 20% at the midpoint from 2018. For the first quarter of 2019, the Company expects adjusted EBITDA in a range of $120 million to $124 million.

We expect full-year 2019 non-GAAP net income per diluted share in a range of $9.80 to $10.00 based on 36.6 million shares. For the first quarter of 2019, we expect non-GAAP net income per diluted share in a range of $2.38 to $2.47 based on 36.5 million shares. These ranges include a non-GAAP tax rate of 25%.

The preceding forward-looking statements reflect CoStar Group's expectations as of February 26, 2019, including forward-looking non-GAAP financial measures on a consolidated basis. Given the risk factors, uncertainties and assumptions discussed above, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.

Reconciliation of EBITDA, adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share and all of the disclosed non-GAAP financial measures to their GAAP basis results are shown in detail below, along with definitions for those terms. A reconciliation of forward-looking non-GAAP guidance to the most directly comparable GAAP measure, net income, can be found within the tables included in this release.

Non-GAAP Financial Measures

For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the Company's financial condition and results of operations, please refer to the Company's latest periodic report.

EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before interest and other income (expense), loss on debt extinguishment, income taxes, depreciation and amortization.

Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before stock-based compensation expense, acquisition- and integration-related costs, restructuring costs and settlements and impairments incurred outside the Company's normal course of business. Adjusted EBITDA margin represents adjusted EBITDA divided by revenues for the period.

Non-GAAP net income is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before stock-based compensation expense, acquisition- and integration-related costs, restructuring costs, settlement and impairment costs incurred outside the Company's normal course of business and loss on debt extinguishment as well as amortization of acquired intangible assets and other related costs. From this figure, we then subtract an assumed provision for income taxes to arrive at non-GAAP net income. In 2018 the company is assuming a 25% tax rate in order to approximate our statutory corporate tax rate excluding the impact of discrete items.

Non-GAAP net income per diluted share (also referred to as non-GAAP EPS) is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period. For periods with GAAP net losses and non-GAAP net income, the weighted-average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.

Earnings Conference Call

Management will conduct a conference call at 5:00 PM EST on Tuesday, February 26, 2019 to discuss earnings results for the fourth quarter and full-year of 2018 and the Company's outlook. The audio portion of the conference call will be broadcast live over the Internet at www.costargroup.com/investors/stock-info. To join the conference call by telephone, please dial (800) 230-1074 (from the United States and Canada) or (612) 234-9959 (from all other countries) and refer to conference code 463809. An audio recording of the conference call will be available for replay approximately one hour after the call's completion and will remain available for a period of time following the call. To access the recorded conference call, please dial (800) 475-6701 (from the U.S. and Canada) or (320) 365-3844 (from all other countries) using access code 463809. The webcast replay will also be available in the Investors section of CoStar Group's website for a period of time following the call.

 
CoStar Group, Inc.
Condensed Consolidated Statements of Operations - Unaudited
(in thousands, except per share data)
                 

Three Months EndedDecember 31,

Year EndedDecember 31,

2018 2017 2018 2017
 
Revenues $ 315,571 $ 253,991 $ 1,191,832 $ 965,230
Cost of revenues 68,248   58,301   269,933   220,403  
Gross profit 247,323 195,690 921,899 744,827
 
Operating expenses:
Selling and marketing (excluding customer base amortization) 69,152 77,529 359,858 318,362
Software development 25,580 21,796 100,937 88,850
General and administrative 39,001 41,578 156,659 146,128
Customer base amortization 7,933   4,029   30,881   17,671  
141,666   144,932   648,335   571,011  
 
Income from operations 105,657 50,758 273,564 173,816
Interest and other income 4,607 2,455 13,281 4,044
Interest and other expense (695 ) (734 ) (2,830 ) (9,014 )
Loss on debt extinguishment —   (3,788 ) —   (3,788 )
Income before income taxes 109,569 48,691 284,015 165,058
Income tax expense 26,060   4,487   45,681   42,363  
Net income $ 83,509   $ 44,204   $ 238,334   $ 122,695  
 
Net income per share - basic $ 2.31   $ 1.24   $ 6.61   $ 3.70  
Net income per share - diluted $ 2.29   $ 1.22   $ 6.54   $ 3.66  
 
