CoStar Group (NASDAQ:CSGP) reported third-quarter 2026 revenue of $952 million, up 14% from a year earlier, and record adjusted EBITDA of $229 million, double the prior-year figure. Net income was $74 million, compared with a net loss of $31 million a year earlier.
Chief Executive Officer and Founder Andy Florance said the company’s adjusted EBITDA exceeded the high end of its guidance range excluding the contribution from Zonda, aided by cost controls that reduced quarterly operating costs by 2% year over year. Adjusted EBITDA margin reached 24%, up 10 percentage points from the prior-year quarter.
CoStar raised its full-year adjusted EBITDA outlook to a range of $820 million to $840 million, representing a midpoint increase of $30 million from prior guidance. The company maintained its longer-term target of $1.25 billion in adjusted EBITDA in 2028.
Cost Review Identifies Additional Savings
Florance said CoStar now expects its 2026 expenses, excluding Zonda, to be $150 million below its original guidance, compared with a prior estimate of $100 million in savings. The company also identified approximately $200 million of additional efficiency opportunities that it expects to realize over the next 12 to 18 months.
Chief Financial Officer Robin Rossmann said the newly identified opportunities were split roughly evenly among organizational efficiencies, post-acquisition integration savings, procurement initiatives and improvements in marketing return on investment. He said the company expects to use efficiencies both to expand margins and invest in growth initiatives.
Rossmann said about $100 million of the $150 million in current-year savings represented ongoing run-rate reductions, while the remaining $50 million was primarily related to lower-than-anticipated sales headcount.
Bookings Decline Prompts Revenue Revision
Annualized net new bookings were $37 million in the third quarter, down from $84 million a year earlier. Management attributed the decline to economic headwinds and insufficient sales capacity, particularly in residential businesses.
Florance said CoStar had approximately 2,000 sales professionals, down about 10% from the prior year. The company is shifting its hiring focus toward field sales professionals with real estate and sales experience in major markets, while decentralizing recruiting into city hubs. It expects sales-force growth to reaccelerate in 2027.
The bookings performance and lower transaction volumes at Australian platform Domain led CoStar to revise its full-year revenue outlook. The company now expects 2026 revenue of $3.75 billion to $3.77 billion, up 16% at the midpoint. The forecast includes about $60 million of revenue from Zonda. Excluding Zonda, the outlook is approximately $35 million below the company’s July forecast.
For the fourth quarter, CoStar expects revenue of $976 million to $996 million and adjusted EBITDA of $275 million to $295 million. The midpoint of the EBITDA range implies a 29% margin.
Commercial and Residential Performance
Commercial revenue rose 7% to $492 million, while segment adjusted EBITDA totaled $180 million. CoStar’s core commercial information platform generated revenue of $344 million, up 8%, as subscribers increased 17% to 331,000. Renewal rates remained at 92%.
LoopNet revenue increased 13% to $89 million, supported by a 20% year-over-year increase in its North American sales team and a 30% sequential increase in annualized net new bookings. Management said it plans to expand a U.K. strategy that combines LoopNet and CoStar sales coverage for smaller and midsize customers into the U.S.
Residential revenue increased 23% to $460 million, including Zonda following its August 21 acquisition. Excluding Zonda, residential revenue grew 8% organically. Segment adjusted EBITDA rose to $49 million from $12 million in the prior quarter.
Apartments.com revenue increased 6% to $320 million. While average revenue per property was flat, paid properties declined 2% sequentially to 91,155. Florance said the sales force did not have enough capacity to both service its installed customer base and pursue new business. The company expects to expand the Apartments.com sales team through 2027.
Homes.com revenue rose 50% year over year to approximately $31 million. Membership exceeded 36,000, and average subscriber pricing reached $271 in September. CoStar introduced Platinum Premium Advertising in mid-September; Florance said average sales prices increased 58% in October to $429 following the launch.
Domain revenue declined 5% on a pro forma basis to $70 million amid weaker Australian transaction volumes. CoStar said it is planning a combined Domain and Homes.com platform for release in 2027.
Zonda and Vexcel Acquisitions
CoStar closed its acquisition of homebuilder information provider Zonda on Aug. 21 for $815 million. Zonda generated $42 million of pro forma third-quarter revenue, with roughly three-quarters from subscription products. Rossmann said Zonda is expected to contribute approximately $60 million of revenue and $10 million of adjusted EBITDA in 2026.
The company also announced an agreement to acquire Vexcel, an aerial-imagery provider, for approximately $730 million. The deal will be funded with cash on hand and CoStar’s undrawn revolving credit facility. Vexcel generated roughly $140 million in revenue over the last 12 months, grew more than 30% on recurring multiyear data contracts and had an adjusted EBITDA margin of about 20%, according to Florance.
Management said Vexcel’s imagery and CoStar’s artificial-intelligence capabilities could expand the company’s ability to collect property data globally. The transaction is not included in CoStar’s guidance.
About CoStar Group (NASDAQ:CSGP)
CoStar Group, Inc is a provider of information, analytics, and online marketplaces for the commercial and residential real estate industries. The company collects, analyzes, and distributes property and market data to real estate professionals, investors, lenders, and other businesses.
Its brands and services include CoStar, which offers commercial real estate data and research; LoopNet, a marketplace for commercial property listings; Apartments.com, a rental housing marketplace; and Homes.com, a residential real estate platform.
