8-K
Costar Group, Inc. (CSGP)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 25, 2020
| COSTAR GROUP, INC. | ||||||||
|---|---|---|---|---|---|---|---|---|
| (Exact name of registrant as specified in its charter) | ||||||||
| Delaware | 0-24531 | 52-2091509 | ||||||
| --- | --- | --- | ||||||
| (State or other jurisdiction of incorporation or organization) | (Commission File Number) | (I.R.S. Employer Identification No.) | 1331 L Street, NW, | Washington, | DC | 20005 | ||
| --- | --- | --- | --- | --- | ||||
| (Address of principal executive offices) | (Zip Code) |
Registrant’s telephone number, including area code: (202) 346-6500
| Not Applicable |
|---|
| (Former name or former address, if changed since last report.) |
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
☐ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
☐ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
☐ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered |
|---|---|---|
| Common Stock ($0.01 par value) | CSGP | Nasdaq Global Select Market |
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).
☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
o
Item 2.02. Results of Operations and Financial Condition.
On February 25, 2020, CoStar Group, Inc. (“CoStar”) announced its financial results for the quarter and year ended December 31, 2019. The full text of the press release (the “Press Release”) issued in connection with the announcement is attached as Exhibit 99.1 to this Current Report on Form 8-K.
The information contained in the Press Release shall be considered “furnished” pursuant to this Current Report on Form 8-K and shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, or otherwise subject to the liabilities of that Section or Sections 11 and 12(a)(2) of the Securities Act of 1933, as amended, nor shall it be deemed incorporated by reference into any of the Registrant’s reports or filings with the Securities and Exchange Commission, whether made before or after the date hereof, except as expressly set forth by specific reference in such a filing.
Item 9.01 Financial Statements and Exhibits.
(d) List of Exhibits.
| Exhibit No. | Description |
|---|---|
| 99.1 | CoStar Group, Inc. Press Release Dated February 25, 2020. |
| 104 | The cover page from this Current Report on Form 8-K, formatted as Inline XBRL. |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| COSTAR GROUP, INC. | ||
|---|---|---|
| By: | ||
| Date: | February 25, 2020 | /s/ Scott T. Wheeler |
| Name: Scott T. Wheeler | ||
| Title: Chief Financial Officer |
Exhibit
Exhibit 99.1
CoStar Group 2019 Net Income Increases 32%
Year-over-Year on Revenue Growth of 17%
WASHINGTON - February 25, 2020 - 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, 2019, was $1.4 billion, an increase of 17% over revenue of $1.2 billion for the full year of 2018. Revenue for the fourth quarter ended December 31, 2019, was $375 million, an increase of 19% over revenue of $316 million for the fourth quarter of 2018.
Net income for the year ended December 31, 2019 was $315 million, an increase of 32% compared to net income of $238 million for the full year of 2018. Net income for the fourth quarter of 2019 was $88 million or $2.39 per diluted share, an increase of 5% compared to net income of $84 million for the fourth quarter of 2018. EBITDA for the full year of 2019 was $445 million, an increase of 27% compared to EBITDA of $351 million for the full year of 2018.
“2019 was a banner year for CoStar Group in both revenue and sales growth,” said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. “We reported $1.4 billion in revenue for the full year, adding over $200 million of revenue over the full year 2018. Our team delivered outstanding net new sales bookings of $210 million, up 24% over 2018. Over the past year, we have been talking about the huge potential for the next chapter of LoopNet. In the fourth quarter of 2019, we saw concrete results when we sold 5X the LoopNet Signature Ads compared to the same quarter a year ago. Our Apartments.com team had an exceptional year, growing Multifamily revenue 21% year-over-year. We have had great success this past year selling solutions to the massive, relatively untapped sub-100-unit apartment market and the residential rental market.”
