Earnings Call Transcript - CSGP Q1 2026

Richard Simonelli, Head of Investor Relations

Hello, everybody, and welcome to the CoStar earnings call for Q1 2026. Thank you all for joining us. Before I turn the call over to Andy Florance, CoStar Group's Founder and CEO, and Chris Lown, our CFO, I'd like to review a few of our safe harbor statements. Certain portions of the discussion today may contain forward-looking statements. The company's outlook and expectations are based on current beliefs and assumptions. 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, those stated in CoStar Group's press release issued today and in our filings with the SEC. All forward-looking statements are based on the information available to CoStar Group on the date of this call. CoStar Group assumes no obligation to update these statements, whether as a result of new information, future events or otherwise. Reconciliations to the most directly comparable GAAP measure of any non-GAAP financial measure discussed on this call are shown in detail in our press release issued today, along with the definitions for those terms. The press release is available on our website located at costargroup.com under Press Room. Please refer to today's press release on how to access the replay of this call. Remember, one question during the Q&A session, so make it a good one. And with that, I'd like to turn the call over to our Founder and CEO, Andy Florance. Andy?

Andy Florance, Founder & CEO

Thank you, Rich. Thank you for joining us today. I want to start with three things. First, this was an exceptional quarter. We delivered our 60th consecutive quarter of double-digit revenue growth. Our adjusted EBITDA doubled, and we're on track for the highest full year adjusted EBITDA in CoStar Group's history. Second, the Homes.com investment is delivering exactly what we said it would. Member agents are generating extraordinary returns on their subscriptions. Consumer engagement on Homes AI is multiples of conventional residential search, and Homes.com is the fastest-growing residential portal in the United States. I'll walk you through the evidence later in the call. Third, the activist distraction is behind us. With the noise gone, we have more focused energy than ever to spend on what matters, growing EBITDA. Let me take you through the numbers. First-quarter 2026 revenue grew 23% year-over-year. Q1 2026 adjusted EBITDA of $132 million doubled year-over-year and came in 26% above the midpoint of our guidance. After a record 2025 for annualized net new bookings, we started 2026 stronger still. Q1 net bookings of $67 million were up 20% year-over-year. We expect productivity to build over the year, particularly from the sales reps we hired throughout 2025. Our commercial business generated $472 million of revenue in Q1, up 15% year-over-year with adjusted EBITDA of $161 million. CoStar revenue was $331 million in Q1, with annualized net new bookings from our core CoStar product up 16% year-over-year. CoStar users grew 22% year-over-year to 317,000. Sales to brokers and tenants were especially strong with broker sales up 29% and tenant sales up 27% year-over-year. CoStar NPS was 69, and our quarterly renewal rate was 92%. CoStar rent benchmark launches this summer. Drawing on our proprietary lease database and public records, it will be the industry's only net effective rent benchmark product, giving landlords, occupiers, investors and brokers visibility into starting rents, effective rents, TI allowances, free rents and escalations across U.S. markets. CoStar new homes is in development with Phase 1 planned for Q2. The module tracks new residential construction from planning through delivery and serves homebuilders, mortgage bankers, retailers and retail center owners. It integrates builder feeds, drone imagery and other data sources to deliver insight into housing supply, demand and market trends. CoStar debt solutions, formerly CoStar lender, had a strong quarter with net new bookings up 26% year-over-year as the business crossed $100 million in revenue. Debt Solutions now serves over 500 financial institutions across the full lender spectrum, including banks, private lenders, debt funds and regulators. Debt Solutions is on track to launch CRE debt benchmarking in the second half of 2026 with CRE loan origination workflow following in Q1 of 2027. The final product will be a full workflow solution to originate and underwrite a loan. Our first release will focus on seamless delivery of property details, peer properties and market information. We launched a client advisory committee with over a dozen institutions to shape the loan origination roadmap, deepen understanding of how AI is reshaping their workflows, and strengthen product-market fit. Across the platform, Debt Solutions is actively building these AI-enhanced workflows. CoStar U.K.'s growth accelerated in Q1 with revenue up 25% and net new bookings up 44% year-over-year. This growth was supported by the release of new land registry lease modules that gave clients authoritative effective rent data sourced from government records and the recollapse of one of our primary competitors there. CoStar Canada revenue grew 22% year-over-year. We released multifamily analytics coverage for Montreal in Q1. CoStar France launches in Q2. We will cross-sell into the 32,000 French CRE professionals who already subscribe to news and information from our Business Immo acquisition, accelerating adoption as we build the only pan-European CRE data and analytics platform. In CoStar Australia, we are rapidly building proprietary property data with our local research team now approaching 100 people. We expect to launch CoStar and LoopNet in