It has been about a month since the last earnings report for CoStar Group (CSGP). Shares have lost about 3.8% in that time frame, underperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is CoStar due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its latest earnings report in order to get a better handle on the important drivers.
CoStar Group Q3 Earnings Beats Estimate, Revenue Increased Y/Y
CoStar Group reported non-GAAP earnings of 23 cents per share in the third quarter of 2025, which surpassed the Zacks Consensus Estimate by 27.78%. The company registered earnings of 22 cents per share in the year-ago quarter, which increased 4.5% year over year.
Revenues of $833.6 million beat the Zacks Consensus Estimate by 0.91% and increased 20.4% year over year. This represents the company’s 58th consecutive quarter of double-digit revenue growth. The upside was driven by robust performance in key segments.
CSGP’s Top-Line Details
CoStar’s revenues (33.2% of revenues) of $277 million beat the consensus estimate by 0.77% and increased 7.8% year over year.
Information Services’ revenues (5% of revenues) of $41.3 million beat the consensus mark by 4.29% and increased 25.2% year over year.
Multifamily revenues (36.3% of revenues) of $303 million missed the consensus estimate by 0.73% but increased 11.5% year over year.
LoopNet’s revenues (9.5% of revenues) of $79.3 million beat the consensus mark by 0.76% and increased 11.8% year over year.
Third-quarter residential revenues (6.6% of revenues) were $54.9 million, which surpassed the consensus mark by 74.29% and increased 98.2% year over year.
Other marketplace revenues (9.4% of revenues) of $78.1 million beat the consensus mark by 4.13% and increased 141.8% year over year.
In the third quarter of 2025, Net New Bookings reached $84 million, representing a 92% increase year over year.
In the reported quarter, CoStar’s sites reached 143 million average monthly unique visitors, while the Homes.com Network achieved 115 million.
CoStar’s Operating Details
In the reported quarter, selling and marketing expenses increased 26.3% year over year to $418.3 million. As a percentage of revenues, selling and marketing expenses were 50.2% compared with 47.8% in the year-ago quarter.
General and administrative expenses, as a percentage of revenues, expanded 360 basis points (bps) on a year-over-year basis to 18.8%.
Software development expenses, as a percentage of revenues, expanded 90 bps, while Customer base amortization expenses rose 230 bps year over year.
Operating expenses increased 34.9% year over year to $712.5 million. As a percentage of revenues, operating expenses increased 920 bps year over year to 85.5%.
Adjusted EBITDA was $114.6 million compared with the year-ago quarter’s $75.9 million. The adjusted EBITDA margin expanded 280 bps to 13.7%.
CSGP’s Balance Sheet & Cash Flow Statement
CoStar reported cash and cash equivalents of $1.93 billion as of Sept. 30, 2025, compared with $3.62 billion as of June 30.
The company had a long-term debt of $992.9 million as of Sept. 30, 2025, compared with $992.5 million as of June 30.
Cash generated by operating activities was $267.9 million in the reported quarter compared with $199.7 million in the previous quarter.
CSGP Initiates Positive Q4 & 2025 Guidance
For the fourth quarter of 2025, the company expects revenues between $885 million and $895 million, indicating year-over-year growth of 25% at the mid-point.
The company anticipates adjusted EBITDA between $150 million and $160 million for the fourth quarter of 2025.
CSGP expects fourth-quarter non-GAAP earnings per share between 26 cents and 28 cents.
For 2025, revenues are expected to be between $3.23 billion and $3.24 billion, indicating year-over-year growth of 18% at the mid-point.
The company anticipates adjusted EBITDA between $415 million and $425 million for 2025.
CSGP expects 2025 non-GAAP earnings per share between 82 cents and 84 cents.
How Have Estimates Been Moving Since Then?
It turns out, estimates revision have trended downward during the past month.
The consensus estimate has shifted -12.59% due to these changes.
VGM Scores
Currently, CoStar has a poor Growth Score of F, however its Momentum Score is doing a lot better with a B. However, the stock was allocated a score of F on the value side, putting it in the bottom 20% quintile for this investment strategy.
Overall, the stock has an aggregate VGM Score of F. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of these revisions indicates a downward shift. It's no surprise CoStar has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
Performance of an Industry Player
CoStar is part of the Zacks Computers - IT Services industry. Over the past month, Infosys (INFY), a stock from the same industry, has gained 3.2%. The company reported its results for the quarter ended September 2025 more than a month ago.
Infosys reported revenues of $5.08 billion in the last reported quarter, representing a year-over-year change of +3.7%. EPS of $0.20 for the same period compares with $0.19 a year ago.
For the current quarter, Infosys is expected to post earnings of $0.20 per share, indicating a change of +5.3% from the year-ago quarter. The Zacks Consensus Estimate remained unchanged over the last 30 days.
Infosys has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of C.
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CoStar Group, Inc. (CSGP): Free Stock Analysis Report American Noble Gas Inc. (INFY): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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