"We are now even more excited about the potential of a great company like STR combined with CoStar’s resources and technology." Florance continued, “Our immediate focus is on creating a more powerful STR by consolidating disparate STR products and CoStar into one seamlessly integrated platform. We expect STR to contribute revenue in the range of $61 to $63 million in 2020."
| Year 2018-2019 Quarterly Results - Unaudited | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| (in millions, except per share data) | ||||||||||||||||
| 2018 | 2019 | |||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||
| Revenues | $ | 274 | $ | 297 | $ | 306 | $ | 316 | $ | 328 | $ | 344 | $ | 353 | $ | 375 |
| Net income | 52 | 44 | 59 | 84 | 85 | 63 | 79 | 88 | ||||||||
| Net income per share - diluted | 1.44 | 1.20 | 1.61 | 2.29 | 2.33 | 1.73 | 2.15 | 2.39 | ||||||||
| Weighted average outstanding shares - diluted | 36.4 | 36.5 | 36.5 | 36.5 | 36.6 | 36.6 | 36.7 | 36.7 | ||||||||
| EBITDA | 70 | 64 | 91 | 125 | 113 | 94 | 113 | 125 | ||||||||
| Adjusted EBITDA | 84 | 85 | 110 | 139 | 125 | 110 | 129 | 142 | ||||||||
| Non-GAAP net income | 60 | 60 | 79 | 102 | 92 | 82 | 96 | 103 | ||||||||
| Non-GAAP net income per share - diluted | 1.65 | 1.66 | 2.16 | 2.81 | 2.53 | 2.23 | 2.61 | 2.82 |
Adjusted EBITDA (which excludes stock-based compensation, acquisition and integration related costs and other items as described below) for the full year of 2019 was $507 million, an increase of 21% compared to adjusted EBITDA of $418 million for the full year of 2018.
Non-GAAP net income (which excludes amortization of acquired intangible assets, stock-based compensation and other items as described below) for the full year of 2019 was $373 million or $10.19 per diluted share, an increase of $72 million or 24% versus the full year of 2018.
2020 Outlook
The Company expects revenue in the range of $1.650 billion to $1.665 billion for the full year of 2020, representing growth of 18% to 19% for the year. This guidance includes an estimated full year 2020 revenue contribution from STR of $61 to $63 million. We expect revenue for the first quarter of 2020 in the range of $387 million to $392 million, representing revenue growth of 19% at the midpoint of the range.
The Company expects adjusted EBITDA in a range of $520 million to $530 million for the full year of 2020, an increase of 4% at the midpoint of the range. For the first quarter of 2020, the Company expects adjusted EBITDA in a range of $115 million to $120 million.
We expect full-year 2020 non-GAAP net income per diluted share in a range of $10.20 to $10.40 based on 36.8 million shares. For the first quarter of 2020, we expect non-GAAP net income per diluted share in a range of $2.25 to $2.35 based on 36.7 million shares. These ranges include a non-GAAP tax rate of 25%.
The preceding guidance does not include any operating results from the proposed RentPath acquisition.
The preceding forward-looking statements reflect CoStar Group’s expectations as of February 25, 2020, 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 other 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 for pending and completed acquisitions, restructuring costs, and settlements and impairments incurred outside the Company’s normal course of business.
