CoStar (CSGP) Q1 2026 Earnings Call Transcript

Motley Fool Transcribing, The Motley FoolTue, April 28, 2026 at 10:55 PM UTC

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Tuesday, April 28, 2026 at 5 p.m. ET

CALL PARTICIPANTS -

Chief Executive Officer — Andrew Florance

Chief Financial Officer — Christian Lown

TAKEAWAYS -

Revenue -- $897 million, up 23%, placing results at the high end of guidance.

Adjusted EBITDA -- $132 million, doubling year over year and exceeding guidance midpoint by 26%.

Net New Bookings -- $67 million, a 20% increase, with management projecting further productivity ramp as new hires mature.

Commercial Revenue -- $472 million, 15% growth, with organic commercial growth stated as 7%.

Residential Revenue -- $425 million, a 32% increase, with a 13% organic growth rate; management expects segment profitability in Q2.

CoStar Segment -- $331 million revenue, up 9%; users increased 22% to 317,000; broker sales up 29%, tenant sales up 27%.

LoopNet Revenue -- $85 million, a 16% increase, with U.S. paid listings up 10% and asset-based pricing now fully implemented across all U.S. markets.

Homes.com Revenue -- $26 million, up 58%, with 35,175 agent subscribers (205% increase), and March annual revenue run-rate at $106 million, a 92% rise.

Homes.com Member ROI -- Company research found average member commission gains of $36,400 in the first year, versus an average annual subscription cost of $3,400, producing an 11-times ROI.

Homes.com ARPU -- Trailing 12-month average at $287; net new bookings of $11 million for the division.

Matterport Performance -- 19% increase in subscription revenue, with enterprise account growth of 31% in March and substantial engagement metrics post-acquisition.

Domain Australia -- Q1 revenue of $68 million, monthly unique audience at 8 million, and total users up 47% to 21.9 million, with core residential revenue up 11%.

OnTheMarket (UK) -- Leads increased 23%, customer base reached 17,500, and NPS reached 46; became UK's number two portal by inventory and surpassed Rightmove in new-home listings.

Subscription Revenue Mix -- 73% of total revenue on annual contracts; five-year subscribers have a renewal rate of 95%.

Share Repurchases -- 11.4 million shares bought back for $505 million in the quarter; company plans $700 million in total 2026 repurchases.

Guidance -- Q2 revenue projected at $922 million to $932 million (18%-19% growth); adjusted EBITDA guidance raised to $780 million to $820 million for the full year; adjusted EPS outlook increased to $1.32-$1.39.

Sales Force -- Total sales headcount at 2,090; Homes.com, Apartments.com, and CoStar represent the largest sales teams, with field sales flagged as delivering higher productivity.

International Expansion -- UK revenue up 25%, Canada up 22%, Australia launching new products in Q3 and Q4; France launch scheduled for Q2.

AI & Product Innovation -- AI-driven features deployed in multiple segments, including lease abstraction, customer support automation, and natural language/voice search; Homes AI credited with driving average time on site up to 18 minutes for users.

Key Client Win -- Expanded partnership with eXp Realty grants 300,000 agents ability to display pre-market listings on Homes.com.

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RISKS -

CEO Florance acknowledged, "The activist campaign over the last year did weigh heavily on homes.com sales and potential partnerships," but said the distraction is now behind the company.

Domain Australia's revenue was seasonally lower sequentially due to the cyclical nature of the Australian market and deliberate discontinuation of unprofitable spam ad revenue.

Management reported its 60th consecutive quarter of double-digit revenue growth, noting Homes.com as the fastest-growing U.S. residential portal and a primary focus for accelerated investment. AI-driven product innovation is being leveraged to improve both platform engagement and internal efficiencies, with Homes AI and Apartments AI already impacting user metrics and monetization. The company's share repurchase activities exceeded pace expectations, contributing to an increase in adjusted EPS guidance for the year, and the executive team described material productivity improvements in both new and established sales channels. International platforms, notably in the UK, Canada, and Australia, continue to benefit from local product launches, proprietary data offerings, and network effects from scaling operations. The full-year outlook was reaffirmed for revenue growth, while the raised adjusted EBITDA and EPS targets were attributed to both operational performance and cost efficiencies, particularly in personnel, reflecting ongoing benefit from AI integration and portfolio optimization initiatives.

Q1 organic revenue growth for the full company was 10%, while approximately 40% of the current year's anticipated growth is expected from non-subscription sources, per CFO Lown.

Management is actively raising Homes.com subscription prices for new members starting May 1, citing strong ROI data for agents and aiming to further optimize pricing by customer cohort.

CFO Lown specified that Domain and Matterport acquisitions increased the share of non-subscription revenue to about 15% of the total.

The proportion of customers on annual subscription contracts rose to 73% from 71%, with retention for five-year subscribers remaining notably high at 95%.

Commercial adjusted EBITDA margin reached 34%, with residential adjusted EBITDA improving $56 million and on track for profitability in the next quarter.

INDUSTRY GLOSSARY -

ARPU (Average Revenue Per User): A key metric indicating the mean revenue brought in per user/subscriber for a digital service or platform.

NPS (Net Promoter Score): A customer loyalty and satisfaction score derived from direct survey feedback, widely used to benchmark brand performance.

Net New Bookings: The value of new subscription or recurring contract business signed in a period, less any churn or downgrades, used as a forward-looking sales effectiveness measure.

Asset-Based Pricing: A pricing strategy in which listing fees vary according to the size or value of the property or asset being advertised.

CRE (Commercial Real Estate): Property used exclusively for business purposes or to provide a workspace rather than a living space.

Depth Revenue / Depth Advertising: Incremental revenue derived from premium listing placements or added features compared to basic (or "surface") placement on a property marketplace.