Australia in Q3 and Q4. Real Estate Manager added AI lease abstraction capabilities to the Visual Lease platform this quarter, and we will extend these capabilities to CoStar Real Estate Manager later this year. Customers are eager to bring this best-in-class capability into the lease management and accounting workflows to save them a lot of time and hassle. We're also deploying multiple AI agents internally to accelerate customer onboarding, support enablement and the automation of repeatable professional services work. In Q1, STR launched profitability benchmarking, supporting more than 150 detailed data points across a hotel's P&L. Customer interest was immediate with 750 hotel subscribers submitting data to unlock the functionality. Building participation at scale is critical to future monetization, and this early engagement reinforces the long-term value of the investment. LoopNet generated $85 million of revenue in Q1, up 16% year-over-year. Paid listings rose 10% year-over-year in the U.S., 35% in Canada and 63% in the U.K. Last month, after more than a year of successful testing, we rolled out asset-based pricing across all U.S. markets. LoopNet advertising is now priced to match the size of the asset and the value LoopNet delivers to listers. Early results have been outstanding. At the high end, the volume of silver listings sold at $300 or above per month grew 650% from February to March. At the low end, listings sold below $40 grew over 1,100%, opening up an entirely new category of inventory and bringing in smaller advertisers who could not justify the higher price points of the prior one-size-fits-all structure. We expect this to drive more listings, more traffic and more revenue. LoopNet's European revenue grew 17% year-over-year following last year's launch in France and Spain; we're seeing the network effects of being the first and only global commercial real estate marketplace. Average monthly unique visitors on LoopNet Europe more than doubled to over 900,000, up 102% year-over-year. Crucially, these users are not just searching their home countries; they're searching globally. We will extend this network effect as LoopNet launches in Australia, Germany and other markets. Our Australia CRE marketing platform, commercialrealestate.com.au, grew 10% year-over-year on a pro forma basis, driven by higher depth revenue, improving depth penetration and higher average revenue per listing. That commercial unique visitor audience was up 129% year-over-year in Q1. Subscription revenue for Matterport was up 19% year-over-year. Enterprise momentum built through the quarter. New enterprise accounts in March were up 31% year-over-year, and direct sales were up 16%, supported by a healthy and expanding pipeline that continues to build into Q2. Matterport has become a critical point of differentiation across CoStar Group. It drives engagement, lifts conversion, and generates valuable proprietary data. Integration is proceeding exceptionally well across Apartments.com, Homes.com, LoopNet, CoStar and Domain. Matterport is already a key component of Homes AI and will unlock huge future AI innovation across CoStar Group. Matterport Exteriors with X-ray now in alpha lets users virtually remove a roof or floor of a virtual building to see the building's interior in the context of the yard and the neighborhood. That's a real estate marketer's dream. We've also released a number of new innovations with strong use cases in architectural, engineering, construction, facilities management and manufacturing. BizBuySell revenue was $8.8 million in Q1 with broker subscribers reporting 2,345 completed sales transactions of businesses representing $2 billion enterprise value, 59% of which involved commercial real estate. We're rapidly turning BizBuySell into a true end-to-end transaction platform with integrated financing, 3D tours and document sharing, now driving over 24,000 buyer profiles and 15% broker adoption. Residential revenue was $421 million in Q1, up 32% year-over-year. Adjusted EBITDA improved by $56 million, and we expect the Residential segment to reach profitability in Q2 2026. Apartments.com generated $312 million of revenue in Q1, up 10% year-over-year, the 15th consecutive quarter of double-digit revenue growth. Apartments.com delivered 220 million highly engaged renter visits, 370,000 tours and 300,000 applications submitted directly on our platform to apartment owners alongside 40 million Matterport tours. Our monthly renewal rate held at 99%. Apartments.com brand media impressions nearly tripled in Q1, up 189% year-over-year to 1.7 billion. The longer we invest in our brand on behalf of our clients, the more efficiently we deploy that investment. A clear example: our first-ever co-branded Super Bowl commercial with Homes.com aired on February 8, reaching 126 million viewers, the highest peak viewership in U.S. media history. Combined with our industry-leading SEO and SEM, these efforts continue to produce the most qualified audience of apartment seekers on the internet. According to Google, overall rental search demand remains soft. Even so, comScore data shows Apartments.com network unique visitors up 3% year-over-year in March. Zillow unique visitors were down 5% year-over-year and Zillow's expanded rental network, Zillow plus Realtor plus Redfin, was down 3%. Zillow has now seen unique visitors decline year-over-year for 15 consecutive months. Our sales force conducted 185,000 quality meetings in Q1 for Apartments.com and achieved an outstanding NPS of 89. In Q1, Apartments.com introduced Smart Search, our natural language search feature and the first AI-powered voice search in multifamily. Smart Search lets renters search