Weighted average outstanding shares - basic 36,136   35,675   36,058   33,200  
Weighted average outstanding shares - diluted 36,474   36,119   36,448   33,559  
 
 
CoStar Group, Inc.
Reconciliation of Non-GAAP Financial Measures - Unaudited
(in thousands, except per share data)
             
Reconciliation of Net Income to Non-GAAP Net Income
 

Three Months EndedDecember 31,

Year EndedDecember 31,
2018 2017 2018 2017
Net income $ 83,509 $ 44,204 $ 238,334 $ 122,695
Income tax expense 26,060   4,487   45,681   42,363  
Income before income taxes 109,569 48,691 284,015 165,058
Amortization of acquired intangible assets 13,277 8,660 51,467 37,391
Stock-based compensation expense 12,125 9,827 42,718 39,030
Acquisition and integration related costs 1,484 1,990 21,683 4,061
Restructuring and related costs — — 2,314 —
Settlements and impairments — — — (760 )
Loss on debt extinguishment —   3,788   —   3,788  
Non-GAAP income before income taxes 136,455 72,956 402,197 248,568
Assumed rate for income tax expense * 25 % 38 % 25 % 38 %
Assumed provision for income tax expense (34,113 ) (27,723 ) (100,549 ) (94,456 )
Non-GAAP net income $ 102,342   $ 45,233   $ 301,648   $ 154,112  
 
Net income per share - diluted $ 2.29   $ 1.22   $ 6.54   $ 3.66  
Non-GAAP net income per share - diluted $ 2.81   $ 1.25   $ 8.28   $ 4.59  
 
Weighted average outstanding shares - basic 36,136 35,675 36,058 33,200
Weighted average outstanding shares - diluted 36,474 36,119 36,448 33,559
 
 

* A 25% and 38% tax rate is assumed for 2018 and 2017, respectively, which approximates our statutory corporate tax rate.

 
 
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
 
Three Months EndedDecember 31, Year EndedDecember 31,
2018 2017 2018 2017
Net income $ 83,509 $ 44,204 $ 238,334 $ 122,695
Amortization of acquired intangible assets in cost of revenues 5,344 4,618 20,586 19,707
Amortization of acquired intangible assets in operating expenses 7,933 4,042 30,881 17,684
Depreciation and other amortization 6,466 6,706 26,276 26,252
Interest and other income (4,607 ) (2,455 ) (13,281 ) (4,044 )
Interest and other expense 695 734 2,830 9,014
Loss on debt extinguishment — 3,788 — 3,788
Income tax expense 26,060   4,487   45,681   42,363  
EBITDA $ 125,400   $ 66,124   $ 351,307   $ 237,459  
Stock-based compensation expense 12,125 9,827 42,718 39,030
Acquisition and integration related costs 1,484 1,990 21,683 4,061
Settlements and impairments — — — (760 )
Restructuring and related costs —   —   2,314   —  
Adjusted EBITDA $ 139,009   $ 77,941   $ 418,022   $ 279,790  
Adjusted EBITDA margin 44 % 31 % 35 % 29 %
 
 
CoStar Group, Inc.

Condensed Consolidated Balance Sheets - Unaudited

(in thousands)
         

December 31,2018

December 31,2017

 

ASSETS
Current assets:
Cash and cash equivalents $ 1,100,416 $ 1,211,463
Accounts receivable, less allowance of $5,709 and $6,469 as of December 31, 2018 and December 31, 2017, respectively 89,192 60,900
Prepaid expenses and other current assets 23,690   15,572
Total current assets 1,213,298 1,287,935
 
Long-term investments 10,070 10,070
Deferred income taxes, net 7,469 5,431
Property and equipment, net 83,303 84,496
Goodwill 1,611,535 1,283,457
Intangible assets, net 288,911 182,892
Deferred commission costs, net 76,031 —
Deposits and other assets 7,432 6,179
Income tax receivable 14,908   12,981
Total assets $ 3,312,957   $ 2,873,441
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities:
Accounts payable $ 6,327 $ 9,262
Accrued wages and commissions 45,588 54,104
Accrued expenses 29,821 22,193
Deferred gain on the sale of building 2,523 2,523
Income taxes payable 14,288 8,166
Deferred rent 4,153 4,732
Deferred revenue 51,459   45,686
Total current liabilities 154,159 146,666
 
Deferred gain on the sale of building 13,669 16,192
Deferred rent 31,944 33,909
Deferred income taxes, net 69,857 12,070
Income taxes payable 17,386 13,354
Other long-term liabilities 4,000   —
Total liabilities $ 291,015   $ 222,191
 
Total stockholders' equity 3,021,942   2,651,250
Total liabilities and stockholders' equity $ 3,312,957   $ 2,873,441
 
 
CoStar Group, Inc.