Non-GAAP net income is a non-GAAP financial measure determined by adjusting GAAP net income attributable to CoStar Group for stock-based compensation expense, acquisition- and integration-related costs for pending and completed acquisitions, 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, and then subtracting an assumed provision for income taxes. In 2020, 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 is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period used in the calculation of GAAP net income per diluted share. 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 25, 2020 to discuss earnings results for the fourth quarter and full year 2019 and the Company’s outlook. The audio portion of the conference call will be broadcast live over the Internet at investors.costargroup.com. To join the conference call by telephone, please dial (844) 721-7241 (from the United States and Canada) or (409) 207-6955 (from all other countries) and refer to access code 910916. The webcast replay will also be available in the Investor 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 Ended<br>December 31, | Year Ended<br>December 31, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Revenues | $ | 374,726 | $ | 315,571 | $ | 1,399,719 | $ | 1,191,832 | ||||
| Cost of revenues | 74,996 | 68,248 | 289,239 | 269,933 | ||||||||
| Gross profit | 299,730 | 247,323 | 1,110,480 | 921,899 | ||||||||
| Operating expenses: | ||||||||||||
| Selling and marketing (excluding customer base amortization) | 99,845 | 69,152 | 408,596 | 359,858 | ||||||||
| Software development | 36,580 | 25,580 | 125,602 | 100,937 | ||||||||
| General and administrative | 50,797 | 39,001 | 178,740 | 156,659 | ||||||||
| Customer base amortization | 11,522 | 7,933 | 33,995 | 30,881 | ||||||||
| 198,744 | 141,666 | 746,933 | 648,335 | |||||||||
| Income from operations | 100,986 | 105,657 | 363,547 | 273,564 | ||||||||
| Interest and other income | 13,801 | 4,607 | 30,017 | 13,281 | ||||||||
| Interest and other expense | (482 | ) | (695 | ) | (2,615 | ) | (2,830 | ) | ||||
| Income before income taxes | 114,305 | 109,569 | 390,949 | 284,015 | ||||||||
| Income tax expense | 26,378 | 26,060 | 75,986 | 45,681 | ||||||||
| Net income | $ | 87,927 | $ | 83,509 | $ | 314,963 | $ | 238,334 | ||||
| Net income per share - basic | $ | 2.42 | $ | 2.31 | $ | 8.67 | $ | 6.61 | ||||
| Net income per share - diluted | $ | 2.39 | $ | 2.29 | $ | 8.60 | $ | 6.54 | ||||
| Weighted average outstanding shares - basic | 36,359 | 36,136 | 36,310 | 36,058 | ||||||||
| Weighted average outstanding shares - diluted | 36,674 | 36,474 | 36,630 | 36,448 |
| 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 Ended<br>December 31, | Year Ended<br>December 31, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Net income | $ | 87,927 | $ | 83,509 | $ | 314,963 | $ | 238,334 | ||||
| Income tax expense | 26,378 | 26,060 | 75,986 | 45,681 | ||||||||
| Income before income taxes | 114,305 | 109,569 | 390,949 | 284,015 | ||||||||
| Amortization of acquired intangible assets | 17,406 | 13,277 | 55,352 | 51,467 | ||||||||
| Stock-based compensation expense | 13,271 | 12,125 | 52,255 | 42,718 | ||||||||
| Acquisition and integration related costs | 3,651 | 1,484 | 6,679 | 21,683 | ||||||||
| Restructuring and related costs | — | — | 3,054 | 2,314 | ||||||||
| Settlements and impairments | (10,750 | ) | — | (10,750 | ) | — | ||||||
| Non-GAAP income before income taxes | 137,883 | 136,455 | 497,539 | 402,197 | ||||||||
| Assumed rate for income tax expense * | 25 | % | 25 | % | 25 | % | 25 | % | ||||
| Assumed provision for income tax expense | (34,470 | ) | (34,113 | ) | (124,385 | ) | (100,549 | ) | ||||
| Non-GAAP net income | $ | 103,413 | $ | 102,342 | $ | 373,154 | $ | 301,648 | ||||
| Net income per share - diluted | $ | 2.39 | $ | 2.29 | $ | 8.60 | $ | 6.54 | ||||
| Non-GAAP net income per share - diluted | $ | 2.82 | $ | 2.81 | $ | 10.19 | $ | 8.28 | ||||
| Weighted average outstanding shares - basic | 36,359 | 36,136 | 36,310 | 36,058 | ||||||||
