Ladies and gentlemen, thank you for standing by, and welcome to the Q1 2020 CoStar Group Earnings Conference Call. [Operator Instructions]. I would now like to hand the call over to your speaker today, Sarah Spray of Investor Relations. Please go ahead.

Thank you very much. Good evening and thank you all for joining us to discuss the first quarter 2020 results of the CoStar Group. Before I turn the call over to Andy Florance, CoStar's CEO and Founder; and Scott Wheeler, our CFO, I would like to review the safe harbor statement. Certain portions of the discussion today may contain forward-looking statements, including expectations for the second quarter of 2020. Forward-looking statements involve many risks, uncertainties, assumptions, estimates and other factors that can cause actual results to differ materially from such statements. Important factors that can cause actual results to differ include but are not limited to the duration and impact of COVID-19, the pace of recovery, customer usage and purchasing decisions, changes in investment strategy or plans, timing and success of acquisitions, those stated in CoStar Group’s press release issued earlier today and in our filings with the SEC, including our most recent Annual Report on Form 10-K and Quarterly Reports on Form 10-Q, under the heading Risk Factors. All forward-looking statements are based on information available to CoStar on the date of this call. CoStar assumes no obligation to update these statements, whether as a result of new information, further events or otherwise. Reconciliation to the most directly comparable GAAP measure to the non-GAAP financial measures discussed on this call, including EBITDA, adjusted EBITDA, non-GAAP net income and forward-looking non-GAAP guidance are shown in detail in our press release issued today, along with definitions for these terms. The press release is available on our website, located at costargroup.com under Press Room. As a reminder, today's conference call is being webcast and the link is also available on our website under Investor Relations. Please refer to today's press release on how to access the replay of this call. And with that, I would like to turn over to our Founder and CEO, Andy Florance.