Full Conference Call Transcript

Andrew Florance: Thank you, Rich. Thank you for joining us today. I want to start with three things. First, this was an exceptional quarter. We delivered our 60th consecutive quarter of double-digit revenue growth. Our adjusted EBITDA doubled and we are on track for the highest full-year adjusted EBITDA in CoStar Group, Inc.'s history. Second, the homes.com investment is delivering exactly what we said it would. Member agents are generating extraordinary returns on their subscriptions, consumer engagement on Homes AI is multiples of conventional residential search, and homes.com is the fastest-growing residential portal in the United States. I will walk you through the evidence later in the call. Third, the activist distraction is behind us.

With the noise gone, we have more focused energy than ever to spend on what matters: growing EBITDA. Let me take you through the numbers. First quarter 2026 revenue grew 23% year over year. Q1 2026 adjusted EBITDA of $132 million doubled year over year and came in 26% above the midpoint of our guidance. After a record 2025 for annualized net new bookings, we started 2026 stronger still. Q1 net bookings of $67 million were up 20% year over year. We expect productivity to build over the year, particularly from the sales reps we hired throughout 2025. Our commercial business generated $472 million of revenue in Q1, up 15% year over year, with adjusted EBITDA of $161 million.

CoStar revenue was $331 million in Q1, with annualized net new bookings from our core CoStar product up 16% year over year. CoStar users grew 22% year over year to 317,000. Sales to brokers and tenants were especially strong, with broker sales up 29% and tenant sales up 27% year over year. CoStar NPS was 69, and our quarterly renewal rate was 92%. CoStar Rent Benchmark launches this summer. Drawing on our proprietary lease database and public records, it will be the industry's only net effective rent benchmark product, giving landlords, occupiers, investors, and brokers visibility into starting rents, effective rents, TI allowances, free rents, and escalations across U.S. markets.

CoStar New Homes is in development with phase one planned for Q2. The module tracks new residential construction from planning through delivery and serves homebuilders, mortgage bankers, retailers, and retail center owners. It integrates builder feeds, drone imagery, and other data sources to deliver insight into housing supply, demand, and market trends. CoStar Debt Solutions, formerly CoStar Lender, had a strong quarter with net new bookings up 26% year over year as the business crossed $100 million in revenue. Debt Solutions now serves over 500 financial institutions across the full lender spectrum, including banks, private lenders, debt funds, and regulators. Debt Solutions is on track to launch CRE debt benchmarking in 2026, with CRE loan origination workflow following in 2027.

The final product will be a full workflow solution to originate and underwrite a loan. Our first release will focus on seamless delivery of property details, peer properties, and market information. We launched a client advisory committee with over a dozen institutions to shape the loan origination roadmap, deepen understanding of how AI is reshaping their workflows, and strengthen product market fit. Across the platform, Debt Solutions is actively building these AI-enhanced workflows. CoStar UK's growth accelerated in Q1 with revenue up 25% and net new bookings up 44% year over year.

This growth was supported by the release of new land registry lease modules that gave clients authoritative effective rent data sourced from government records, and the recollapse of one of our primary competitors there. CoStar Canada revenue grew 22% year over year. We released multifamily analytics coverage for Montreal in Q1. CoStar France launches in Q2. We will cross-sell into the 32,000 French CRE professionals who already subscribe to news and information from our Business Immo acquisition, accelerating adoption as we build the only pan-European CRE data and analytics platform. In CoStar Australia, we are rapidly building proprietary property data with our local research team approaching 100 people.

We expect to launch CoStar and LoopNet in Australia in Q3 and Q4. Real Estate Manager added AI lease abstraction capabilities to the Visual Lease platform this quarter, and we will extend these capabilities to CoStar Real Estate Manager later this year. Customers are eager to bring this best-in-class capability into the lease management and accounting workflows to save them a lot of time and hassle. We are also deploying multiple AI agents internally to accelerate customer onboarding, support, enablement, and the automation of repeatable professional services work. In Q1, STR launched profitability benchmarking, supporting more than 150 detailed data points across a hotel's P&L. Customer interest was immediate, with 750 hotel subscribers submitting data to unlock the functionality.

Building participation at scale is critical to future monetization, and this early engagement reinforces the long-term value of the investment. LoopNet generated $85 million of revenue in Q1, up 16% year over year. Paid listings rose 10% year over year in the U.S., 35% in Canada, and 63% in the UK. Last month, after more than a year of successful testing, we rolled out asset-based pricing across all U.S. markets. LoopNet advertising is now priced to match the size of the asset and the value LoopNet delivers to listers. Early results have been really outstanding. At the high end, the volume of Silver listings sold at $300 or above per month grew 650% from February to March.

At the low end, listings sold below $40 grew over 1,100%, opening up an entirely new category of inventory and bringing in smaller advertisers who could not justify the higher price points of one-size-fits-all that we had before. We expect this to drive more listings, more traffic, and more revenue. LoopNet's European revenue grew 17% year over year. Following last year's launch in France and Spain, we are seeing the network effects of being the first and only global commercial real estate marketplace. Average monthly unique visitors on LoopNet Europe more than doubled to over 900,000, up 102% year over year. Crucially, these users are not just searching their home countries, they are searching globally.

We will extend this network effect as LoopNet launches in Australia, Germany, and other markets. Our Australia CRE marketing platform, commercialrealestate.com.au, grew 10% year over year on a pro forma basis driven by higher depth revenue, improving depth penetration, and higher average revenue per listing. That commercial unique visitor audience was up 129% year over year in Q1. Subscription revenue for Matterport was up 19% year over year. Enterprise momentum built through the quarter. New enterprise accounts in March were up 31% year over year, and direct sales were up 16%, supported by a healthy and expanding pipeline that continues to build into Q2. Matterport has become a critical point of differentiation across CoStar Group, Inc.

