CoStar’s Earnings Show a Pivot to Residential Amid Commercial Slowdown

By Franco Faraudo

The CoStar Group had its earnings call yesterday, and the focus was squarely on the residential sector. The company’s revenue grew 12 percent year over year, giving the company an incredible 50 straight quarters of double-digit growth stretching back to 2011. But, as CEO Andy Florence explained, that revenue has been more diversified into new markets, new products, and new geographies.

The majority of the call was dedicated to CoStar’s big push into the residential marketplace. In 2021, CoStar bought for $156 million in cash. At the time, many worried that it would be hard to get traffic to a somewhat unknown website when well-established marketplaces like Zillow,, and Redfin already existed. Now is second only to Zillow in terms of traffic, with 100 million unique visitors in September, an increase of 1,290 percent.

Florence brought up the ongoing Sitzer/Burnett lawsuit against the National Association of Realtors. Interestingly, he sees the case as an opportunity for “The first-generation real estate portals leveraged this threatened buyer broker commission rule to divert listing leads from all the agents in the market to a small handful of agents who were then required to split their commissions with the portal,” Florence said. He then explained that this was not the same as the monetization strategy of, “Now that is one of the most heavily trafficked portals, there is a strong and viable alternative for lead generation available to agents that do not require usurious commission splits.”

It isn’t just the U.S. residential market that CoStar is pushing into. Last week, they offered £100 million to buy the U.K. property portal OnTheMarket. If they are able to close the deal, they plan to spend £46.5 million on sales in marketing for the website in the first year alone.

Finally, the conversation turned to the commercial market. Sales and leasing activity is still down, but there are some positive signs: property searchers were up 13 percent compared to the same period last year. The struggles that the industry is having could actually benefit some of the company’s business lines, like its new lender platform and the online auction platform Ten-X, which it acquired in 2020.

CoStar’s stock was down after the call, but that probably had more to do with the struggles of the market at large than anything Florence said. The ongoing growth for CoStar is proof that its acquisition strategy to push into new markets has been successful. CoStar has been the most dominant technology company in commercial real estate (at least in the U.S.) for decades now, and if this growth continues, they might be able to do the same for residential. If companies like Zillow are not already worried about their new, well-funded competition, they should be.

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