Thank you, Sarah. It's an unusual milestone to have a safe-harbor statement, and I appreciate you pointing that out. Good evening and thank you for joining us today for CoStar's first virtual first quarter 2020 earnings call with our entire management team. The first quarter was really a composite quarter with two normal months and one pandemic month. As with every business, the COVID-19 pandemic has upended normal operations. The pandemic hit operations in CoStar's Beijing office first giving us advance warning, allowing us to transition 100% of our North American and European operations to a digital remote workplace. Employee safety and continuity of operations for the sake of our investors, clients, and our employees were our top priorities. I want to express our gratitude to our systems teams who responded promptly, working around the clock to execute our emergency contingency plans. We are very grateful for their diligent efforts. We believe that 95% of CoStar's staff have successfully transitioned to working remotely over the past six weeks at 90% productivity. These are stressful and discerning times for our employees, and I am incredibly thankful to them for their resilience and continued focus on our professional responsibilities. It’s perfectly understandable if our employees' kids periodically appear in our many video conference calls. We focus consistently on keeping our customers and mission-critical needs front and center. At the same time, we continue to build and innovate for CoStar and our clients’ future as this disruption subsides... ...We believe our products remain mission-critical to the vast majority of our clients even as they deal with pandemic-driven market disruptions. The commercial real estate industry will continue to operate, and to do so, it will need to sign and renew leases, find investment opportunities, value properties, dispose of properties, analyze markets, and importantly, market vacancies to generate much-needed revenue. At a time when people cannot readily visit properties in person, digital marketing becomes even more vital. CoStar Group and our digital solutions are here to meet the industry’s continuing need for high-quality data and highly effective digital marketing. In the immediacy of the initial phases of our crisis, our clients are trying to assess what it all means and are trying to de-risk. This leads to a situation where buying new information or marketing solutions sometimes is not their first priority. The clients of our clients are also putting things on hold, which is disconcerting to our clients. As I have consistently communicated over the years, in the early phases of an economic disruption, let alone a global pandemic, our gross sales drop and cancellations rise initially. We are observing some of that now. I want to stress that our business has always been resilient during down cycles. In the 2008 recession, which was hard on the commercial real estate industry, that was the only time our revenue ever contracted, and even then our revenue only dropped 1% in calendar 2009. We typically experienced a flat sales quarter followed by two quarters of declining sales, finishing with a slightly negative sales quarter afterward. Again, our revenue dropped only 1% in the worst year in our 34-year history. Unfortunately, in any economic cycle, some number of our clients' businesses will fail. Some clients will exit the business permanently, while others will lose buildings to bankruptcy. We share their pain and feel deeply empathetic for any of our clients' businesses who are encountering struggles in this downturn. We have frequently seen clients going through bankruptcy organization continue to pay for our mission-critical services. As some building owners lose their buildings, those buildings remain viable assets through bankruptcy as new investors step in to buy them, and many of these investors end up purchasing our services as they begin to operate their new acquisitions... ...The fact remains that in every past cycle, the majority of our customers continue to operate their businesses and rely on our services. Typically, sales of properties slow dramatically for several quarters to years after a disruption like this. Fortunately, we're not as heavily impacted by the property investment sales cycle. Our broker clients tend to derive a lot more of their revenue from leasing commissions. Normally in this cycle, leasing positives initially for a quarter or so tend to rebound sharply like a V shape. This is due to the simple fact that the bulk of leasing activity at any given time is driven by leases expiring that need to be renewed. Lease expiration dates have no respect for an economic crisis, and most companies remain operational and continue to need their facilities, thus signing leases even in a down cycle. When they sign those leases, our clients earn commissions. I've asked our economists to use the wealth of information we have on past cycles to run simulations to estimate expected leasing activity over the next 12 months. We believe there will be close to a million leases signed in the next 12 months, generating more than half a trillion dollars of leasing value and more than $20 billion in commissions. While leasing has initially ceased, we still anticipate that significant business will happen in the back half of the year. This analysis refers to total leasing activity, not growth in demand. We expect there will be a significant contraction of demand overall, but commissions are not normally impacted, with rates falling only a little, which typically does not hit commissions too hard. In fact, with high leasing activity during some contraction in demand, there's somewhat like a game of musical chairs among building owners. While there is considerable leasing activity, when the music stops, there are fewer owners without critical tenant income. The pandemic and social distancing make this economic downturn more challenging than other downturns. The physical leasing process of prospective tenants driving by properties, signing, and touring the buildings has in most cases ground to a halt. Just when owners desperately need to promote their buildings and tour tenants to fill growing vacancies, the physical inspections of properties are impractical. The digital marketing avenues, such as Apartments.com, LoopNet, and others, will become critical replacements for the loss of traditional physical leasing processes. Prospective tenants can now tour their options on Apartments.com, see what the buildings look like, view aerial drone videos, and explore virtual walkthroughs of the apartments. They could potentially use our online leasing tools to apply, sign a lease, and pay rent without ever