Condensed Consolidated Statements of Cash Flows - Unaudited

(in thousands)

     

Year EndedDecember 31,

2018     2017
Operating activities:
Net income $ 238,334 $ 122,695
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 77,743 63,643
Amortization of deferred commissions costs 48,313 —
Amortization of debt issuance costs 876 2,303
Loss on extinguishment of debt — 3,788
Loss on disposal of property and equipment 73 129
Stock-based compensation expense 41,214 39,030
Deferred income taxes, net 3,666 (2,903 )
Bad debt expense 6,542 5,690
Changes in operating assets and liabilities, net of acquisitions:
Accounts receivable (27,819 ) (17,524 )
Prepaid expenses and other current assets (1,651 ) (3,672 )
Deferred commissions (53,497 ) —
Income tax receivable (1,927 ) (12,981 )
Accounts payable and other liabilities (14,132 ) 11,525
Income taxes payable 9,632 16,937
Deferred revenue 7,879 6,004
Deposits and other assets 212   39  
Net cash provided by operating activities 335,458 234,703
 
Investing activities:
Purchases of property and equipment and other assets (29,632 ) (24,499 )
Cash paid for acquisitions, net of cash acquired (418,369 ) (47,768 )
Net cash used in investing activities (448,001 ) (72,267 )
 
Financing activities:
Payments of long-term debt — (345,000 )
Payments of debt issuance costs — (3,467 )
Repurchase of restricted stock to satisfy tax withholding obligations (24,327 ) (14,902 )
Proceeds from equity offering, net of transaction costs — 833,911
Proceeds from exercise of stock options and employee stock purchase plan 27,071   9,888  
Net cash provided by financing activities 2,744 480,430
 
Effect of foreign currency exchange rates on cash and cash equivalents (1,248 ) 1,374  
Net (decrease) increase in cash and cash equivalents (111,047 ) 644,240
Cash and cash equivalents at beginning of year 1,211,463   567,223  
Cash and cash equivalents at end of year $ 1,100,416   $ 1,211,463  
 
 
CoStar Group, Inc.
Disaggregated Revenues - Unaudited
(in thousands)
     
Three Months Ended December 31,
2018   2017
North America   International   Total North America   International   Total
Information and analytics
CoStar Suite $ 135,785 $ 6,153 $ 141,938 $ 115,821 $ 6,277 $ 122,098
Information services 17,164 2,035 19,199 15,300 1,954 17,254
Online marketplaces
Multifamily 108,541 — 108,541 75,531 — 75,531
Commercial property and land 45,812   81   45,893   39,108   —   39,108
Total revenues $ 307,302   $ 8,269   $ 315,571   $ 245,760   $ 8,231   $ 253,991
 
     
Year Ended December 31,
2018   2017
North America   International   Total North America   International   Total
Information and analytics
CoStar Suite $ 519,661 $ 25,534 $ 545,195 $ 440,534 $ 22,651 $ 463,185
Information services 58,708 8,916 67,624 64,503 8,115 72,618
Online marketplaces
Multifamily 405,795 — 405,795 279,855 — 279,855
Commercial property and land 173,137   81   173,218   149,572   —   149,572
Total revenues $ 1,157,301   $ 34,531   $ 1,191,832   $ 934,464   $ 30,766   $ 965,230
 
 
CoStar Group, Inc.
Results of Segments - Unaudited
(in thousands)
                     

Three Months EndedDecember 31,

Year EndedDecember 31,

2018 2017 2018 2017
EBITDA
North America $ 128,131 $ 66,842 $ 358,036 $ 236,906
International (2,731 ) (718 ) (6,729 ) 553
Total EBITDA $ 125,400   $ 66,124   $ 351,307   $ 237,459
 