the way they speak, packing every detail and even multiple locations into a single query. Results are faster, more detailed and dramatically more efficient. The early metrics are really strong. Renters who use Smart Search spend 94% more time on site and view 63% more listings. Ahead of the June Apartmentalize trade show that NAA hosts, the big show of the year, we will launch Apartments AI, our pioneering conversational search experience built on the same technology powering Homes AI. Apartments AI will more deeply engage renters and continue delivering best-in-class advertiser ROI through the industry's highest quality leads. We will also highlight Homes.com's expanded rental capabilities and the value-add to Apartments.com at that same Apartmentalize. Apartments.com leads the industry on price transparency. Any property can now display complete all-in monthly price with all the extras—recurring and one-time required fees—with a prominent badge alerting renters. Six states already require this sort of transparency and the FTC just concluded its public comment period on similar rules. Matterport continues to be a true differentiator for consumers on Apartments.com. We now have approximately 250,000 3D tours on the platform, including over 1,500 Matterport 3D Exteriors that give prospective renters an immersive 360-degree view of the entire community. In Q1, renters spent 46% more time on listings featuring a Matterport and those listings generated 56x more tour requests per listing than listings without one. It's an amazing stat. Homes.com revenue grew 58% year-over-year to $26 million in Q1. We are on pace to hit our stated 2026 net investment target of $550 million in homes. And what that investment is buying is becoming clear in the data. Membership growth and monetization are both accelerating. We added over 4,300 members in Q1, up 205% from Q1 of 2025. We now have 35,175 agent subscribers with 76% of them on annual contracts. Net new bookings were $11 million in Q1. March annual revenue run rate reached $106 million, up 92% year-over-year. Our trailing 12-month average ARPU is $287. We are now seeing clear quantifiable evidence that the Homes.com business model is working and that our subscribers are gaining an extraordinary return on their investment. We analyzed the first 11,400 Homes.com members and compared the commission earnings in the 12 months before joining Homes.com to the earnings in the 12 months after they became a Homes.com subscriber. The findings are striking. On average, a Homes.com subscriber earned $36,400 more in commissions in their first year as a member. Against an average annual subscription cost of just $3,400, that's an 11x return on their investment. In the same time period, our members saw commissions grow 16%, while the average non-member saw their commissions decline. The ROI is even stronger for the agents who need it most. Agents who had earned $50,000 or less in the prior year earned $58,000 more after joining. Pre-membership earnings were $26,000 on average, and that jumped to $82,000 on average. There are hundreds of thousands of agents in this earnings cohort. Agents in the $50,000 to $100,000 bracket earned $41,000 in commissions after joining. Agents in the $100,000 to $150,000 bracket earned $38,000 more once they became Homes members. These numbers almost certainly understate the value. The benefit extends beyond our 12-month analysis window, and we exclude the significant rental marketing value members generate through Homes.com and our syndication to Apartments.com. Based on these results, we will raise subscription fees for new customers on May 1 and evaluate measured potential renewal increases. For CoStar Group as a whole, this is the fastest organic revenue build we've ever achieved for a new product, and we hit these revenue levels faster than our U.S. competitors did at their start. Our NPS is 41, an excellent score after just two years and still improving. Homes.com subscribers paid to promote 260,000 active listings in Q1, representing 8.7% of the nearly 3 million homes for sale in the U.S. In 2025, the Homes.com network grew nearly 2.1 billion views and 108 million average monthly unique visitors. We achieved a healthy balance across SEM, SEO and direct traffic, allowing us to optimize SEM for quality leads, not just quantity. The result is better traffic and more engaged visitors. Organic traffic to Homes.com was up more than 100% year-over-year in every month of the quarter and March specifically up 119% year-over-year. Homes.com was featured across major cultural moments in 2026, including the Oscars, the Olympics, the Super Bowl, March Madness and many others, driving over 3 billion impressions in Q1. Our new March ad showcased Homes AI in action, and I have received more positive feedback on this campaign than any of our prior Homes.com campaigns. In March, average annual session duration hit an all-time high, up 26% year-over-year and bounce rate hit an all-time low, down 29%. Homes AI is the engine behind this engagement search. AI users run nearly 4x as many searches, favorite 7x as many properties and submit 7x as many leads. In April, time on site reached 18 minutes for AI users versus 4 minutes, 32 seconds for non-AI users. Put plainly, when consumers experience Homes AI, they spend roughly 4x longer than they do on conventional residential search. This is precisely the dynamic that precedes meaningful consumer share shift and is exactly the proof point we expected our AI investment to produce. In March 2026, we significantly expanded our relationship with eXp Realty, the largest residential firm by transaction size in 2025. The new partnership lets eXp's 3,000 agents