exchanging stacks of paper with a stranger... ...Fortune 500 executives are now touring potential new office space in high-rise towers, likely from the comfort of their homes, rather than touring in person. This shift is likely why Apartments.com had its second-best sales month ever last month, and in fact, excluding convention sales events, it was our best sales month ever. Even with the country largely locked down and our entire sales team working from home, sales for Apartments.com at this point in April have exceeded levels from April 2019. To be clear, we expect revenues overall may contract in the near term, but we feel there are several drivers that make our business resilient or even somewhat counter-cyclical over the course of the next year. With 34 years of experience running a company that provides economic insights across multiple cycles, it's undeniable this pandemic has created more uncertainty than any other scenario I've encountered. The tragedy of the pandemic touches too many lives, creating serious economic uncertainty. Thought leaders I respect hold diametrically opposed outlooks. Therefore, it is essentially unrealistic to predict with certainty the detailed consequences this pandemic will have on our business over the coming year. So we will provide guidance for the next quarter, but not the full year. However, we continue to believe that our data analytics and marketing tools will be among the most valuable sources of information, leads, and potential traffic for our customers. Therefore, we remain very confident in our business model and the role we play in supporting the CRE industry. We're maintaining our investments to strengthen our position from both a brand and product perspective, believing that we will exit the present uncertainty in a stronger position than prior to the pandemic. With that, I want to quickly review our Q1 results. I am pleased to report that we delivered at the high end of our guidance range across the board. CoStar Group's total revenue grew 19% year-over-year to $390 million. Across all of our service lines, our revenue growth was ahead of expectations, with LoopNet revenue leading the pack, achieving nearly 23% year-over-year growth. Apartments.com was strong as well, with revenue growth just above 20%. Despite the significant investments we're currently making in the Apartments.com brand, this quarter's net income was solid at $73 million, and adjusted EBITDA was robust at $124 million. During the first quarter, our sales team generated $48 million in net new bookings despite the pandemic's disruptive impact. Again, Apartments.com stood out, achieving its second-highest quarter ever in net new sales at an increase of 34% versus the prior year quarter. Paige Forrest and the entire multifamily team delivered an amazing, resilient, and adaptive performance throughout the first quarter, managing to navigate through it all expertly. LoopNet also had an exceptional start to the year, but we did see the CRE industry slow a bit harder in March as a direct reaction to the pandemic. Let's dive a little deeper into Apartments.com. Last year, we invested approximately $150 million to market Apartments.com to consumers. We still believe Apartments.com represents a tremendous market opportunity for CoStar Group and that by increasing our marketing investment to our previously committed level of $250 million in 2020, we can achieve extraordinary returns. Our enhanced marketing campaign launched in March coinciding with renters starting to quarantine at home, leading to unprecedented levels of media consumption. The initial results from this campaign in its first month are strong, with $1.5 billion impressions, nearly double that of last year. Overall visits to Apartments.com reached a new all-time high, and unnoticed brand awareness reached a new high of 35%. I believe Jeff Goldblum and RPA, along with the entire team, did an outstanding job creating our advertising content, and we are excited to present this series of ads to consumers in the coming months. After a dip in March due to quarantine measures, leads have recovered substantially and are exceeding levels observed at the same time last year. Without a doubt, our marketing investment is paying off. Combined with efforts from our sales team, we anticipate maintaining good net new booking levels. We are diligently working through all the necessary regulatory processes required before closing the acquisition of RentPath. The bankruptcy proceedings have proceeded as expected. In late March, no auction was held as no qualified bidders came forward. Public filings indicate that the majority of debt holders support the planned reorganization which includes the anticipated sale to CoStar. The SEC review is ongoing, and we expect a second request which will extend the review timeframe consistent with our previous estimates of 3 to 12 months from signing. As always, we respect the FTC process and will fully cooperate with providing the agency with all information they require to conduct their investigation. At this time, there is no additional information we can offer on the outlook for that process. LoopNet commenced the year dynamically, continuing to capitalize on positive usage and sales trends noted in the fourth quarter. As we and the rest of the country transitioned to remote work in early March, we experienced a drop in daily average users that lasted about a month. Over the past few weeks, we've observed a steady increase in users, nearly back to last year's levels. Importantly, the number of searches now exceeds those of last year, which is what truly matters for our customers. While LoopNet sales dipped in March as consumer behavior transitioned to working from home, we've seen user traffic and lead volumes progressively improve week over week, which brings optimism that sales levels could improve in the months ahead. We predict that revenue growth for commercial property and land revenue will be approximately 10% to 12% in the second quarter of 2020 compared to the same quarter last year. Additionally, our gross margin for the first quarter came in at 80% and we anticipate maintaining that level in the second quarter. Overall spending came in lower than our first-quarter expectations as we rapidly adjusted our business to respond to stay-at-home orders and prepare for anticipated negative impacts in the economy. Summarily, we delivered very strong financial results in the first quarter of 2020, and our business is in solid financial standing. Our teams are safe, productive, and continue to focus on providing our customers with our valuable products in the months and years ahead, and I thank you all for your support as we navigate these complex times.