 
CoStar Group, Inc.
Reconciliation of Non-GAAP Financial Measures with 2017-2018 Quarterly Results - Unaudited
(in millions, except per share data)
                   
Reconciliation of Net Income to Non-GAAP Net Income
 
2017 2018  
Q1   Q2   Q3   Q4 Q1   Q2   Q3   Q4  
 
Net income $ 22.1 $ 22.2 $ 34.2 $ 44.2 $ 52.2 $ 43.8 $ 58.8 $ 83.5
Income tax expense 13.3     3.6     21.0     4.5   3.5     1.9     14.2     26.1  
Income before income taxes 35.4 25.8 55.2 48.7 55.7 45.7 73.0 109.6
Amortization of acquired intangible assets 10.9 9.3 8.5 8.7 10.4 14.1 13.6 13.3
Stock-based compensation expense 9.4 10.1 9.7 9.8 10.4 11.2 9.0 12.1
Acquisition and integration related costs 0.4 0.4 1.2 2.0 3.5 9.5 7.2 1.5
Restructuring and related costs — — — — — — 2.3 —
Settlements and impairments (0.8 ) — — — — — — —
Loss on debt extinguishment —     —     —     3.8   —     —     —     —  
Non-GAAP income before income taxes 55.3 45.6 74.6 73.0 80.1 80.6 105.1 136.5
Assumed rate for income tax expense * 38 % 38 % 38 % 38 % 25 % 25 % 25 % 25 %
Assumed provision for income tax expense (21.0 )   (17.3 )   (28.4 )   (27.7 ) (20.0 )   (20.1 )   (26.3 )   (34.1 )
Non-GAAP net income $ 34.3     $ 28.3     $ 46.3     $ 45.2   $ 60.1     $ 60.4     $ 78.8     $102.3  
 
Non-GAAP net income per share - diluted $ 1.05     $ 0.86     $ 1.41     $ 1.25   $ 1.65     $ 1.66     $ 2.16     $ 2.81  
 
Weighted average outstanding shares - basic 32.3 32.4 32.4 35.7 35.9 36.1 36.1 36.1
Weighted average outstanding shares - diluted 32.6 32.7 32.8 36.1 36.4 36.5 36.5 36.5
 
 
* A 25% and 38% tax rate is assumed for 2018 and 2017, respectively, which approximates our statutory corporate tax rate.
 
 
Reconciliation of Net Income to EBITDA and Adjusted EBITDA
 
 
2017 2018  
Q1   Q2   Q3   Q4 Q1   Q2   Q3   Q4  
 
Net income $ 22.1 $ 22.2 $ 34.2 $ 44.2 $ 52.2 $ 43.8 $ 58.8 $ 83.5
Amortization of acquired intangible assets 10.9 9.3 8.5 8.7 10.4 14.1 13.6 13.3
Depreciation and other amortization 6.4 6.5 6.6 6.7 6.6 6.4 6.8 6.5
Interest and other income (0.4 ) (0.6 ) (0.6 ) (2.5 ) (3.0 ) (2.6 ) (3.0 ) (4.6 )
Interest and other expense 2.7 2.7 2.9 0.7 0.7 0.7 0.7 0.7
Loss on debt extinguishment — — — 3.8 — — — —
Income tax expense 13.3     3.6     21.0     4.5   3.5     1.9     14.2     26.1  
EBITDA $ 55.0     $ 43.7     $ 72.6     $ 66.0   $ 70.4     $ 64.3     $ 91.1     $125.5  
Stock-based compensation expense 9.4 10.1 9.7 9.8 10.4 11.2 9.0 12.1
Acquisition and integration related costs 0.4 0.4 1.2 2.0 3.5 9.5 7.2 1.5
Restructuring and related costs — — — — — — 2.3 —
Settlements and impairments (0.8 )   —     —     —   —     —     —     —  
Adjusted EBITDA $ 63.9     $ 54.3     $ 83.6     $ 77.9   $ 84.4     $ 85.1     $109.6   $139.0  
 
 
CoStar Group, Inc.
Reconciliation of Forward-Looking Guidance - Unaudited
(in thousands, except per share data)
               
Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income
 
Guidance Range Guidance Range
For the Three Months For the Twelve Months
Ended March 31, 2019 Ended December 31, 2019
Low High Low High
 
