In a challenging market, real estate data giant CoStar is experiencing a jump in revenue and profits over last year — and it sees a big opportunity ahead in the residential space as the property market slows.
The company said on Tuesday that it in made $577 million in revenue in the third quarter, up from $499 million a year ago. The company made $72 million in profit during Q3 2022, up from $64 million in the third quarter of 2021.
In the earnings call on Tuesday, CEO Andy Florance said Apartments.com in particular thrived in the third quarter.
“Our Apartments.com sales team delivered record sales in September, bringing our net new bookings to $90 million on a year-to-date basis in 2022, an increase of 192% compared to the same period of 2021,” Florance told analysts. “Revenue growth for Apartments.com accelerated to 11% in the third quarter, and we now expect revenue growth of 16% in the fourth quarter of 2022.”
The company raised its revenue guidance to a range of $2.175 billion to $2.180 billion for the full year of 2022 and anticipates between $565 million and $570 million in revenue in the fourth quarter. While profits were up from the prior year, they were down from the two prior quarters.
CoStar, which acquired Apartments.com in 2014, has made a number of plays into the residential real estate space in recent years. It purchased residential portal Homesnap in 2020, Homes.com in 2021 and then Citysnap, a StreetEasy competitor in New York City, this year.
CoStar generated $19.35 million in revenue from its residential businesses in the third quarter and about $57.6 million year to date, the earnings statements show. Registered agents using its Homesnap Pro and Pro+ products grew to over 958,000 at the end of the third quarter, a 23% increase over Q3 2021.
Traffic to Homes.com continues to grow, with average monthly unique visitors for the third quarter up 52% compared to the third quarter of 2021, Florance said on the earnings call.
“I’m encouraged by the rapid improvement in consumer traffic. We do have a long way to go, but we’re tracking just where we were with traffic growth on Apartments.com at the same time, and Apartments.com was a very successful launch,” Florance said. “According to ComScore, September 2022 over September 2021, Homes.com visits grew 27%, while in the same time period, Zillow fell 22% and Realtor fell 30%.”
Florance has been anything but shy in announcing CoStar’s plans to overtake Zillow in the residential data space. CoStar says its edge is in building a marketplace at Homes.com that advertises the home “as opposed to advertising agents,” an obvious dig at the Seattle giant and its Premier Agent program. CoStar’s intention is to partner with 1.5 million agents “in support of your listing, your lead approach.”
“Zillow is no longer a relevant player,” Florance told HousingWire in late 2021. “We have done a million dollars of market research in the last couple of months, and we have found that Zillow is not the leader in the space. Zillow is actually not used by many homebuyers.”
While others are spooked by high interest rates, Florance sees more than a silver lining.
“With rising interest rates and a rapidly cooling residential property market, I believe now is the perfect time to invest in a marketplace that’s designed to help consumers and their agents advertise and sell properties faster and at a higher price,” he said on the earnings call Tuesday. “Deteriorating market conditions may well create a tailwind for our business model.”