csgp-20230331

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2023


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ______ to ______

Commission file number 0-24531

CoStar Group, Inc.

(Exact name of registrant as specified in its charter)


Delaware						52-2091509
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)


1331 L Street, NW
Washington,	DC	20005

(Address of principal executive offices) (Zip Code)

(202) 346-6500

(Registrant’s telephone number, including area code)

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 (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes x No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.


Large accelerated filer	x	Accelerated filer	☐
Non-accelerated filer	☐	Smaller reporting company	☐
		Emerging growth company	☐

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

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No x

As of April 21, 2023, there were 408,539,209 shares of the registrant’s common stock outstanding.

COSTAR GROUP, INC.

FORM 10-Q

TABLE OF CONTENTS


	Glossary of Terms	4

PART I	FINANCIAL INFORMATION

Item 1.	Financial Statements	6

	Condensed Consolidated Statements of Operations	6

	Condensed Consolidated Statements of Comprehensive Income	7

	Condensed Consolidated Balance Sheets	8

	Condensed Consolidated Statements of Changes in Stockholders’ Equity	9

	Condensed Consolidated Statements of Cash Flows	11

	Notes to Condensed Consolidated Financial Statements	12

Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	28

Item 3.	Quantitative and Qualitative Disclosures About Market Risk	40

Item 4.	Controls and Procedures	41

PART II	OTHER INFORMATION

Item 1.	Legal Proceedings	42

Item 1A.	Risk Factors	42

Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	42

Item 3.	Defaults Upon Senior Securities	42

Item 4.	Mine Safety Disclosures	42

Item 5.	Other Information	42

Item 6.	Exhibits	43

Signatures		44

Glossary of Terms

The following abbreviations or acronyms used in this Quarterly Report on Form 10-Q (this "Report") are defined below:


Abbreviation or Acronym			Definition
2020 Credit Agreement			The second amended and restated credit agreement, which amended and restated in its entirety the then-existing credit agreement originally entered into on April 1, 2014 and amended and restated on July 1, 2020
2022 Form 10-K			CoStar Group's Annual Report on Form 10-K for the year ended December 31, 2022 filed with the SEC on February 22, 2023
ASC			Accounting Standards Codification
ASU			Accounting Standards Update
Brexit			The June 23, 2016 U.K. referendum in which British citizens approved an exit from the E.U.
Business Immo			The legal entity BIH, a French société par actions simplifiée, the owner and operator of Business Immo, a leading commercial real estate news service provider in France
Business Immo Acquisition			CoStar UK's acquisition of the issued share capital of Business Immo on April 5, 2022
CECL			Current expected credit losses
CoStar Group (also the “Company,” “we,” “us” or “our”)			The legal entity, CoStar Group, Inc., a Delaware corporation, one or more of its consolidated subsidiaries or operating segments, or the entirety of CoStar Group, Inc. and its consolidated subsidiaries
CoStar UK			The legal entity, CoStar UK Limited, a wholly owned subsidiary of CoStar Group
Covenant Suspension Period			A period of time defined in the 2020 Credit Agreement in which we maintain a corporate investment grade rating from any two of Standard & Poor’s Rating Services, Fitch Ratings, Inc. or Moody’s Investors Services, Inc. and no event of default is continuing
CRI			CoStar Realty Information, Inc., a Delaware corporation and wholly owned subsidiary of CoStar Group, Inc.
DSUs			Deferred Stock Units
E.U.			European Union
EBITDA			Net income before interest income or expense, net; other income or expense, net; loss on debt extinguishment; income taxes; depreciation and amortization
ESG			Environmental, Social and Governance
ESPP			Employee Stock Purchase Plan
EURIBOR			Euro Interbank Offered Rate
FASB			Financial Accounting Standards Board
GAAP			Generally accepted accounting principles in the U.S.
GILTI			Global intangible low taxed income inclusion
Halo Merger Sub			Snapped Halo Merger Sub Corp., a Delaware corporation and wholly-owned subsidiary of CoStar Realty Information, Inc.
Homes.com			A homes for-sale listings site
Homesnap			Homesnap is an online and mobile software platform that provides residential real estate professionals access to applications that manage residential real estate agent workflow and marketing campaigns delivered on third-party platforms acquired in the Homesnap Acquisition
Homesnap, Inc.			The legal entity Homesnap, Inc., a Delaware corporation
Homesnap Acquisition			CRI's acquisition of Homesnap completed on December 22, 2020, pursuant to an Agreement and Plan of Merger dated November 20, 2020 between CRI, Snapped Halo Merger Sub Corp., a Delaware corporation and wholly owned subsidiary of CRI, and Homesnap, Inc., a Delaware corporation. Snapped Halo Merger Sub Corp. was merged with and into Homesnap, Inc., with Homesnap, Inc. surviving the merger as a wholly owned subsidiary of CRI
Land.com Network			Our network of sites featuring rural lands for sale including: LandsofAmerica, LandAndFarm and LandWatch


Abbreviation or Acronym			Definition
LIBOR			London Interbank Offered Rate
Matching RSUs			Awards of matching restricted stock units awarded under the Company's Management Stock Purchase Plan
MSPP			Management Stock Purchase Plan
ROU			Right-of-use
SEC			U.S. Securities and Exchange Commission
Securities Act			Securities Act of 1933, as amended
SEM			Search Engine Marketing
Senior Notes			2.800% notes issued by CoStar Group, Inc. due July 15, 2030
SOFR			Secured Overnight Financing Rate
STAR Report			A benchmarking tool used by the hospitality industry to compare a hotel's performance against a set of similar hotels in the same geographical area.
STR			Originally known as "Smith Travel Research", STR is a global data and analytics company that specializes in benchmarking hotel performance and providing market insights to the industry
TDR			Troubled debt restructuring
Ten-X			The legal entity Ten-X Holding Company, Inc. and its directly and indirectly owned subsidiaries
U.K.			The United Kingdom of Great Britain and Northern Ireland
U.S.			The United States of America

PART I — FINANCIAL INFORMATION

Item 1.Financial Statements

COSTAR GROUP, INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share data)

(unaudited)


	Three Months Ended March 31,
	2023		2022
Revenues	$	584,366	$	515,825
Cost of revenues	119,196		95,479
Gross profit	465,170		420,346

Operating expenses:
Selling and marketing (excluding customer base amortization)	226,234		143,997
Software development	66,590		54,021
General and administrative	89,508		77,961
Customer base amortization	10,617		16,092
	392,949		292,071
Income from operations	72,221		128,275
Interest income (expense), net	43,548		(7,718)
Other income, net	581		864
Income before income taxes	116,350		121,421
Income tax expense	29,219		32,103
Net income	$	87,131	$

SEC Form 10-Q filed by CoStar Group Inc.