It drives engagement, lead conversion, and generates valuable proprietary data. Integration is proceeding exceptionally well across apartments.com, homes.com, LoopNet, and CoStar. Matterport is already a key component of Homes AI and will unlock huge future AI innovation all across CoStar Group, Inc. Matterport Exteriors with X-ray, now in alpha, lets users virtually remove a roof or floor of a virtual building to see the building's interior in the context of the yard and the neighborhood. That is a real estate marketer's dream. We have also released a number of new innovations with strong use cases in architectural engineering, construction, facilities management, and manufacturing.

BizBuySell revenue was $8.8 million in Q1, with broker subscriptions at 2,345, and with broker subscribers reporting 2,345 completed sales transactions of businesses representing $2 billion enterprise value, 59% of which involved commercial real estate. We are rapidly turning BizBuySell into a true end-to-end transaction platform with integrated financing, 3D tours, and document sharing now driving over 24,000 buyer profiles and 15% broker adoption. Residential revenue was $421 million in Q1, up 32% year over year. Adjusted EBITDA improved by $56 million and we expect the residential segment to reach profitability in Q2 2026. Apartments.com generated $312 million of revenue in Q1, up 10% year over year, the 15th consecutive quarter of double-digit revenue growth.

Apartments.com delivered 220 million highly engaged visits, 370,000 tours, and 300,000 applications submitted directly on our platform to apartment owners, alongside 40 million Matterport tours. Our monthly renewal rate held at 99%. Apartments.com brand media impressions nearly tripled in Q1, up 189% year over year to 1.7 billion. The longer we invest in our brand on behalf of our clients, the more efficiently we deploy that investment. A clear example: our first-ever co-branded Super Bowl commercial with homes.com aired on February 8, reaching 126 million viewers, the highest peak viewership in U.S. media history. Combined with our industry-leading SEO and SEM, these efforts continue to produce the most qualified audience of apartment seekers on the Internet.

According to Google, overall rental search demand remains soft. Even so, Comscore data shows Apartments.com network unique visitors up 3% year over year in March. Zillow unique visitors were down 5% year over year, and Zillow's expanded rental network—Zillow plus Realtor plus Redfin—was down 3%. Zillow has now seen unique visitors decline year over year for 15 consecutive months. Our sales force conducted 185,000 quality meetings in Q1 for Apartments.com and achieved an outstanding NPS of 89. In Q1, Apartments.com introduced SmartSearch, our natural language search feature, and the first AI-powered voice search in multifamily. SmartSearch lets renters search the way they speak, packing every detail and even multiple locations into a single query.

Results are faster, more detailed, and dramatically more efficient. The early metrics are really strong. Renters who use SmartSearch spend 94% more time on-site and view 63% more listings. Ahead of the June Apartmentalize trade show that NAA hosts, the big show of the year, we will launch Apartments AI, our pioneering conversational search experience built on the same technology powering Homes AI. Apartments AI will more deeply engage renters and continue delivering best-in-class advertiser ROI through the industry's highest-quality leads. We will also highlight homes.com's expanded rental capabilities and the value add to Apartments.com at that same Apartmentalize. Apartments.com leads the industry in price transparency.

Any property can now display complete all-in monthly price with all the extras—recurring and one-time required fees—with a prominent badge alerting renters. Six states already require this sort of transparency, and the FTC just concluded its public comment period on similar rules. Matterport continues to be a draw for consumers on Apartments.com. We now have approximately 250,000 3D tours on the platform, including over 1,500 Matterport 3D exteriors that give prospective renters an immersive 360-degree view of the entire community. In Q1, renters spent 46% more time on listings featuring a Matterport, and those listings generated 56 times more tour requests per listing than listings without one. Homes.com revenue grew 58% year over year to $26 million in Q1.

We are on pace to hit our stated 2026 net investment target of $550 million. We had 4,300 members in Q1, up 205% from 2025. We now have 35,175 agent subscribers, with 76% of them on annual contracts. Net new bookings were $11 million in Q1. March annual revenue run-rate reached $106 million, up 92% year over year. Our trailing 12-month average ARPU is $287. We are now seeing clear, quantifiable evidence the homes.com business model is working and that our subscribers gain an extraordinary return on their investment.

We analyzed the first 11,400 homes.com members and compared their commission earnings in the 12 months before joining homes.com to the earnings in the 12 months after they became a homes.com subscriber. The findings are striking. On average, a homes.com subscriber earned $36,400 more in commissions in their first year as a member. Against an average annual subscription cost of just $3,400, that is an 11-times return on their investment. In the same time period, our members saw commissions grow 16%, while the average nonmember saw their commissions decline. The ROI is even stronger for the agents who need it most. Agents who had earned $50,000 or less in the prior year earned $58,000 more after joining.

Pre-membership earnings were $26,000 on average, and that jumped to $82,000 on average. There are hundreds of thousands of agents in this earnings cohort. Agents in the $50,000 to $100,000 bracket earned $41,000 more in commissions after joining. Agents in the $100,000 to $150,000 bracket earned $38,000 more once they became homes.com members. These numbers almost certainly understate the value. The benefit extends beyond our 12-month analysis window. We also exclude the significant rental marketing value members generate through homes.com and our syndication to apartments.com. Based on these results, we will raise subscription fees for new customers on May 1 and evaluate measured potential renewal increases.

For CoStar Group, Inc. as a whole, this is the fastest organic revenue build we have ever achieved for a new product, and we hit these revenue levels faster than our U.S. competitors did at their start. Our NPS is 41, an excellent score after just two years, and still improving. Homes.com subscribers paid to promote 260,000 active listings in Q1, representing 8.7% of the nearly 3 million homes for sale in the U.S. In 2025, the homes.com network drew nearly 2.1 billion views and 108 million average monthly unique visitors. We achieved a healthy balance across SEM, SEO, and direct traffic, allowing us to optimize SEM for quality leads, not just quantity.

