CoStar Group posted its 61st consecutive quarter of double-digit revenue growth, but its stock dropped over 12% in after-hours trading following the July 28 earnings release.
Revenue climbed to $925 million for the quarter, an 18% year-over-year increase. Net income reached $55 million, up from $6 million in the same period last year. Wall Street had anticipated revenue closer to $929 million.
Investors focus on Homes.com and rentals headwinds
During Tuesday’s earnings call, investors appeared concerned about Homes.com performance and challenges in the rentals space for Apartments.com. The company recently adjusted its Homes.com sales team, reducing the inside team from 660 at the end of 2025 to about 400 while expanding its field team to 50.
Founder and CEO Andy Florance explained the change as part of a long-term plan. “We’ve always believed field teams would be the most productive,” he stated. “It takes years to build a good one, so we initially built an inside team for speed to market.”
CoStar’s stock ended the day near $26, touching 52-week lows. The company expects to deliver the highest full-year adjusted EBITDA in its history in 2026, according to Florance.
AI and cost savings remain a bright spot
CoStar highlighted artificial intelligence as a cost-saving tool across its operations. Outgoing CFO Christian Lown noted that the company hasn’t yet fully realized AI’s potential. “I see a lot of opportunity across all of our businesses, research included, to drive down costs with AI,” he said.
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Cash reserves totaled $1.27 billion at the end of June, down from $1.63 billion at the close of 2025. Gross profit rose to $728 million from $613 million a year earlier. Adjusted EBITDA jumped 116% year-over-year to $184 million.
Site traffic declined, with CoStar’s platforms averaging 118 million monthly unique visitors in Q2. That figure was lower than the 131 million in Q1 and 139 million in Q4 2025. The company forecast Q3 revenue between $935 million and $945 million, with adjusted EBITDA ranging from $190 million to $210 million.
Acquisitions and new revenue streams
In mid-Q2, CoStar revealed plans to buy Zonda, a leading provider of home building data, for $800 million in cash. Florance expects the deal to close before year-end.
The company also plans to introduce a Platinum marketing tier for Homes.com later this year. The premium service, already successful on Apartments.com, will include enhanced placement, improved search results, and stronger social marketing. Florance described it as a key revenue source after its rollout.
Robin Rossman, currently CoStar’s managing director in Europe, will replace Lown as CFO at the end of the month. The transition occurs as the company adjusts to growth and investor scrutiny.