Well done, and thank you, Andy. It's been an unbelievable start to this year in so many ways, unlike anything I've ever seen, but I'm thankful that our CoStar teams are safe and productive, and week by week, we will continue to navigate through these changes. Financially, we're in a very strong position. We maintain a conservative balance sheet precisely for times like this – a time when we can continue to invest for the future and take advantage of new opportunities that come our way. We have $1.9 billion in cash. Our subscription revenue model is resilient, and our services are 100% digital, which is ideal in this current environment where person-to-person contact has been practically eliminated. Our business is much more diversified than it was during the '08-09 recession, with 50% of our revenue now coming from online marketplaces as opposed to nearly 100% from CoStar a decade ago. Additionally, owners, property managers, institutional investors, and lenders now represent our largest customer base, contrasting with greater reliance on the brokerage customer sector during the last downturn. Over the past month and a half, we have monitored daily metrics on contracts, sales, customer inquiries, customer retention, cash receipts, purchases, and payments. While this information, although valuable, does not provide projections for the future, it certainly offers insights that help us create multiple revenue scenarios in our financial models, of which even absolute worst-case scenarios do not indicate any concerns with liquidity or our ability to continue generating strong positive operating cash flows. Now, regarding the results, we began the year strongly, with revenue in the first quarter up 19% compared to the same quarter last year, while revenue growth, excluding the STR acquisition, was 15%. CoStar Suite revenues grew 12% year-over-year in Q1 2020. As stay-at-home orders began in early March, we observed the daily sales and the new contract flow for CoStar decline, dropping to roughly half of January and February levels by the end of March. However, entering the last week of April, we have seen sales levels stabilize, with marginal improvements. We expect renewal rates to gradually decline in the upcoming months, similar to what we experienced during previous economic downturns. We have discontinued all price increases in early March for our customers. Assuming these trends in sales and renewals persist through May and June, we anticipate CoStar Suite's revenue growth rate to range between 7% to 8% for the second quarter of 2020. Revenue in our information services segment grew 72% year-over-year in Q1 2020, reaching $32 million, which includes our first full quarter of STR results. Combined, STR and our real estate manager business account for around 80% of revenue in information services. Notably, these businesses have recurring subscription revenue as well as one-time transaction or implementation fee revenue. Subscription revenues, which were 80% of total revenue in the first quarter, are stable and, as Andy indicated, will continue to be stable while increasing both year-over-year and sequentially in Q2. This is encouraging considering that the global hospitality industry is among the hardest hit by recent travel restrictions. However, the transaction implementation fee revenues have declined as customers delay purchases and plan implementations. Overall, we expect reported revenue from information services to grow at a rate of roughly 30% to 40% in Q2 2020 compared to the corresponding quarter in 2019. Multifamily revenue growth for Q1 remained robust at 20% over Q1 2019, which aligns with our expectations. The revenue growth was driven by a combination of an increase in the number of properties advertising with us, which was up 9%, along with a growth in average rate per property, which increased 11% in the first quarter as customers upgraded to higher-level packages. Despite the disruptive events that took place in March, multifamily had a phenomenal first quarter, achieving their second-highest quarterly bookings ever. Digital marketing has never been more critical than it is right now. So far in April, we continue to see strong sales levels. If this trend continues through Q2, we can estimate revenue growth of approximately 18% to 19% compared to the same quarter last year. Our commercial property and land revenue grew 20% year-over-year in Q1 2020. Our LoopNet marketplace, which contributes over 75% of the sector's revenue, experienced a 23% year-over-year growth in the first quarter. Following solid LoopNet sales in January and February, we observed sales volumes drop to approximately half in March, consistent with those seen in CoStar Suite, maintaining that level through this period in April. However, with LoopNet user traffic and lead volumes improving week by week, we remain optimistic that sales levels may enhance in the forthcoming months. We aim to achieve a commercial property and land revenue growth rate around 10% to 12% for Q2 2020 compared to the same quarter last year. Our gross margin for the first quarter was 80%, aligning with expectations, with anticipation of maintaining this level during Q2. In summary, we delivered impressive financial results in Q1 of 2020 and our business remains on solid financial footing. Our teams are productive and remain committed to delivering valuable services to our customers in the upcoming months and years ahead. Thank you for your continued support. I am looking forward to updating you on our progress in July.