The result is better traffic and more engaged visitors. Organic traffic to homes.com was up more than 100% year over year every month of the quarter, and March specifically was up 119% year over year. Homes.com was featured across major cultural moments in 2026, including the Oscars, the Olympics, the Super Bowl, March Madness, and many others, driving over 3 billion impressions in Q1. Our new March ad showcased Homes AI in action, and I have received more positive feedback on this campaign than any of our prior homes.com campaigns. In March, average annual session duration hit an all-time high, up 26% year over year, and bounce rate hit an all-time low, down 29%.

Homes AI is the engine behind this engagement. Homes AI users run nearly four times as many searches, favorite seven times as many properties, and submit seven times as many leads. In April, time on-site reached 18 minutes for AI users versus 4 minutes 32 seconds for non-AI users. Put plainly, when consumers experience Homes AI, they spend roughly four times longer than they do on conventional residential search. This is precisely the dynamic that precedes meaningful consumer share shift and is exactly the proof point we expected our AI investment to produce. In March 2026, we significantly expanded our relationship with eXp Realty, the largest residential firm by transaction size in 2025.

The new partnership lets eXp's 300,000 agents prominently display pre-market coming-soon listings on homes.com. You may recall we partnered earlier with eXp Commercial in December 2024 when they became a major subscriber to CoStar's information and analytics. We have been integrating Apartments.com with homes.com since early 2025. Last year, homes.com rentals drove over 10% of Apartments.com's traffic, making homes.com Apartments.com's largest syndication partner. This combination produced nearly 650,000 paid single-family home rental listings in 2025. Paid single-family rental listings in Q1 2026 grew 33% year over year. According to Comscore, homes.com is now the fastest-growing rental site in the U.S.

Per Google Analytics, homes.com rentals visits grew by 13 million versus 2025, making homes.com our most powerful channel for reaching the single-family rental market. Over 214,000 independent owners now use our rental tools, and we expect that number to rise materially as we extend the full Apartments.com feature set into homes.com. We are continuing to improve the experience for renters who search on homes.com. By the end of 2026, every tool available at Apartments.com will be available on homes.com, letting independent owners rent their house, condo, or townhouse across both platforms. In August 2025, we began selling marketing on homes.com to new-home builders.

In the first eight months, we generated $3.3 million in annualized net new bookings, with the run-rate accelerating each quarter. Q1 alone delivered $1.5 million. We signed data feed agreements with 663 homebuilders looking to reach the homes.com audience. These feeds now cover roughly 75% of all new-home activity in the U.S. These feeds provide a better consumer experience to home searchers on homes.com and are a foundational building block to power a valuable new-homes information product within CoStar. Let me pause to speak briefly to the elephant in the room. The activist campaign over the last year did weigh heavily on homes.com sales and potential partnerships. Real estate leaders were reading a steady drumbeat of negative coverage.

Nonetheless, we made durable progress through it. With that distraction now behind us, we can now apply even more focused energy to accelerating homes.com revenue and the revenue in every other business in the portfolio. Land.com revenue grew 8% year over year, and net new bookings hit a record, up 126% year over year. Our county-targeted network ad format, boosted by replacing a regionally targeted site-specific ad, tripled inventory and quadrupled ads sold. Domain Australia delivered a strong Q1 with sustained elevated audience volume, strong uptake of premium products, and disciplined cost control. Recent investments in product, technology, research, and photography are now producing tangible outcomes, and Q1 revenue was $68 million.

The Australian market is highly cyclical, and Q1 is always seasonally soft, which is reflected in overall sequential down revenue. Year over year, however, core Domain residential revenue did grow 11%. We delivered EBITDA growth despite all the significant investments we are making. In addition to expected normal seasonality, we also discontinued revenue from spam ads on the Domain portals because it was not materially profitable and significantly distracted from the value home sellers receive when marketing on those sites. CoStar Group, Inc.'s technology capabilities are already benefiting Australian customers. Domain site improvements are dramatically increasing traffic. Monthly unique audience averaged 8 million across the quarter, with March hitting 8.4 million, the second highest month on record.

Total users reached a high of 21.9 million, up 47% year over year, and listings grew 28%. Domain launched Matterport in Australia this month, bundling immersive technology into premium listing packages and giving agents and vendors meaningful savings on traditional photography. The launch generated significant positive media coverage. Q1 was another strong quarter for OnTheMarket. We closed it with our 23rd consecutive month of positive net new bookings. Total time on-site was up 16%, and page views were up 24% year over year, driving a 23% year-over-year increase in leads. OnTheMarket now has 17,500 estate agents and new-home developer customers on-site, the highest in its history.

OnTheMarket has eclipsed Zoopla as the UK's number two portal by inventory, and now has more new-home listings than Rightmove. The growth was accelerated by signing the Connells Group, the UK's largest estate agent, with over 80 brands and more than 1,200 branch locations. Our OnTheMarket sales team is delivering real value for customers. NPS came in at a solid 46 for the period. In Q2, we will continue building AI search functionality as we progress towards integrating OnTheMarket into the homes.com software environment in 2027. In closing, I want to acknowledge our outstanding management team. The breadth and depth of expertise across this company is what makes everything you have heard today possible.

I am very grateful for what they bring to this company. I also want to thank our Board of Directors; their leadership, expertise, and counsel were outstanding through what was at times a noisy year. We are well positioned to deliver against every objective we have set and to unlock large digital real estate opportunities ahead of us. To our shareholders, thank you for your continued support. The data this quarter across CRE, across Apartments, and especially across homes.com confirms one thing: the strategy is working. I have never been more confident in our plan to deliver double-digit revenue growth and significant earnings expansion through 2030 and beyond.