| Weighted average outstanding shares - diluted | 36,674 | 36,474 | 36,630 | 36,448 | ||||||||
| * A 25% tax rate is assumed for 2019 and 2018, which approximates our statutory corporate tax rate. | ||||||||||||
| Reconciliation of Net Income to EBITDA and Adjusted EBITDA | ||||||||||||
| Three Months Ended<br>December 31, | Year Ended<br>December 31, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| Net income | $ | 87,927 | $ | 83,509 | $ | 314,963 | $ | 238,334 | ||||
| Amortization of acquired intangible assets in cost of revenues | 5,854 | 5,344 | 21,357 | 20,586 | ||||||||
| Amortization of acquired intangible assets in operating expenses | 11,552 | 7,933 | 33,995 | 30,881 | ||||||||
| Depreciation and other amortization | 6,524 | 6,466 | 25,813 | 26,276 | ||||||||
| Interest and other income | (13,801 | ) | (4,607 | ) | (30,017 | ) | (13,281 | ) | ||||
| Interest and other expense | 482 | 695 | 2,615 | 2,830 | ||||||||
| Income tax expense | 26,378 | 26,060 | 75,986 | 45,681 | ||||||||
| EBITDA | $ | 124,916 | $ | 125,400 | $ | 444,712 | $ | 351,307 | ||||
| Stock-based compensation expense | 13,271 | 12,125 | 52,255 | 42,718 | ||||||||
| Acquisition and integration related costs | 3,651 | 1,484 | 6,679 | 21,683 | ||||||||
| Restructuring and related costs | — | — | 3,054 | 2,314 | ||||||||
| Adjusted EBITDA | $ | 141,838 | $ | 139,009 | $ | 506,700 | $ | 418,022 |
| CoStar Group, Inc. | ||||
|---|---|---|---|---|
| Condensed Consolidated Balance Sheets - Unaudited | ||||
| (in thousands) | ||||
| December 31, <br>2019 | December 31, <br>2018 | |||
| ASSETS | ||||
| Current assets: | ||||
| Cash and cash equivalents | $ | 1,070,731 | $ | 1,100,416 |
| Accounts receivable, less allowance of $5,097 and $5,709 as of December 31, 2019 and December 31, 2018, respectively | 92,240 | 89,192 | ||
| Prepaid expenses and other current assets | 36,194 | 23,690 | ||
| Total current assets | 1,199,165 | 1,213,298 | ||
| Long-term investments | 10,070 | 10,070 | ||
| Deferred income taxes, net | 5,408 | 7,469 | ||
| Lease right-of-use assets | 115,084 | — | ||
| Property and equipment, net | 107,529 | 83,303 | ||
| Goodwill | 1,882,020 | 1,611,535 | ||
| Intangible assets, net | 421,196 | 288,911 | ||
| Deferred commission costs, net | 89,374 | 76,031 | ||
| Deposits and other assets | 9,232 | 7,432 | ||
| Income tax receivable | 14,908 | 14,908 | ||
| Total assets | $ | 3,853,986 | $ | 3,312,957 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||||
| Current liabilities: | ||||
| Accounts payable | $ | 7,640 | $ | 6,327 |
| Accrued wages and commissions | 53,087 | 45,588 | ||
| Accrued expenses | 38,680 | 29,821 | ||
| Deferred gain on the sale of building | — | 2,523 | ||
| Income taxes payable | 10,705 | 14,288 | ||
| Deferred rent | — | 4,153 | ||
| Lease liabilities | 29,670 | — | ||
| Deferred revenue | 67,274 | 51,459 | ||
| Total current liabilities | 207,056 | 154,159 | ||
| Deferred gain on the sale of building | — | 13,669 | ||
| Deferred rent | — | 31,944 | ||
| Deferred income taxes, net | 87,096 | 69,857 | ||
| Income taxes payable | 20,521 | 17,386 | ||
| Lease and other long-term liabilities | 133,720 | 4,000 | ||
| Total liabilities | $ | 448,393 | $ | 291,015 |
| Total stockholders’ equity | 3,405,593 | 3,021,942 | ||
| Total liabilities and stockholders’ equity | $ | 3,853,986 | $ | 3,312,957 |
| CoStar Group, Inc. | ||||||
|---|---|---|---|---|---|---|
| Condensed Consolidated Statements of Cash Flows - Unaudited | ||||||
| (in thousands) | ||||||
| Year Ended<br>December 31, | ||||||
| 2019 | 2018 | |||||
| Operating activities: | ||||||