[Operator instructions] And your first question comes from Mario Cortellacci with Jefferies.

I hope all of you and all your families are healthy and staying safe. I was just curious, because we have limited insight into how Apartments.com has performed during the last downturn, obviously, it wasn't part of your financials. Just wondering if you can give us a little more insight into how that business reacted. And I guess, I think the expectation is that it's more of a consumer-type of business so it would likely be more impacted. But any extra color or any more background.

Sure. I've asked Apartments.com or similar companies that we acquired in the last downturn and typically said that Apartments.com does better in a downturn than in a really healthy market. Higher vacancy rates mean there's more demand for leads and traffic into leasing offices, and point of fact, many people, executives believe that a really healthy market like we had a year ago is a bad environment to operate Apartments.com. Consumer behavior is fundamental. It's like having a roof over your head. So it's very resilient during a downturn.

Great. And then just more of a longer-term question. I think we've done a lot of questions around how the industry could structurally change on the commercial real estate side. I guess just the working from home environment, do you think that impacts demand for commercial real estate longer term? I think I heard you tossed out a number on just square footage of commercial real estate declining over the next two years. I didn't know if I heard that correctly or if maybe this has something to do with that. But do you think that this is a structural change in the industry that could happen longer term as more people work from home and there's just less demand for office space?

Well, forgive me, I don't want to sound flippant in our discussion. I may come across as bluntly opinionated. I personally was an early cynic on the notion that co-working would take over the world. I suspect many will continue to want to work from home. I think there is a knee-jerk reaction wherein people state, 'Oh gosh, everyone’s going to work from home.' I’m not witnessing that trend significantly. In fact, I could actually argue that the potential downside of 250 million square feet of demand disappearing in the office sector is primarily driven by job losses – 1 person per 200 feet. The demand for office space is very elastic to price. The quantity of space per person in Houston is dramatically larger than that in other locations. Prices can (and do) drop dramatically, leading to increased demand. Therefore, while my staff based in Beijing is thrilled to return to the office, we can understand differing opinions on remote work.

Your next question comes from Peter Christiansen with Citi.

Andy, do you think this economic shock will require you to change any of your products or services, whether it be features or perhaps the way it's priced or packaged? Do you think CoStar will need to change any of its product offerings as a result of this economic shock?

Yes, we are actively initiating changes in our product to adapt to the current situation. If you visit LoopNet, there's now a prominent virtual tour button on our homepage, and we have enabled a feature where brokers can join each other on a LoopNet tour via video conferencing as they view properties. We call this feature co-tour. Apart from this, there are around a dozen other virtual leasing enhancements that we are implementing. Additionally, we are ramping up marketing in light of the current crisis. One common consequence of disruptions is that consumer behavior often changes permanently, and we anticipate that people will increasingly value online marketing and real estate much more than they have in the past. Hence, we are pulling all the strings to capture that shift as rapidly as we can. While I anticipate we may look into a couple of acquisitions as a response to these developments, I don’t foresee any need for significant changes in pricing at this time.

No, that's fine. And then have you observed any new use cases for CoStar products? Have any new clients approached you? I'm curious if anything new has emerged.

It's a bit early to determine that, but I anticipate we will see new clients emerge. Typically, when economic circumstances turn, we see an influx of interest from those with capital on the sidelines looking to capitalize on distressed properties. That process is already beginning to ramp up.

Your next question comes from Stephen Sheldon with William Blair.

Andy, you mentioned that revenues could contract in the near term. Given the uncertainty out there, could you share your current visibility regarding potential revenue in the third and fourth quarters this year? Do you perceive a meaningful likelihood that revenue in the second half of the year could show organic declines or was your statement more of a general possibility rather than an expectation?

I would reiterate that uncertainty is substantial right now. We are unsure when or how we will return to full operational capacity, but I would not be surprised if we witnessed some softness in revenue. That being said, when examining April's Apartment sales data, I found myself shocked to see that despite alarming headlines, we have managed to sell a considerable amount of online marketing. That said, I must acknowledge that some aspects of our business, similar to previous downturns, may indeed experience softness. We have seen a number of customers request forbearance on their bills, and we have renegotiated some deferrals for approximately 160 customers. We have also seen some user headcount reductions at various sites. Thus, while a long-term outlook presents challenges, we will aspire to maintain our growth trajectory despite any downturn. Historically, in 34 years, we've only encountered one single year in which our revenue has gone negative, and even then only by 1%. If that is the outcome we're facing again, I can accept it, and we'll work to navigate through it. Regarding the global system we plan to rollout for CoStar Suite in the third quarter, I consider it a significant investment that isn’t driven by recent market events. Reflecting on the early days of CoStar, we began in a handful of cities. At that time, the demand was limited; however, once we expanded across the United States, demand for our products multiplied significantly. I believe the same holds true on an international front. Once we can connect our European solutions into a cohesive offering alongside a consistent platform in the United States and our Asian assets, we will be able to provide added value for our clients. While we can’t make significant investments this year, we will begin modestly investing in our global presence.