At this point, I will turn the call over to our CFO, Chris.

Christian Lown: Thanks, Andy. In Q1 2026, we delivered $132 million of adjusted EBITDA, doubling the adjusted EBITDA from Q1 2025 and $17 million above the high end of our guidance range. The outperformance in adjusted EBITDA was primarily due to lower personnel costs and cost-saving efforts as we continue to find efficiencies from AI, personnel, and other expense initiatives. Q1 2026 revenue was $897 million, which was 23% higher year over year and toward the high end of our guidance range. Organic revenue growth was 10% for the quarter. Commercial revenue in the first quarter was $472 million, an increase of 15% year over year and a 7% organic growth rate.

Our commercial brands delivered revenue in line with the guidance we provided on our February earnings call. CoStar revenue grew 9% to $331 million, driven by strong double-digit international growth. The year-over-year increase was driven by both volume and price. LoopNet revenue was $85 million in the first quarter, a 16% increase year over year, or an 11% organic growth rate. The year-over-year growth is attributable to an increase in paid listings from our continued focus on selling Silver ads. Other commercial revenue was $56 million in Q1 2026, up 81% compared to Q1 2025. The year-over-year increase is primarily attributable to the inorganic contribution from Matterport, which has performed well since the acquisition, with subscription revenue growth of 19%.

Residential revenue in Q1 2026 was $425 million, a 32% increase over last year's first quarter and at the high end of our guidance range. Organic growth for residential in the first quarter was 13%, with double-digit growth contributions from Apartments, Homes, and OnTheMarket. Increased volumes were the catalyst for organic growth in the first quarter. Commercial adjusted EBITDA was $161 million in Q1 2026, a 34% margin and above the high end of our guidance range. Similarly, residential adjusted EBITDA was also better than our guidance range, coming in at negative $29 million. CoStar posted positive net income and adjusted EPS of $0.23 per share for Q1 2026, both considerably higher than our guidance.

Our sales headcount at the end of March was 2,090. Homes.com reps make up our largest sales team, consisting of 570 individuals. Apartments.com is the next largest sales force with 520 reps, with CoStar at 475 reps, and 225 at the LoopNet team. For homes.com reps, we are focused on driving productivity and efficiency in 2026. With our other brands, we will be adding reps throughout the remainder of the year, given the significant opportunity that still exists across all our brands. We expect productivity to ramp as our new sales reps mature over the coming years. Our contract renewal rate has held consistently at 89% for the past seven quarters.

Subscription revenue on annual contracts was 73% of total revenue for Q1 2026, compared to 71% during Q1 2025. Customers who have been subscribers for at least five years have an impressive 95% renewal rate. As a reminder, Domain does not operate using annual subscriptions. Net new bookings for the first quarter were $67 million, a 20% increase from Q1 2025. In 2025, we completed our first share repurchase program, buying back $500 million worth of stock, or 7.1 million shares. We subsequently announced a $1.5 billion buyback program in January. Throughout the first quarter, we repurchased 11.4 million shares for $505 million, the majority of which was purchased through an accelerated share repurchase plan.

We expect to repurchase an additional $195 million of shares during the remaining nine months of the year, bringing our total cash outlay for share buybacks in 2026 to $700 million. For Q2 2026, we expect revenue to range from $922 million to $932 million. This range represents an 18% to 19% increase over Q2 2025, or a 10% organic growth rate at the midpoint. Commercial revenue is expected in a range of $479 million to $484 million. We expect residential revenue of $443 million to $448 million, an increase of 32% to 34% year over year, or 12% to 14% organically.

Adjusted EBITDA is expected to range between $160 million and $180 million, representing a margin of 17% to 19%, or roughly 700 basis points higher than Q2 2025. Commercial adjusted EBITDA is expected to be between $160 million and $170 million, a margin of 34% to 35%. Residential adjusted EBITDA is anticipated to be positive in Q2 2026, ranging between breakeven and $10 million. Our adjusted EPS guidance for Q2 2026 calls for a range of $0.27 to $0.30 per share on 409 million weighted average shares outstanding. For full-year 2026, we are reaffirming our previous revenue guidance range of $3.78 billion to $3.82 billion, a 16% to 18% annual growth rate.

Commercial revenue remains at a range of $1.955 billion to $1.975 billion, and the residential revenue range remains at $1.825 billion to $1.845 billion. Based on the strength of the first quarter and the expectation of continued personnel expense efficiencies, we now expect adjusted EBITDA to range from $780 million to $820 million. This is an increase of $30 million at its midpoint, and a full percentage point increase in margin. Our adjusted EPS range is also increasing for the full year. The accelerated share repurchase program in the first quarter retired more shares than we had forecast, and the previously mentioned expense reduction initiatives are primarily driving our guidance increase to adjusted EPS.

Our new adjusted EPS guidance range is $1.32 to $1.39, an increase of $0.09 at the midpoint. I will now turn the call back over to the operator for questions.

Operator: Thank you. As a reminder, to ask a question, please press 1-1 on your telephone and wait for your name to be announced. Please limit yourself to one question. Our first question comes from Ryan Tomasello with KBW. You may proceed.

Ryan Tomasello: Two-part question on bookings. First, was the $67 million of net new in line with generally what you were expecting for the quarter? And then second, there seems to be some variation in how we find investors are translating bookings into revenue growth expectations given our bookings do not underpin 100% of the company's revenue base. So, I was hoping you could walk us through how you think about the appropriate math there around the percentage of bookings-driven revenue and how that translates to the level of bookings needed to achieve your low- to mid-teens revenue growth targets embedded in your financial framework? Thanks.