| Net income | $ | 314,963 | $ | 238,334 | ||
| Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
| Depreciation and amortization | 81,165 | 77,743 | ||||
| Amortization of deferred commissions costs | 53,421 | 48,313 | ||||
| Amortization of debt issuance costs | 876 | 876 | ||||
| Non-cash lease expense | 22,748 | — | ||||
| Loss on disposal of property and equipment | 105 | 73 | ||||
| Stock-based compensation expense | 52,255 | 41,214 | ||||
| Deferred income taxes, net | 8,220 | 3,666 | ||||
| Bad debt expense | 10,978 | 6,542 | ||||
| Changes in operating assets and liabilities, net of acquisitions: | ||||||
| Accounts receivable | (5,014 | ) | (27,819 | ) | ||
| Prepaid expenses and other current assets | (14,244 | ) | (1,651 | ) | ||
| Deferred commissions | (66,688 | ) | (53,497 | ) | ||
| Income tax receivable | — | (1,927 | ) | |||
| Accounts payable and other liabilities | 17,751 | (14,132 | ) | |||
| Lease liabilities | (25,442 | ) | — | |||
| Income taxes payable | (577 | ) | 9,632 | |||
| Deferred revenue | 7,911 | 7,879 | ||||
| Other assets | (648 | ) | 212 | |||
| Net cash provided by operating activities | 457,780 | 335,458 | ||||
| Investing activities: | ||||||
| Purchases of property and equipment and other assets | (46,197 | ) | (29,632 | ) | ||
| Cash paid for acquisitions, net of cash acquired | (437,556 | ) | (418,369 | ) | ||
| Net cash used in investing activities | (483,753 | ) | (448,001 | ) | ||
| Financing activities: | ||||||
| Repurchase of restricted stock to satisfy tax withholding obligations | (27,577 | ) | (24,327 | ) | ||
| Proceeds from exercise of stock options and employee stock purchase plan | 25,080 | 27,071 | ||||
| Other financing activities | (1,657 | ) | — | |||
| Net cash (used in) provided by financing activities | (4,154 | ) | 2,744 | |||
| Effect of foreign currency exchange rates on cash and cash equivalents | 442 | (1,248 | ) | |||
| Net decrease in cash and cash equivalents | (29,685 | ) | (111,047 | ) | ||
| Cash and cash equivalents at the beginning of period | 1,100,416 | 1,211,463 | ||||
| Cash and cash equivalents at the end of period | $ | 1,070,731 | $ | 1,100,416 |
| CoStar Group, Inc. | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Disaggregated Revenues - Unaudited | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months Ended December 31, | ||||||||||||
| 2019 | 2018 | |||||||||||
| North America | International | Total | North America | International | Total | |||||||
| Information and analytics | ||||||||||||
| CoStar Suite | $ | 154,152 | $ | 7,107 | $ | 161,259 | $ | 135,785 | $ | 6,153 | $ | 141,938 |
| Information services | 24,318 | 5,030 | 29,348 | 17,164 | 2,035 | 19,199 | ||||||
| Online marketplaces | ||||||||||||
| Multifamily | 130,168 | — | 130,168 | 108,541 | — | 108,541 | ||||||
| Commercial property and land | 53,846 | 105 | 53,951 | 45,812 | 81 | 45,893 | ||||||
| Total revenues | $ | 362,484 | $ | 12,242 | $ | 374,726 | $ | 307,302 | $ | 8,269 | $ | 315,571 |
| Year Ended December 31, | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| 2019 | 2018 | |||||||||||
| North America | International | Total | North America | International | Total | |||||||
| Information and analytics | ||||||||||||
| CoStar Suite | $ | 590,222 | $ | 27,576 | $ | 617,798 | $ | 519,661 | $ | 25,534 | $ | 545,195 |
| Information services | 76,950 | 11,496 | 88,446 | 58,708 | 8,916 | 67,624 | ||||||
| Online marketplaces | ||||||||||||
| Multifamily | 490,631 | — | 490,631 | 405,795 | — | 405,795 | ||||||
| Commercial property and land | 202,264 | 580 | 202,844 | 173,137 | 81 | 173,218 | ||||||
| Total revenues | $ | 1,360,067 | $ | 39,652 | $ | 1,399,719 | $ | 1,157,301 | $ | 34,531 | $ | 1,191,832 |
