CoStar Group Reports 19% Revenue Growth to $3.25 Billion, Net Income Declines

CoStar Group, Inc. reported a significant increase in its financial performance for the fiscal year ending December 31, 2025, with total revenue reaching $3.25 billion, a 19% increase from $2.74 billion in 2024. The company's net income, however, saw a decline to $7 million from $139 million in the previous year, primarily due to increased operating expenses and costs associated with recent acquisitions. The gross profit margin slightly decreased from 80% to 79%, reflecting higher costs of revenue, which rose by 23% to $686 million.

The company attributed its revenue growth to strong performances in both its Commercial and Residential Real Estate segments. Commercial Real Estate revenue increased by 18% to $1.79 billion, driven by a $103 million rise in CoStar revenue and contributions from the Matterport and Domain acquisitions. Residential Real Estate revenue also grew by 20% to $1.46 billion, bolstered by an increase in the number of agents and properties advertised, along with revenue from the Domain acquisition. The company reported annualized net new bookings of approximately $308 million, indicating a healthy demand for its subscription-based services.

Strategically, CoStar Group has been active in expanding its market presence through acquisitions, including the purchase of Matterport and Domain, which were completed in February and August 2025, respectively. These acquisitions are expected to enhance CoStar's offerings in 3D digital twin technology and expand its reach in international markets. The company is also focusing on integrating its residential platforms and launching additional AI-enabled features across its products, which are anticipated to drive future growth.

Operationally, CoStar Group's employee headcount has grown to over 8,000 across 20 countries, reflecting its expansion efforts. The company reported a contract renewal rate of approximately 89% for its subscription-based services, indicating strong customer retention. However, the increase in operating expenses, particularly in selling and marketing, software development, and general administrative costs, has raised concerns about profitability. The company plans to continue investing in its business and evaluating strategic growth opportunities while managing its cost structure.

Looking ahead, CoStar Group anticipates a moderation in revenue growth for its Commercial Real Estate segment in 2026, while expecting an acceleration in the Residential Real Estate segment due to the full-year impact of the Domain acquisition. The company remains committed to leveraging its extensive database and AI capabilities to enhance its service offerings and maintain its competitive edge in the real estate marketplace.