Net income $ 65,000 $ 70,000 $ 280,000 $ 292,000
Income tax expense 22,000   24,000   93,000   97,000  
Income before income taxes 87,000 94,000 373,000 389,000
Amortization of acquired intangible assets 13,000 13,000 48,000 48,000
Stock-based compensation expense 15,000 13,000 55,000 50,000
Acquisition and integration related costs 1,000   —   2,000   1,000  
Non-GAAP income before income taxes 116,000 120,000 478,000 488,000
Assumed rate for income tax expense * 25 % 25 % 25 % 25 %
Assumed provision for income tax expense (29,000 ) (30,000 ) (119,500 ) (122,000 )
Non-GAAP net income $ 87,000   $ 90,000   $ 358,500   $ 366,000  
 
Net income per share - diluted $ 1.78   $ 1.92   $ 7.65   $ 7.98  
Non-GAAP net income per share - diluted $ 2.38   $ 2.47   $ 9.80   $ 10.00  
 
Weighted average outstanding shares - diluted 36,500 36,500 36,600 36,600
 
 
* A 25% tax rate is assumed, which approximates our statutory corporate tax rate.
 
 
Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA
 
 
Guidance Range Guidance Range
For the Three Months For the Twelve Months
Ended March 31, 2019 Ended December 31, 2019
Low High Low High
Net income $ 65,000 $ 70,000 $ 280,000 $ 292,000
Amortization of acquired intangible assets 13,000 13,000 48,000 48,000
Depreciation and other amortization 6,000 6,000 27,000 27,000
Interest and other expense, net (2,000 ) (2,000 ) (10,000 ) (10,000 )
Income tax expense 22,000 24,000 93,000 97,000
Stock-based compensation expense 15,000 13,000 55,000 50,000
Acquisition and integration related costs 1,000   —   2,000   1,000  
Adjusted EBITDA $ 120,000   $ 124,000   $ 495,000   $ 505,000  
 

About CoStar Group, Inc.

CoStar Group, Inc. (NASDAQ:CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. LoopNet is the most heavily trafficked commercial real estate marketplace online with approximately 5 million monthly unique visitors per month. Realla is the UK's most comprehensive commercial property digital marketplace. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. CoStar Group's websites attracted an average of approximately 42 million unique monthly visitors in aggregate in the fourth quarter of 2018. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of over 3,700 worldwide, including the industry's largest professional research organization. For more information, visit www.costargroup.com.

This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group's financial expectations, the Company's plans, objectives, expectations and intentions and other statements including words such as "hope," "anticipate," "may," "believe," "expect," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar Group and are subject to significant risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the risk that the trends stated or implied by this release cannot or will not be sustained at the current pace, including trends related to revenue, net income, non-GAAP net income, EBITDA, adjusted EBITDA, margin expansion, and sales; the risk that the Company is unable to sustain current revenue and earnings growth rates or increase them; the risk that the Company is unable to achieve its stated goal to exit 2023 with a $3 billion revenue run rate with adjusted EBITDA margin at or above 40% for the full year; the risk that the Company is unable to further monetize LoopNet in the coming years as expected; the risk that LoopNet, along with the Company's network of commercial real estate marketing assets, does not reach the size of Apartments.com; the risk that the Company's revenue and earnings do not fall within the guidance provided for the full year of 2019 or achieve the expected growth rates; the risk that revenues for the first quarter and full year 2019 will not be as stated in this press release; the risk that net income for the first quarter and full year 2019 will not be as stated in this press release; the risk that adjusted EBITDA for the first quarter and full year 2019 will not be as stated in this press release; the risk that non-GAAP net income and non-GAAP net income per diluted share for the first quarter and full year 2019 will not be as stated in this press release; and the risk that the tax rate estimates stated in this press release are incorrect or may change. Additional factors that could cause results to differ materially from those anticipated in the forward-looking statements can be found in CoStar's Annual Report on Form 10-K for the year ended December 31, 2017, and CoStar's Quarterly Report on Form 10-Q for the quarter ended September 30, 2018, each of which is filed with the SEC, including in the "Risk Factors" section of those filings, and the Company's other filings with the SEC available at the SEC's website (www.sec.gov). CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

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