| CoStar Group, Inc. | ||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Results of Segments - Unaudited | ||||||||||||
| (in thousands) | ||||||||||||
| Three Months Ended<br>December 31, | Year Ended<br>December 31, | |||||||||||
| 2019 | 2018 | 2019 | 2018 | |||||||||
| EBITDA | ||||||||||||
| North America | $ | 125,457 | $ | 128,131 | $ | 451,699 | $ | 358,036 | ||||
| International | (541 | ) | (2,731 | ) | (6,987 | ) | (6,729 | ) | ||||
| Total EBITDA | $ | 124,916 | $ | 125,400 | $ | 444,712 | $ | 351,307 |
| CoStar Group, Inc. | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Reconciliation of Non-GAAP Financial Measures with 2018-2019 Quarterly Results - Unaudited | ||||||||||||||||
| (in millions, except per share data) | ||||||||||||||||
| Reconciliation of Net Income to Non-GAAP Net Income | ||||||||||||||||
| 2018 | 2019 | |||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||
| Net income | 52.2 | 43.8 | 58.8 | 83.5 | 85.2 | 63.2 | 78.6 | 87.9 | ||||||||
| Income tax expense | 3.5 | 1.9 | 14.2 | 26.1 | 12.5 | 16.8 | 20.3 | 26.4 | ||||||||
| Income before income taxes | 55.7 | 45.7 | 73.0 | 109.6 | 97.7 | 80.0 | 98.9 | 114.3 | ||||||||
| Amortization of acquired intangible assets | 10.4 | 14.1 | 13.6 | 13.3 | 13.2 | 12.2 | 12.5 | 17.4 | ||||||||
| Stock-based compensation expense | 10.4 | 11.2 | 9.0 | 12.1 | 12.0 | 13.8 | 13.1 | 13.3 | ||||||||
| Acquisition and integration related costs | 3.5 | 9.5 | 7.2 | 1.5 | 0.2 | 0.5 | 2.3 | 3.7 | ||||||||
| Restructuring and related costs | — | — | 2.3 | — | 0.1 | 2.2 | 0.8 | — | ||||||||
| Settlements and impairments | — | — | — | — | — | — | — | (10.8) | ||||||||
| Non-GAAP income before income taxes | 80.1 | 80.6 | 105.1 | 136.5 | 123.2 | 108.7 | 127.6 | 137.9 | ||||||||
| Assumed rate for income tax expense * | 25% | 25% | 25% | 25% | 25% | 25% | 25% | 25% | ||||||||
| Assumed provision for income tax expense | (20.0) | (20.1) | (26.3) | (34.1) | (30.8) | (27.2) | (31.9) | (34.5) | ||||||||
| Non-GAAP net income | 60.1 | 60.4 | 78.8 | 102.3 | 92.4 | 81.5 | 95.7 | 103.4 | ||||||||
| Non-GAAP net income per share - diluted | 1.65 | 1.66 | 2.16 | 2.81 | 2.53 | 2.23 | 2.61 | 2.82 | ||||||||
| Weighted average outstanding shares - basic | 35.9 | 36.1 | 36.1 | 36.1 | 36.2 | 36.3 | 36.3 | 36.4 | ||||||||
| Weighted average outstanding shares - diluted | 36.4 | 36.5 | 36.5 | 36.5 | 36.6 | 36.6 | 36.7 | 36.7 | ||||||||
| * A 25% tax rate is assumed for 2019 and 2018, which approximates our statutory corporate tax rate. | ||||||||||||||||
| Reconciliation of Net Income to EBITDA and Adjusted EBITDA | ||||||||||||||||
| 2018 | 2019 | |||||||||||||||
| Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | Q4 | |||||||||
| Net income | ||||||||||||||||
| Amortization of acquired intangible assets | 10.4 | 14.1 | 13.6 | 13.3 | 13.2 | 12.2 | 12.5 | 17.4 | ||||||||
| Depreciation and other amortization | 6.6 | 6.4 | 6.8 | 6.5 | 6.5 | 6.5 | 6.3 | 6.5 | ||||||||
| Interest and other income | (3.0 | ) | (2.6 | ) | (3.0 | ) | (4.6 | ) | (4.9 | ) | (5.9 | ) | (5.4 | ) | (13.8 | ) |
| Interest and other expense | 0.7 | 0.7 | 0.7 | 0.7 | 0.7 | 0.7 | 0.7 | 0.5 | ||||||||
| Income tax expense | 3.5 | 1.9 | 14.2 | 26.1 | 12.5 | 16.8 | 20.3 | 26.4 | ||||||||
| EBITDA | ||||||||||||||||
| Stock-based compensation expense | 10.4 | 11.2 | 9.0 | 12.1 | 12.0 | 13.8 | 13.1 | 13.3 | ||||||||
| Acquisition and integration related costs | 3.5 | 9.5 | 7.2 | 1.5 | 0.2 | 0.5 | 2.3 | 3.7 | ||||||||
| Restructuring and related costs | — | — | 2.3 | — | 0.1 | 2.2 | 0.8 | — | ||||||||
| Adjusted EBITDA |
All values are in US Dollars.