prominently display premarket coming-soon listings on Homes.com. You may recall we partnered earlier with eXp Commercial in December 2024 when they became a major subscriber to CoStar's information and analytics. We've been integrating Apartments.com with Homes.com since early 2025. Last year, Homes.com rentals drove over 10% of Apartments.com's traffic, making Homes.com Apartments.com's largest syndication partner. This combination produced nearly 650,000 paid single-family home rental listings in 2025. Paid single-family rental listings in Q1 2026 grew 33% year-over-year. According to comScore, Homes.com is now the fastest-growing rental site in the U.S. For Google Analytics, Homes.com rental visits grew by 13 million versus Q1 of 2025, making Homes.com our most powerful platform for reaching the single-family rental market. Over 214,000 independent owners now use our rental tools, and we expect that number to rise materially as we extend the full Apartments.com feature set into Homes.com. We're continuing to improve the experience for renters who search on Homes.com. By the end of 2026, every tool available on Apartments.com will be available on Homes.com, letting independent owners rent their house, condo or townhouse across both platforms. At the end of August 2025, we began selling marketing on Homes.com to new homebuilders. In the first eight months, we generated $3.3 million in annualized net new bookings with the run rate accelerating each quarter. Q1 alone delivered $1.5 million. We have signed data feed agreements with 663 homebuilders looking to reach the Homes.com audience. These feeds now cover roughly 75% of all production new home activity in the U.S. These feeds provide a better consumer experience to home searchers on Homes.com and are a foundational building block to power a valuable new homes information product within CoStar. So let me pause to speak briefly to the elephant in the room. The activist campaign over the last year did weigh heavily on Homes.com sales and potential partnerships. Real estate leaders were reading a steady drumbeat of negative coverage. Nonetheless, we made durable progress through it. With that distraction now behind us, we can apply even more focused energy to accelerating Homes.com revenue and the revenue in every other business in the portfolio. Land.com revenue grew 8% year-over-year and net new bookings hit a record, up 126% year-over-year, boosted by replacing a regionally targeted site-specific ad with a county-targeted network ad format. Inventory tripled and ads sold quadrupled. Domain Australia delivered a strong Q1 with sustained elevated audience volume, strong uptake of premium products and disciplined cost control. Recent investments in product technology, research and photography are now producing tangible outcomes and Q1 revenue was $68 million. The Australian market is highly cyclical and Q1 is always seasonally soft, which is reflected in overall sequential down revenue. Year-over-year, however, core Domain Residential revenue did grow 11%. We delivered EBITDA growth despite all the significant investments we're making. In addition to expected normal seasonality, we discontinued revenue from SPA ads on the Domain portals because it was not materially profitable and significantly distracted from the value home sellers receive when marketing on those sites. CoStar Group's technology capabilities are already benefiting Australian customers. Domain site improvements are dramatically increasing traffic. Monthly unique audience averaged 8 million across the quarter with March hitting 8.4 million, the second highest month on record. Total users reached a high of 21.9 million, up 47% year-over-year and listings grew 28%. Domain launched Matterport in Australia this month, bundling immersive technology into premium listing packages and giving agents and vendors meaningful savings on traditional photography. The launch generated significant positive media coverage. Q1 was another strong quarter for OnTheMarket. We closed it with our 23rd consecutive month of positive net new bookings. Total time on site was up 16% and page views up 24% year-over-year, driving a 23% year-over-year increase in leads. OnTheMarket now has 17,500 estate agents and new home developer customers on site, the highest in its history. OnTheMarket has eclipsed Zoopla as the U.K.'s #2 portal by inventory and now has more new home listings than Rightmove. The growth was accelerated by signing the Connells Group, the U.K.'s largest estate agent with over 80 brands and more than 1,200 branch locations. Our OnTheMarket sales team is delivering real value for customers. NPS came in at a solid 46 for the period. In Q2, we'll continue building AI search functionality as we progress towards integrating OnTheMarket into the Homes.com software environment in 2027. In closing, I want to acknowledge our outstanding management team. The breadth and depth of expertise across this company is what makes everything you've heard today possible. I am very grateful for what they bring to this company. I also want to thank our Board of Directors for their leadership and counsel through what was at times a noisy year. We are well positioned to deliver against every objective we've set and to unlock large digital real estate opportunities ahead of us. To our shareholders, thank you for your continued support. The data this quarter across CRE, across apartments, especially across Homes.com confirms one thing: the strategy is working. I've never been more confident in our plan to deliver double-digit revenue growth and significant earnings expansion through 2030 and beyond. At this point, I'll turn the call over to our CFO, Chris.