Christian Lown: Yes. Thanks, Ryan. So, a couple of comments there. First, as you heard from our comments, we reaffirmed our guidance range for revenue and increased our EBITDA guidance, so broadly in line with what we are looking for from a bookings perspective and from a revenue development perspective. Your second question is a detailed question, so let me try to break it down this way. Today, around 15% of our revenue is non-subscription; that increased as a result of the Domain and Matterport acquisitions last year.

If you look at our guidance, we are currently expecting revenue to grow around $550 million at the midpoint of our range, and around 40% of this increase is from acquisitions or non-subscription revenue growth. Therefore, the remaining growth is around $330 million, which is the revenue driven by net new. That is what 2026 represents, but then you are rolling forward to 2027 and 2028. A couple of building blocks there: if you assume the non-subscription revenue growth is in the low double digits, that results in subscription revenue needing to grow by around $1 billion in total between 2027 and 2028.

What is important to note is that during that period, we are expecting meaningful, significant growth out of homes.com—meaningfully faster than our other brands—with our other subscription businesses also growing in the low double-digit range, along with the other group, which is consistent with our historic growth. Timing has a big impact here, obviously, when these bookings happen and how that rolls into revenue. Most importantly, we are committed to delivering on the adjusted EBITDA targets we set out for 2028 and 2030. This can occur in a number of ways. We can deliver it through our 15% revenue CAGR, which we are very committed to.

We can overachieve our revenue targets and invest in additional growth opportunities, which would continue to promote additional longer-term growth. Or, finally, we can rationalize costs if revenue growth is less than 15%. Importantly, as Andy mentioned, we are fully committed to our stated homes.com net investment number. We are well on track to hit that number this year, and we gave you guidance through 2030, and we will hit those numbers. Our primary focus at CoStar Group, Inc. today is to drive revenue, to drive EBITDA growth, and margin expansion through 2030 and beyond. I think that gives you the building blocks to start thinking about your question.

Ryan Tomasello: Thanks, Chris. Appreciate the detailed color.

Operator: Thank you. Our next question comes from Peter Christiansen with Citi. You may proceed.

Peter Christiansen: Good evening. Thanks for the question. Really good script this quarter, guys; lots to like and the transparency on a number of fronts. That said, I want to dig into bookings again a little bit here, and particularly Apartments pricing. You showed some really good rooftop growth last quarter, and we know that you have been winning back some share there. Some of that share has been lower-priced opportunities. Thinking about the competitive dynamic, how that has changed and maybe the mix shift on tiering of ads there, just wondering if you could give us a sense of what has been generally the pricing impact and how that might be impacting overall bookings production? Thank you.

Andrew Florance: I would comment on one point that I think I commented on last quarter. We picked up a lot of rooftops from Rent.com. As that whole thing went the way it went, there was an opportunity to do that. That became a primary focus for our sales force: to go after those rooftops when they were in transition. They put a lot of effort into that. That is a once-in-a-decade opportunity to do a share shift. The nice thing is we were not buying those from anyone; we were just winning them in the organic market. Now, those advertisers had been with Apartment Guide and Rent.com through a bankruptcy and through a degradation of a business over several years.

So they tend to lean towards lower-ARPU rooftops—often lower rental rates, smaller unit counts, that kind of stuff. That has driven, for several quarters, our rooftop revenue ARPU down somewhat. I am not seeing a major shift in levels or depth advertising. The thing that really struck me was these folks coming out of Rent.com were lower-end customers—very important customers; they just happen to have more budget properties.

Operator: Thank you. Our next question comes from George Tong with Goldman Sachs. You may proceed.

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George Tong: Sticking with Apartments.com, the revenue growth moderated sequentially to 10% year over year. What would need to change to drive a reacceleration from here? Or do you think this is the right long-term run-rate growth for the platform?

Andrew Florance: I think the thing that reaccelerates revenue growth is our targeted continued growth in the sales force. As the revenue gets bigger and bigger, you need to have more sales to deal with the revenue opportunity. There is clearly plenty of open opportunity out there. We are still relatively early in penetrating the opportunity. I think homes.com presents an important strategic opportunity in that it can grow more traffic. It is already our biggest syndication partner into Apartments.com. It allows us to strengthen our single-family presence there and draw renters in from multiple angles and multiple perspectives. I think we can continue to improve on the current growth rate, and I think we still remain significantly competitively advantaged.

You want to add anything to that, Chris?

Christian Lown: No. That is great.

George Tong: Very helpful. Thank you.

Operator: Thank you. Our next question comes from Alexei Gogolev with JPMorgan. You may proceed.

Alexei Gogolev: Hi, everyone. Great to hear from you. Both you and Chris mentioned the sales productivity ramp. With the headcount additions across the sales organization, what are you seeing in terms of ramp times or quota attainment, maybe some productivity by cohort, and how does that inform your hiring pace for the rest of the year?

Andrew Florance: It would vary by brand. I think we are seeing CoStar productivity per rep improve. I thought it was interesting to see that broker sales and tenant sales are up in CoStar. That is generally an indication of improving commercial real estate market conditions and more robust selling opportunities. On Apartments.com, as your revenues have grown and you need to keep growing the sales force to match, they are handling—even with a 99% monthly renewal rate—a larger absolute cancellation level, so you need to keep growing that sales force, and it actually grows productivity as you grow the sales force. On LoopNet, we definitely want to continue to grow that sales force.

The asset-based pricing will increase productivity for sure, but you have a relatively large base of revenue compared to the size of the sales force, and ROI across all those sales forces is very solid. With homes.com, you are still dealing with a very rookie sales force. It is unprecedented to have that many salespeople with that little tenure given the fact that we really just launched that group a year or so ago. I am spending more time now that I have a little more free time with our sales force and feel like we are making some good headway in improving sales force productivity.

