CoStar Group Q2 Earnings Beat Estimates, Revenues Increase Y/Y

CSGP’s Commercial Growth Stays Steady

Commercial Real Estate revenues increased 7.8% year over year to $481 million and accounted for 52% of total revenues. Commercial adjusted EBITDA rose 6.8% to $172 million.

Within the commercial portfolio, CoStar revenues advanced 8.7% to $337 million. LoopNet revenues climbed 14.5% to $87 million, supported by growth in paid listings. Other Commercial Real Estate revenues declined 5% to $57 million, primarily due to lower transaction volumes at Ten-X.

CoStar’s Residential Segment Turns Profitable

Residential Real Estate revenues climbed 33% year over year to $444 million. The segment generated adjusted EBITDA of $12 million, marking the first time that the residential segment turned adjusted EBITDA positive and improving $41 million sequentially.

Apartments.com revenues rose 9% to $318 million. Paid properties increased 12% to nearly 93,000, while monthly renewal rates remained at 99%. Average revenue per property declined 3.6%, primarily reflecting a sales mix shift toward smaller communities.

CSGP Expands Core Platforms and AI Tools

Apartments.com generated revenues of $318 million, up 9% year over year. Paid properties increased 12% to nearly 93,000, while monthly renewal rates remained at 99%. Average revenue per property declined 3.6%, reflecting a shift toward smaller communities with lower average pricing.

Homes.com revenues jumped 66% to $28.5 million. Agent subscribers more than doubled to over 36,000, while the monthly cancellation rate improved to 2.4% in June from 6.5% a year earlier. Management plans to introduce higher-priced Platinum advertising during the third quarter.

CSGP launched Apartments.com AI in June. Users completed more than half a million sessions within a few weeks, spending about 20 minutes per session. AI users viewed twice as many listings, while 3D-tour usage rose 225% and traffic-to-lead conversion increased 256%.

CSGP Expands Margins Through Cost Discipline

Operating expenses increased 1.9% year over year to $652 million, significantly slower than revenue growth. Selling and marketing expenses were unchanged at $395 million, while general and administrative expenses declined 6.6% to $114 million.

Software development expenses rose 11.5% to $107 million and customer-base amortization increased 33.3% to $36 million.

Operating income improved to $76 million from an operating loss of $27 million in the year-ago quarter. Adjusted EBITDA more than doubled to $184 million from $85 million. The adjusted EBITDA margin expanded 900 basis points to 20%, reaching the target level one quarter earlier than management had expected. Adjusted net income increased 73% to $128 million.

CSGP Ends Quarter With Solid Balance Sheet

Cash and cash equivalents were $1.27 billion as of June 30, 2026, compared with $1.63 billion at 2025-end. Long-term debt was $994 million, broadly unchanged from $993 million at the end of 2025.

As of June 2026, Net cash provided by operating activities totaled $267 million. CSGP repurchased $587 million of stock during the period, including $82.1 million in the second quarter. Management expects full-year repurchases of approximately $700 million.

CSGP Lowers Revenue Outlook, Retains Profit View

For the third quarter of 2026, CoStar expects revenues to be between $935 million and $945 million, adjusted EBITDA of $190-$210 million and adjusted earnings of 31-34 cents per share. Commercial revenues are projected at $489-$494 million, while Residential revenues are expected between $446 million and $451 million.

For 2026, CoStar revised its revenue outlook to $3.715-$3.755 billion. The company affirmed adjusted EBITDA guidance of $780-$820 million and projected adjusted EPS of $1.32-$1.39.

The lower revenue outlook reflects restructuring at Ten-X, sales-force optimization at Homes.com and pricing discipline at Apartments.com.

CSGP’s Zacks Rank & Other Stocks to Consider

CoStar Group currently carries a Zacks Rank #2 (Buy).

Some other top-ranked stocks in the broader Zacks Computer and Technology sector include ASE Technology ASX, nVent Electric NVT and Tokyo Electron TOELY. Each stock currently carries a Zacks Rank of 2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of ASE Technology have gained 110.7% in the year-to-date period. ASX is set to report the second quarter of 2026 results on July 30.

Shares of nVent Electric have surged 39% in the year-to-date period. NVT is slated to report second-quarter 2026 results on July 31.

Tokyo Electron's shares have gained 49.3% in the year-to-date period. TOELY is set to report first-quarter fiscal 2027 results on July 30.

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