Christian Lown, CFO

Thanks, Andy. In the first quarter of 2026, we delivered $132 million of adjusted EBITDA, doubling the adjusted EBITDA from the first quarter of 2025 and $17 million above the high end of our guidance range. The outperformance in adjusted EBITDA was primarily due to lower personnel costs from cost-saving efforts as we continue to find efficiencies from AI, personnel and other expense initiatives. Q1 2026 revenue was $897 million, which was 23% higher year-over-year and toward the high end of our guidance range. Organic revenue growth was 10% for the quarter. Commercial revenue in the first quarter was $472 million, an increase of 15% year-over-year and a 7% organic growth rate. Our commercial brands delivered revenue in line with the guidance we provided on our February earnings call. CoStar revenue grew 9% to $331 million, driven by strong double-digit international growth. The year-over-year increase was driven by both volume and price. LoopNet revenue was $85 million in the first quarter, a 16% increase year-over-year or an 11% organic growth rate. The year-over-year growth was attributable to an increase in paid listings from our continued focus on selling silver ads. Other commercial revenue was $56 million in the first quarter of 2026, up 81% compared to the first quarter of 2025. The year-over-year increase is primarily attributable to the inorganic contribution from Matterport, which has performed well since the acquisition with subscription revenue growth of 19%. Residential revenue in Q1 2026 was $425 million, a 32% increase over last year's first quarter and at the high end of our guidance range. Organic growth for Residential in the first quarter was 13%, with double-digit growth contributions from Apartments, Homes and OnTheMarket. Increased volumes were the catalyst for organic growth in the first quarter. Commercial adjusted EBITDA was $161 million in the first quarter of 2026, a 34% margin and above the high end of our guidance range. Similarly, Residential adjusted EBITDA was also better than our guidance range, coming in at negative $29 million. CoStar posted positive net income and adjusted EPS of $0.23 per share for the first quarter of 2026, both considerably higher than our guidance. Our sales headcount at the end of March was 2,090. Homes.com reps make up our largest sales team, consisting of 570 individuals. Apartments.com is the next largest sales force with 520 reps with CoStar at 475 reps and 225 at the LoopNet team. For Homes.com reps, we are focused on driving productivity and efficiency in 2026. With our other brands, we will be adding reps throughout the remainder of the year, given the significant opportunity that still exists across all our brands, and we expect productivity to ramp as our new sales reps mature over the coming years. Our contract renewal rate has held consistently at 89% for the past seven quarters. Customers who have been subscribers for at least five years have an impressive 95% renewal rate. Subscription revenue on annual contracts was 73% of total revenue for the first quarter of 2026 compared to 71% during the fourth quarter of 2025. As a reminder, Domain does not operate using annual subscriptions. Net new bookings for the first quarter were $67 million, a 20% increase from the first quarter of 2025. In 2025, we completed our first share repurchase program, buying back $500 million worth of stock or 7.1 million shares. We subsequently announced a $1.5 billion buyback program in January of this year. Throughout the first quarter, we repurchased 11.4 million shares for $505 million, the majority of which was purchased through an accelerated share repurchase plan. We expect to repurchase an additional $195 million worth of shares during the remaining nine months of the year, bringing our total cash outlay for share buybacks in 2026 to $700 million. For the second quarter of 2026, we expect revenue to range from $922 million to $932 million. This range represents an 18% to 19% increase over the second quarter of 2025 or a 10% organic growth rate at the midpoint. Commercial revenue is expected to grow between 7% and 9% to a range of $479 million to $484 million. We expect Residential revenue of $443 million to $448 million, an increase of 32% to 34% year-over-year or 12% to 14% organically. Adjusted EBITDA is expected to range between $160 million and $180 million, representing a margin of 17% to 19% or roughly 700 basis points higher than Q2 2025. Commercial adjusted EBITDA is expected to be between $160 million and $170 million, a margin of 34% to 35%. Residential adjusted EBITDA is anticipated to be positive in Q2 2026, ranging between breakeven and $10 million. Our adjusted EPS guidance for Q2 2026 calls for a range of $0.27 to $0.30 per share on 409 million weighted average shares outstanding. For full year 2026, we are reaffirming our previous revenue guidance range of $3.78 billion to $3.82 billion, a 16% to 18% annual growth rate. Commercial revenue remains at a range of $1.955 billion to $1.975 billion, and the Residential revenue range remains at $1.825 billion to $1.845 billion. Based on the strength of the first quarter and the expectation of continued personnel expense efficiencies, we now expect adjusted EBITDA to range from $780 million to $820 million. This is an increase of $30 million at its midpoint and a full percentage point increase in margin. Our adjusted EPS range is also increasing for the full year. The accelerated share repurchase program in the first quarter retired more shares than we had forecast and the previously mentioned expense reduction initiatives are primarily driving our guidance increase to adjusted EPS. Our new adjusted EPS guidance range is $1.32 to $1.39, an increase of $0.09 at the midpoint. I will now turn the call back over to the operator for questions.

