CoStar Group Reports 15% Revenue Growth to $781.3 Million in Q2 2025

CoStar Group, Inc. reported a significant increase in financial performance for the second quarter of 2025, with total revenues reaching $781.3 million, a 15% increase from $677.8 million in the same period last year. The company's gross profit also rose to $613.5 million, up from $542 million, although the gross profit margin slightly decreased from 80% to 79%. The increase in revenues was driven by a notable rise in "Other Revenues," which surged by 139% to $74.7 million, primarily due to the acquisition of Matterport. Additionally, revenues from the Multifamily segment increased by 11%, while CoStar and LoopNet revenues grew by 7% and 8%, respectively.

Despite the revenue growth, CoStar Group reported a net income of $6.2 million for the quarter, a decline of 68% compared to $19.2 million in the prior year. This decrease was attributed to higher operating expenses, which rose to $640.7 million, reflecting a 15% increase driven by higher costs in selling and marketing, software development, and general administrative expenses. Notably, customer base amortization expenses surged by 160% to $26.5 million, largely due to the recent acquisitions. The company also experienced a significant drop in interest income, which fell by 39% to $32.5 million, further impacting overall profitability.

In terms of strategic developments, CoStar Group completed the Matterport Acquisition in February 2025, which has been integrated into its service offerings. The acquisition is expected to enhance CoStar's capabilities in 3D digital twin technology, allowing for improved property analytics and user engagement. Additionally, the company is in the process of acquiring Domain, with a binding agreement to purchase 100% of its shares for approximately A$2.4 billion ($1.5 billion). This acquisition is subject to various approvals and conditions, and the company anticipates its completion in the third quarter of 2025.

Operationally, CoStar Group reported a total employee headcount of 4,500 as of June 30, 2025, reflecting an increase due to the Matterport acquisition. The company also noted a strong customer base, with subscription revenues accounting for approximately 95% of total revenues for the quarter. The company’s contract renewal rates remained stable at around 89%, indicating solid customer retention. Furthermore, CoStar's international revenues increased by 7%, driven by growth in its North American segment, which accounted for the majority of total revenues.

Looking ahead, CoStar Group anticipates continued revenue growth driven by its strategic investments in technology and acquisitions. The company plans to enhance its Homes.com platform and integrate Matterport's technology across its services. However, it also acknowledges potential challenges, including economic conditions and competition, which could impact future performance. The company remains committed to leveraging its extensive data and analytics capabilities to drive growth and improve operational efficiency.