It feels good to be back in there working on sales force productivity, and I see a lot of opportunity to improve it. With a group like the homes.com group, we are going to be continuing to grow our sales force in the field because we are seeing higher productivity in the field salespeople than we do in the centralized sales force. We are also seeing high sales productivity with our new-homes advertising salespeople at homes.com. I am also optimistic that we are going to see productivity improvements with our inside sales team at homes.com.

So the growth in that group is really field and new-home sales where the numbers are pretty good, and then I am working on bringing up the core inside group, and I think we are having some success there.

Christian Lown: Andy, the only thing I would add is that it is important to realize that we really started on this journey to increase our sales force roughly about this time last year. There have been pretty significant increases in sales force across all of our brands, and they all came in at different times. For instance, LoopNet recently added a lot of salespeople to get to the number I talked about. We do an incredible job tracking the cohorts. We look at their evolution. We track them on a six-month, 12-month, and 18-month cohort basis, so we see the development that we want to see.

It is important to note that we started on this journey basically about a year ago and then accelerated through last year. We feel good about that productivity and cohort development, but this does take time to get them up to full productivity. I believe the number for Apartments.com is that at year five they are twice as productive as they were at the end of year one. It is a multiyear scale-up. Some people enter at a really high level; some people scale up through a couple of years.

Operator: Thank you. Our next question comes from Stephen Sheldon with William Blair. You may proceed.

Stephen Sheldon: Thanks for taking my question. Just wanted to follow up on the sales capacity and productivity topic. What has changed, if anything, in terms of where you will deploy incremental sales over the rest of the year and into next? Are there certain areas of strength—either by segment or geography—where you may be pushing the pedal more? On the flip side, are there any areas where productivity is not progressing the way you would expect where it could make sense to cut back or potentially shift into other areas? So from here, what has changed in terms of your plans for incremental sales capacity investments?

Andrew Florance: Sure, and I hope I give you a good brain dump of all things we are thinking about there. I am seeing really good results with our new-home salespeople. The folks who are going out and dealing with major homebuilders and giving them enhanced exposure on homes.com are very productive. We will grow that at a measured pace because you do not want to slam too many people into a segment at once.

We are going to invest in adding about 50 more folks into our field sales for homes.com because those field sales folks who can actually have one-on-one meetings, show up at open houses, show up at brokers’ offices, are more productive than the people in the inside sales work. We are going to do that in batches of five cities at a time. So we might hire up eight people in Washington, Dallas, and three other markets, stabilize it, have an RD in each market, then do the next round. We would likely prioritize our marketing spend and SEM investment around those markets where we are building that field sales team up.

We have always felt that the field sales team through time would be the most productive for homes.com. I am also enjoying working a bit more with the inside sales team, making sure that they have the right value propositions and improving their pitch, and we believe that we have the right number, but we want to tighten the pitch, the service, and the pricing, frankly. I think the product is currently underpriced. When I look at the kind of benefit these folks are getting when they get marketing benefit of homes.com, we are not charging enough, and we need to be bolder about that pricing because we are delivering enormous value.

On the Apartments.com group, I would like to see our field sales team continue to grow at a measurable pace. The field sales team with Apartments.com is consistently the most productive. And then with LoopNet, I would like to see that field sales team keep growing at an incremental measured pace because, again, their headcount is not quite adequate as a ratio relative to their growing revenue base. I think with Ben focusing on the asset-based pricing effectively now, there is a lot of opportunity there. We are growing the Matterport sales team, and again, we are doing that in measured batches of probably 20 a quarter or something like that, so we are holding our productivity up.

It is nice to be back in the game and spending more time on sales than on other things.

Christian Lown: Yes, and the Matterport comment was a great one because it is such a huge opportunity given the limited sales force we had when we acquired the company. We have really put in place go-to-market, TAM strategy, etc., and we are expecting great things out of the Matterport sales force over the coming years.

Stephen Sheldon: Good to hear. Thank you.

Operator: Thank you. Next question comes from Jeffrey Meuler with Baird. You may proceed.

Jeffrey Meuler: Thanks. Can you help put the sequential trends in net bookings the last few quarters in context? This is the third straight quarter of sequential decline in the net bookings number. If you started picking up the pace of hiring a year ago, I would think that productivity would be building over the last year. I get that Q2 2025 is a good quarter, but this quarter is still quite a bit below what it was in 2023 before you launched Homes and when you had a much smaller sales force. I know you are getting a million questions on sales; I think we are struggling to understand it. Thank you.

Christian Lown: I understand. We started putting out the quarterly total bookings because we thought that was important for people to see the trends. Obviously, there is variability. As you said, last year we had a very interesting situation. The first quarter was deemed weak; the second quarter was great. There is some variability, but we feel really good about the opportunity set and the underlying productivity we are seeing out of the sales force, and the flywheel should really start in the second half of this year. We feel really good about the direction.

Andrew Florance: And I think we have the same conversation every first quarter. It is like Groundhog Day. Our first quarter tends to be a little lighter. Our second quarter always tends to be our strongest. So when you talk about three quarters down, remember second quarter is our strongest. I mentioned Apartmentalize. That is a huge bookings opportunity for the residential segment, and we enter that this year with incredibly strong product—with Apartments AI and Homes being a major contributor. Our product teams have been pushing aggressively to make sure that we have a bunch of new rental features in homes.com, and we will enter that in a strong place.

You are still dealing with a sales force at homes.com where you do not have many folks with more than a year of experience. It will not be a junior sales force in two or three quarters; it will start to move into post-rookie status.

Jeffrey Meuler: Thank you.

Operator: Our next question comes from Curtis Nagle with Bank of America. You may proceed.