Operator, Operator

Operator instructions were provided. Our first question comes from Ryan Tomasello with KBW.

Ryan Tomasello, Analyst, KBW

Two-part question on bookings. First, was the $67 million of net new in line with generally what you were expecting for the quarter? And then second, there seems to be some variation in how investors are translating bookings into revenue growth expectations, given our bookings don't underpin 100% of the company's revenue base. Chris, I was hoping you could walk us through how you think about the appropriate math around the percentage of bookings-driven revenue and how that translates to the level of bookings needed to achieve your low- to mid-teens revenue growth targets embedded in your financial framework.

Christian Lown, CFO

Yes. Thanks, Ryan. A couple of comments. First, as you heard from our comments, we reaffirmed our guidance range for revenue and increased our EBITDA guidance, so broadly in line with what we're looking for from a net new perspective and from a revenue development perspective. On your second question, today around 15% of our revenue is non-subscription, and that increased as a result of the Domain and Matterport acquisitions last year. If you look at our guidance, we're currently expecting revenue to grow around $550 million at the midpoint of our range and around 40% of this increase is from acquisitions or non-subscription revenue growth. Therefore, the remaining growth is around $330 million, which is the revenue driven by net new. That is what 2026 represents. Looking forward to 2027 and 2028, if you assume non-subscription revenue growth is in the low double digits, that results in subscription revenue needing to grow by around $1 billion in total between 2027 and 2028. We're expecting meaningful growth out of Homes.com, meaningfully faster than our other brands, with our other subscription businesses also growing in the low double-digit range, which is consistent with our historic growth. Timing has a big impact when these bookings happen and how that rolls into revenue. The most important point is we are committed to delivering on the adjusted EBITDA targets we set out for 2028 and 2030. That can occur in a number of ways: we can deliver it through our 15% revenue CAGR, we can overachieve our revenue targets and invest in additional growth opportunities, or we can rationalize costs if revenue growth is less than 15%. Importantly, and as Andy mentioned on his call, we are fully committed to our stated Homes.com net investment number. We're well on track to hit that number this year, and we gave guidance through 2030, and we will hit those numbers. Our primary focus at CoStar today is to drive revenue, to drive EBITDA growth and margin expansion through 2030 and beyond. I think that gives you the building blocks to start thinking about your question.

Operator, Operator

Our next question comes from Pete Christiansen with Citi.

Peter Christiansen, Analyst, Citi

Really good script this quarter, guys. A lot to like, and I appreciate the transparency on a number of fronts. That said, I want to dig into bookings again a little bit here, and particularly apartments pricing. You showed some really good rooftop growth last quarter, and we know that you're winning back some share there and some of that share has been lower-priced opportunities. Also thinking about the competitive dynamic, how that's changed and maybe that's shifted the mix in tiering of ads there. Just wondering if you could give us a sense of what has generally been the pricing impact and maybe how that might be impacting overall bookings production?

Andy Florance, Founder & CEO

I would comment on one point I raised last quarter. We picked up a lot of rooftops from Rent.com. As that whole situation unfolded, there was an opportunity to win those rooftops when they were in transition. Our sales force focused on winning those rooftops; that was a once-in-a-decade opportunity to capture share. The nice thing is we weren't buying those from anyone; we were winning them in the organic market. Those advertisers had been with ApartmentGuide and Rent.com through a bankruptcy and the degradation of a business over several years, so they tended to lean toward lower ARPU rooftops, often lower rental rates and smaller unit counts. That has driven our rooftop revenue ARPU down somewhat for several quarters. I'm not seeing a major shift in levels or depth advertising. The thing that really struck me was these folks coming out of Rent.com were lower-end but very important customers; they happen to have more budget properties.

Operator, Operator

Our next question comes from George Tong with Goldman Sachs.

Keen Fai Tong, Analyst, Goldman Sachs

Sticking with Apartments.com, the revenue growth moderated sequentially to 10% year-over-year. What would need to change to drive a reacceleration from here? Or do you think this is the right long-term run rate growth for the platform?