| 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, 2020 | Ended December 31, 2020 | |||||||||||
| Low | High | Low | High | |||||||||
| Net income | $ | 54,000 | $ | 60,000 | $ | 266,000 | $ | 277,000 | ||||
| Income tax expense | 11,000 | 12,000 | 75,000 | 78,000 | ||||||||
| Income before income taxes | 65,000 | 72,000 | 341,000 | 355,000 | ||||||||
| Amortization of acquired intangible assets | 19,000 | 19,000 | 72,000 | 72,000 | ||||||||
| Stock-based compensation expense | 17,000 | 16,000 | 64,000 | 62,000 | ||||||||
| Acquisition and integration related costs | 9,000 | 8,000 | 24,000 | 22,000 | ||||||||
| Non-GAAP income before income taxes | 110,000 | 115,000 | 501,000 | 511,000 | ||||||||
| Assumed rate for income tax expense * | 25 | % | 25 | % | 25 | % | 25 | % | ||||
| Assumed provision for income tax expense | (27,500 | ) | (28,800 | ) | (125,500 | ) | (128,300 | ) | ||||
| Non-GAAP net income | $ | 82,500 | $ | 86,200 | $ | 375,500 | $ | 382,700 | ||||
| Net income per share - diluted | $ | 1.47 | $ | 1.63 | $ | 7.23 | $ | 7.53 | ||||
| Non-GAAP net income per share - diluted | $ | 2.25 | $ | 2.35 | $ | 10.20 | $ | 10.40 | ||||
| Weighted average outstanding shares - diluted | 36,700 | 36,700 | 36,800 | 36,800 | ||||||||
| * 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, 2020 | Ended December 31, 2020 | |||||||||||
| Low | High | Low | High | |||||||||
| Net income | $ | 54,000 | $ | 60,000 | $ | 266,000 | $ | 277,000 | ||||
| Amortization of acquired intangible assets | 19,000 | 19,000 | 72,000 | 72,000 | ||||||||
| Depreciation and other amortization | 7,000 | 7,000 | 29,000 | 29,000 | ||||||||
| Interest and other expense, net | (2,000 | ) | (2,000 | ) | (10,000 | ) | (10,000 | ) | ||||
| Income tax expense | 11,000 | 12,000 | 75,000 | 78,000 | ||||||||
| Stock-based compensation expense | 17,000 | 16,000 | 64,000 | 62,000 | ||||||||
| Acquisition and integration related costs | 9,000 | 8,000 | 24,000 | 22,000 | ||||||||
| Adjusted EBITDA | $ | 115,000 | $ | 120,000 | $ | 520,000 | $ | 530,000 |
All Contacts
Scott Wheeler
Chief Financial Officer
(202) 336-6920
swheeler@costar.com
Sarah Spray
Vice President
Investor Relations
(202) 346-6394
sspray@costar.com
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. STR provides premium data benchmarking, analytics and marketplace insights for the global hospitality sector. LoopNet is the most heavily trafficked commercial real estate marketplace online with over 6 million monthly unique visitors. 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 over 47 million unique monthly visitors in aggregate in the fourth quarter of 2019. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe, Canada and Asia with a staff of over 4,300 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's plans, objectives, expectations, beliefs 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 and are subject to many 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, and sales bookings; the risk that the Company is unable to sustain current revenue, earnings and bookings growth rates or increase them; the risk that CoStar’s and STR’s products cannot be combined successfully into a seamless integrated platform when or as expected; the risk that the amount of revenue STR contributes in 2020 will not be as expected and stated in this release; the risk that revenues for the first quarter and full year 2020 will not be as stated in this press release; the risk that net income for the first quarter and full year 2020 will not be as stated in this press release; the risk that adjusted EBITDA for the first quarter and full year 2020 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 2020 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. More information about potential factors that could cause results to differ materially from those anticipated in the forward-looking statements include, but are not limited to, those stated in CoStar’s filings from time to time with the Securities and Exchange Commission, including in CoStar’s Annual Report on Form 10-K for the year ended December 31, 2018, and Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, as well as CoStar’s other filings with the SEC available at the SEC’s website (www.sec.gov). All forward-looking statements are based on information available to CoStar on the date hereof, and CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.