Thank you, Andy. I appreciate the insights. I am curious, have you seen strong outcomes from the recent investments you’ve rolled out, particularly in multi-family offerings? How have these investments fared in this volatile economic landscape? Have you seen any responses from clients you weren’t expecting?

Indeed, we observe a divergence between varying economic segments. Specifically, we perceive that within the multifamily sector, clients are compelled to evaluate their vacancies, establishing strong interest in our advertising solutions. Likewise, we acknowledge that many commercial clients are approaching decisions about whether to promote their offerings as traditional marketing methods have been disrupted. Adapting is necessary, and that is where our offerings can shine.

Your next question comes from Mayank Tandon with Needham.

Andy or Scott, maybe one of you could answer this. In terms of the multifamily platform, I think, Scott, you mentioned that 11% of the growth last quarter came from some of the upgrades. Could you provide a little bit more color in terms of what those features are that the users are buying? And what does that mean for 2Q in terms of the contribution from the upgrade on the platform?

Certainly. What I was referring to regarding revenue growth was that our clients are choosing higher-level ad packages to purchase, which comes at a premium per package. Last year, we announced the introduction of a Diamond Plus level for sorting to the top of our Diamond section, and we introduced Platinum and Gold Plus tiers by the end of Q4 to differentiate levels further. While these are not currently substantial components of our sales figures, they do exemplify the demand for increased exposure during times of high vacancy. We experienced that in the first quarter, which contributed to the 11% growth attributed to pricing and package enhancements.

Your next question comes from Bill Warmington with Wells Fargo.

So Signature Ads at LoopNet was a central focus of the sales conference in January. The initiative shifts LoopNet from being a broker-focused offering to an owner-driven one. Have you seen uptake on those ads moving from a broker price point at $35, $40, $60 per listing per month up to $2,000 to $3,000 per listing? Is that trend happening? Do you anticipate this driving revenue? Because it appears they expect revenue growth in that division to transition from around 20% to 22% to approximately 10% to 12%.

That's correct. Before the pandemic affected the market, we were witnessing strong sales performances for LoopNet Signature Ads. However, as the pandemic emerged, all activity came to a halt while businesses assessed their situations. The strong results for Signature Ads were evident during January and February, and though we anticipated a dip in transactions in the wake of the pandemic, we remain optimistic about a recovery as market conditions improve.

Additionally, I believe we need to clarify our message for owners regarding the market conditions. With several impending lease expirations, many properties require effective marketing strategies to attract tenants. Our ongoing efforts to refine the marketing strategy for LoopNet should yield positive results as conditions evolve. Thus far, I am still upbeat about the potential for revenue growth from LoopNet as we continue to target daily traffic to expand overall ad visibility.

Your next question comes from Ryan Tomasello with KBW.

Regarding your expense base, could you discuss the available levers you could pull as you head into the latter half of the year and how willing you would be to utilize those options, depending on how the situation develops in the coming quarters? Additionally, regarding your apartment ad spend, can you clarify if your intention to maintain that plan is just for Q1, or should we also anticipate further ad spend in the second half of the year?

At this point, we have various financial levers we can deploy, but we do not have conditions prompting us to contract spending drastically. We continue to identify substantial growth drivers across the business and as we reported this quarter, we are achieving our expectations. Should conditions deteriorate dramatically, we would adapt, but we are not currently motivated to change our established strategy. Our traffic and lead flow on Apartments.com are at all-time highs, and we see no compelling reason to alter our course, thus we intend to maintain our original marketing strategy unless actual results necessitate a shift.

Your next question comes from George Tong with Goldman Sachs.