Andy Florance, Founder & CEO

I think the thing that will reaccelerate revenue growth is continued growth in the sales force. As revenue gets bigger, you need more salespeople to address the opportunity. There's clearly plenty of open opportunity out there; we are still relatively early in penetrating it. Homes.com presents an important strategic opportunity: it can grow more traffic, it's already our biggest syndication partner into Apartments.com, and it strengthens our single-family presence while drawing renters in from multiple angles. I think we can continue to improve on the current growth rate, and we still remain significantly competitively advantaged. Do you want to add anything to that, Chris?

Christian Lown, CFO

No, that's great.

Operator, Operator

Our next question comes from Alexei Gogolev with JPMorgan.

Alexei Gogolev, Analyst, JPMorgan

Both you and Chris mentioned the sales productivity ramp. With the headcount additions across the sales organization, what are you seeing in terms of ramp times or quota attainment, maybe some productivity by cohort? And how does that inform your hiring pace for the rest of the year?

Andy Florance, Founder & CEO

It varies by brand. CoStar is accelerating productivity per rep; broker and tenant sales are up, indicating improving CRE market conditions and stronger selling opportunities. On Apartments.com, as revenues grow, you need more salespeople to keep up with the opportunity; field sales teams are consistently very productive. On LoopNet, we want to continue to grow the sales force; the asset-based pricing will increase productivity. Regarding Homes.com, you are dealing with a relatively young sales force—many reps have limited tenure since the group launched about a year ago. I'm spending more time working on sales force productivity and I see a lot of opportunity to improve. For Homes.com, we will continue to grow the sales force in the field because field reps are more productive than centralized inside sales. We're also seeing high productivity with our new homes advertising salespeople at Homes.com. I am optimistic we'll see productivity improvements with our inside sales team at Homes.com as well. The growth in that group is really field and new home sales where the numbers are pretty good, and I'm working on bringing up the core inside group and seeing some success.

Christian Lown, CFO

The only thing I'd add is that we really started increasing our sales force roughly about a year ago, and the increases came at different times across brands. We track cohorts closely and look at their evolution on a 6-, 12- and 18-month cohort basis, so we see the development we want to see. But it does take time to get them up to full productivity.

Andy Florance, Founder & CEO

I believe the number for Apartments.com is that by year five a rep is twice as productive as they were at the end of year one. It is a multi-year scale-up process; some reps enter at a high level, others scale up over a couple of years.

Operator, Operator

Our next question comes from Stephen Sheldon with William Blair.

Stephen Sheldon, Analyst, William Blair

Just wanted to follow up on the sales capacity and productivity topic. At a high level, what has changed, if anything, in terms of where you'll deploy incremental sales resources over the rest of the year and into next? Are there certain areas of strength—by segment or geography—where you're pushing the pedal more? On the flip side, are there any areas where productivity isn't progressing the way you'd expect and where it could make sense to cut back or shift resources? From here, what's changed in terms of your plans for incremental sales capacity investments?

Andy Florance, Founder & CEO

I'll run through a few areas. We're seeing very good results with our new homes salespeople who work directly with major homebuilders; those reps are productive and we'll grow that channel at a measured pace. We plan to add roughly 50 more field sales folks for Homes.com, hired in batches across five-city clusters to stabilize and then expand. We'll prioritize SEM marketing spend around those markets where we're building field teams. Field reps are the most productive for Homes.com over time. I'm also working with the inside sales team to improve pitches and pricing; I believe the product is currently underpriced relative to the value delivered. For Apartments.com, I want the field sales team to continue measured growth. For LoopNet, the ratio of salesforce to revenue needs improvement given the growing revenue base; with Ben focusing on asset-based pricing, there's much opportunity. We're also growing the Matterport sales team in measured batches—perhaps 20 per quarter—to maintain productivity while seizing the large opportunity there.

Christian Lown, CFO

The Matterport comment is important because it represents a huge opportunity given the limited sales force Matterport had when we acquired it. We've put in place go-to-market and TAM strategies and expect strong performance from the Matterport sales team over the coming years.

Operator, Operator

Our next question comes from Jeff Meuler with Baird.

Jeff Meuler, Analyst, Baird

Can you help put the sequential trends in net bookings the last few quarters in context? This is the third straight quarter of sequential decline in the net bookings number. If you started picking up the pace of hiring a year ago, I would think productivity would be building over the last year. Q1 this year is still quite a bit below what it was in Q1 of 2023 before you launched Homes when you had a much smaller sales force. We're struggling to understand the bookings dynamics and sales productivity.

Christian Lown, CFO

We started putting out quarterly total bookings to increase transparency and to show the trends. There is variability quarter-to-quarter. Last year, Q1 2025 was weak and Q2 2025 was very strong, so some variability is expected. We feel good about the opportunity set and the underlying productivity we're seeing from the sales force. The hiring created a lag effect, but we expect the flywheel to really start turning in the second half of next year. We feel good about the direction.