Curtis Nagle: In the press release, you cited some strong numbers in terms of engagement and member agents coming on from homes.com. Near term, how is this translating into revenue momentum within the segment? Can you comment on that?

Andrew Florance: I would say the most important thing when you look at translating into revenue momentum is that now that we have about a year or so with this—10,000 users in Q1 2025 and now up to 35,000—we have a lot more information on how the product is impacting their earnings, and the results are phenomenal. That gives me comfort that we can begin to bring the ARPU up pretty materially, and that we will have growing productivity with that group. You have good synergies with Apartments.com and their productivity. All of that is why we have the confidence that we are building revenue momentum.

Curtis Nagle: Not to belabor a point, but it is obviously top of mind. Would you be willing to provide bookings guidance for Q2, just at a minimum, so we do not continue to see such a mismatch between internal expectations and investor expectations?

Christian Lown: Bookings is a number we have never guided to. There are only two or three of you who actually put out a bookings number. If you look at it back historically, you see variability in quarters. Last year, Q1 2025 was 18% of bookings for the full year. We provided booking numbers for homes.com because we wanted transparency. We wanted people to understand the investment and what is going on, but getting into guidance around total bookings is not something we are going to do.

Andrew Florance: And, again, remember, bookings are up 20% year over year.

Curtis Nagle: Okay. I appreciate it. Thank you.

Operator: Our next question comes from Analyst with Jefferies. You may proceed.

Analyst: Thank you. Andy, can you talk about the pricing strategy in homes.com at this point, and the idea of raising pricing for new members on May 1? Why not maybe wait a year? The metrics are very supportive of that pricing action, but perhaps you could build the user base further. Help us understand timing there.

Andrew Florance: I think we can do both. We can grow the user base and capture more of the value. Particularly for the folks who are earning under $250,000 a year—there are many of those agents. I am looking at the close rates for the folks who are well trained and who are in the upper half of homes.com salespeople, and the close rates are extremely high—north of 50%. Once you get to that high close rate, you start to feel that you need to bring the price up. I think there is room to recognize more value and, at the same time, continue to keep the same growth and possibly accelerate the growth in the number of members.

There are a couple of places, looking at the different cohorts of agents and profiles of agents, where we will probably bring the pricing down a touch. In the biggest cohorts of agents, we are leaving too much on the table. We are providing a lot of value, and I think we can push price and keep member count growing. We will optimize it by cohort, but I feel pretty good about that right now.

Operator: Our next question comes from Brett Huff with Stephens. You may proceed.

Brett Huff: Thanks for taking the question and good evening, guys. Thanks for the ROI stats on homes.com. That is super helpful and something we have been focused on. My question is on Matterport. We feel that it is a really big underlying structural piece of the business that is underappreciated. You gave great stats on lingering on the site and things like that. It is clearly a great enhancer to all of the products that you have.

Can you talk about balancing how you price it and distribute it just to improve the product generally, and also talk a little bit about Matterport as a function or a module of data that is going to help you differentiate and remain on the edge of proprietary data? I heard both of those themes. Is there a pricing given trying to maybe do both, and how do you think about pricing and distribution of that? Thank you.

Andrew Florance: There are a lot of elements in pricing and distribution. Starting from the last question backwards, part of my thinking around bringing the homes.com ARPU up a bit is that a core value proposition there is the Matterports, the exterior 3Ds we build, and the floor plans we build. That delivers a lot of value. You have heard the conversion stats—when people have a Matterport, they are getting about 30 times the views and 56 times more tour requests. There is a part of the Matterport pricing that is embedded in a monthly subscription or monthly advertising fee for either Apartments, Land, LoopNet, or homes.com. You can recognize a little bit of pricing value there with Matterport.

With Domain, it is a little bit different. There, we are using Matterport to get people to upgrade to higher depth-level advertising, so you are getting price appreciation but you are actually giving them value—effectively you are selling a Matterport when you do that. There is a very favorable response to that in Australia. A big change with Matterport is that when we acquired Matterport, they were very focused on mass subscription of low-end accounts using the iPhone as the capture device. We actually feel that the professional user of Matterport—the real estate agent, the leasing company, the architectural/engineering/construction company—is the biggest part of the market, and they want speed of capture and quality of capture.

We are refocusing folks towards a more aggressive price point on the Matterport Pro3 camera and then a higher SaaS subscription price for regular users. So we are pulling the hardware price down and focusing more on the SaaS subscription side—a razor-and-razor-blade strategy. We are working aggressively on the Matterport Pro4 camera. There is an engineering team meeting right now in Mountain View reviewing the final specs on that. You are going to have more SaaS revenue at slightly higher price points and lower hardware revenue. Then the pricing is reflected across the board in the subscription rates or advertising rates with LoopNet, Apartments, Homes, and Land. In terms of competitive differentiation, I am very excited about that.

I described the X-ray function; it does not do it justice. The ability to produce these Gaussian splats that make an exterior model that allows you to see the neighborhood and fly around the house, and then as you approach the house, the walls disappear and you move into the house—or as you fly a synthetic drone, a virtual drone towards the house. The ability to take off the roof and look into the second floor, pull it up and look into the first floor. The ability to do side-by-side comparisons in AEC. We have a very robust product roadmap right now that will continue to differentiate us.

We do not feel that there is anyone really keeping up with our innovation pace or development pace. The earnings call sounded a little bit like a Matterport earnings call because it came up in every other thing I said, but to the credit of the development team and the leadership team at Matterport, they are leaning in to facilitating success in all of our products with that differentiating technology. It is good stuff.

Operator: I would now like to turn the call back over to Andrew Florance for any closing remarks.

Andrew Florance: I would like to thank everyone for joining us on this quarter's earnings call, and I look forward to reporting our progress on the next quarter's earnings call. Thank you very much for joining us.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

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