You withdrew your full-year 2020 guidance and are only guiding one quarter out for now. Can you discuss your confidence level in achieving your previously disclosed 2023 targets?

Those are always fun questions to tackle, especially in such uncertain times. When we determined not to give 2020 guidance, you’re asking about 2023, which is fair. What we can say is we are actively focused on recovering back to historical growth rates as quickly as possible while also investing for future growth and pursuing acquisitions to close any potential revenue gaps resulting from a temporary slowdown. Mathematically, we can still reach those targets; however, we cannot ascertain the length and duration of this downturn. It will certainly depend on market progress, but we will keep our sights on this throughout.

The prevailing uncertainty remains high at present. While we have no reason to suspect that our 2023 targets are unachievable at this stage, we will monitor the conditions closely for any changes that might affect our trajectory. Furthermore, if we enter an environment conducive to acquisitions, we may lean more towards those channels in order to help achieve our goals more effectively.

Your next question comes from Brett Huff with Stephens.

Good afternoon, guys, and glad you're all well. Andy, I want to follow up a little more closely on your conversations with clients. We've received many queries regarding the microeconomic decisions that multifamily owners or commercial building owners might be making as they consider whether to sell or hold their assets under current conditions. Do you happen to have any anecdotes that might help us gain better insights into how owners are deciding on how to proceed with advertising on LoopNet or Apartments.com? You provided a solid example of a large multifamily owner strategically advertising with urgency. Are there any more insights you can share?

I think there are two perspectives to unpack here. One involves the microeconomic decision to market on a given platform. As market conditions soften, financial trends necessitate a transition towards digital marketing for property owners. Traditional methods, such as broker parties or printed materials, are quickly becoming obsolete. The ongoing presence of COVID-19 amplifies this reality, and it is a no-brainer for owners. Meanwhile, the essential decision-making about whether to sell or hold onto properties hinges on an amalgamation of data trends combined with our Company’s portfolio of solutions. Owners and lenders must coordinate their decisions through data to gauge appropriate pricing realistically. We need our clients to utilize our data effectively as they anticipate potential market shifts. I believe we will be well-positioned as a repository of information throughout this period.

Your next question comes from Sterling Auty with JPMorgan.

For my single question, I want to circle back to multifamily and delve deeper into your assessment. Is it safe to assume that the multifamily sector has already reached its low point, or is there a risk of sequential contraction in the upcoming quarters?

Two distinct inquiries arise from this topic, one at the aggregate level of our advertising business and another examining valuations and rental asset prices. It is my strong belief that our operational performance is largely insulated from shifts in occupancy. There is an observable inverse correlation between higher vacancy rates and increased campaign demand reflecting our advertising solutions. Should general rent decline occur, my hypothesis is that our model remains relatively unaffected. For now, we feel confident in our engagements with Apartments.com and the overall tempo of online leasing activities. Of course, our perspective could shift depending on developing economic indicators.

Your next question comes from Joe Goodwin with JMP Securities.

Just a quick observation regarding your revenue growth potential going negative. Can you share your thoughts on how you're assessing the timeframe for when that might emerge?

It's challenging to pinpoint with clarity, but looking back at previous economic downturns such as '08 and '09, we encountered two consecutive quarters of meaningful revenue declines. I would anticipate a similar pattern developing here. However, this cycle may shift the traditional timeline significantly due to variations in crisis dynamics. It's simply too early to ascertain when or if we will experience negative growth, but if we overlay the conditions of past downturns, I would look at late Q3 and early Q4 as potential contenders. Nonetheless, this is a different cycle and unforeseen conditions may impact the outlook.

It’s important to remember that the precipitous decline occurs quickly. The patterns we see today differ greatly from '08, where negative momentum built over an extended timeframe. The sudden sharp drop-off we’ve experienced will be continuously assessed in the coming weeks and months.

There are no further questions at this time. I'll turn the call back to presenters for any closing remarks.

Thank you for joining us for our Q1 earnings call. I look forward to providing an update this summer regarding our performance for Q2. I hope you are all staying safe and well, and I appreciate everyone's participation in today's call.

This concludes today's conference call. Thank you very much for joining us. You may now disconnect.