Andy Florance, Founder & CEO

We tend to have the same conversation every first quarter. Our first quarter is typically a little lighter and our second quarter tends to be the strongest, especially given the timing of events like Apartmentalize. We enter that period this year with strong product—Apartments AI, Homes contributing significantly—and we expect to be in a strong position. Remember, Homes.com still has relatively few reps with more than a year of experience; that will change over the next two to three quarters as the team moves beyond the rookie phase.

Operator, Operator

Our next question comes from Curtis Nagle with Bank of America.

Curtis Nagle, Analyst, Bank of America

In the press release, you cited some pretty strong numbers in terms of engagement and number of agents coming on from Homes.com. Near term, how is this translating into revenue momentum within the segment? Could you comment on that?

Andy Florance, Founder & CEO

We now have about a year of data and more members—up from roughly 10,000 in mid-2025 to 35,000 now—so we have much better visibility on the product's impact on earnings. The results are phenomenal and give me confidence we can materially raise ARPU while growing membership. There are strong synergies with Apartments.com that improve productivity, and all of that supports our confidence in building revenue momentum for Homes.com.

Curtis Nagle, Analyst, Bank of America

Not to belabor a point, but it's obviously top of mind. Would you be willing to provide bookings guidance for Q2, at a minimum, so we don't continue to see such a mismatch between external expectations and investor expectations?

Christian Lown, CFO

Bookings is a number we've never guided to. There are only a few firms that publish a bookings number. Historically, there's variability by quarter. Last year Q1 represented about 18% of bookings for the full year, so you can look at those patterns, but we won't be giving bookings guidance. We provided Homes.com booking numbers to increase transparency about the investment, but guidance on total bookings is not something we're going to do.

Operator, Operator

Our next question comes from Surinder Thind with Jefferies.

Surinder Thind, Analyst, Jefferies

Andy, can you talk about the decision or the pricing strategy in Homes.com at this point and the idea of raising pricing for new members on May 1? Why not wait a year? The metrics seem supportive of that pricing action, but could you explain the timing?

Andy Florance, Founder & CEO

We can grow the user base and capture more of the value at the same time. For agents earning under $250,000 per year, the close rates for well-trained agents are very high—north of 50% for the upper-performing reps—and once you get to that level, you need to bring the price up. We are leaving too much value on the table in many cohorts. We will push price for new customers while still growing member count, and we'll optimize pricing by cohort. There are a couple of smaller cohorts where we may lower pricing slightly, but for the bulk of agents we're undercharging relative to the value delivered. We feel confident we can raise price and maintain growth.

Operator, Operator

Our next question comes from Brett Huff with Stephens.

Brett Huff, Analyst, Stephens

Thanks for the ROI stats on Homes.com; that's helpful. My question is on Matterport. It feels like a large, underappreciated structural piece of the business. Can you talk about balancing making Matterport broadly available to improve your products and how you price and distribute it? Also, how does Matterport function as proprietary data that helps differentiate the company long term? How do you think about pricing and distribution given those dual goals?

Andy Florance, Founder & CEO

There are several elements to pricing and distribution. Part of our strategy is embedding Matterport into monthly subscriptions or advertising fees across Apartments, Land, LoopNet and Homes, which allows us to capture some of the pricing value while delivering clear value to customers. In Domain, Matterport helps move customers to higher-depth advertising packages, effectively selling the Matterport as part of a premium package. Since acquiring Matterport, we've refocused toward the professional user—real estate agents, leasing companies, AEC firms—who prioritize speed and quality of capture. We're emphasizing the Matterport Pro3 camera and a higher SaaS subscription price for regular users, leaning toward a razor-and-razor-blade model with lower hardware and higher recurring SaaS revenue. We're also working on the Matterport Pro4 camera; engineering is reviewing final specs now. Regarding competitive differentiation, the Exteriors X-ray and the ability to create immersive exterior-interior models and synthetic aerial flight are powerful differentiators. We have a robust roadmap for AEC use cases and other verticals, and we believe our development pace is accelerating ahead of competitors. Matterport will both monetize directly and materially improve conversion and engagement across our product portfolio, making the data and the experiences a deeper source of proprietary advantage.

Operator, Operator

I would now like to turn the call back over to Andy Florance for any closing remarks.

Andy Florance, Founder & CEO

I'd like to thank everyone for joining us on this first quarter earnings call. I look forward to reporting our progress in the second quarter earnings call. Thank you very much for joining us.

Operator, Operator

This concludes the conference. Thank you for your participation. You may now disconnect.