CoStar Group (NASDAQ:CSGP) shares dropped 14.3% in pre-market trading after the real estate data and marketplace company released second-quarter 2026 results that exceeded earnings expectations but disappointed investors with weaker-than-expected revenue guidance and a reduced full-year outlook.
Although profitability improved significantly during the quarter, the market focused on slowing revenue growth and softer booking trends, extending the stock’s decline from after-hours trading into Wednesday’s pre-market session.
Earnings Beat Fails to Offset Lower Revenue Outlook
CoStar reported adjusted earnings per share of $0.32, surpassing analysts’ consensus estimate of $0.29.
Adjusted EBITDA more than doubled from the same period last year to $184 million, lifting the company’s adjusted EBITDA margin to 20%, compared with 11% a year earlier.
However, management forecast third-quarter 2026 revenue of between $935 million and $945 million. The midpoint of that range came in roughly 2.9% below analysts’ expectations.
The company also lowered its full-year 2026 revenue guidance to a range of $3.715 billion to $3.755 billion, down from its previous outlook, which had been centred around $3.8 billion.
Slower Bookings Raise Growth Concerns
Investor sentiment was further weighed down by weaker booking activity.
Net new bookings totalled $69 million during the quarter, representing a decline of approximately 26% from a year earlier.
Management said the reduction reflected deliberate strategic decisions aimed at improving efficiency rather than weakening market conditions, but investors questioned what the slowdown could mean for future revenue growth.
Following the results, Keefe, Bruyette & Woods downgraded CoStar shares from Outperform to Market Perform and reduced its price target to $29 from $41.
Company-Specific Selling Pressure Intensifies
The broader market offered little explanation for the sharp decline, with the NASDAQ down around 0.3% and the S&P 500 trading broadly flat, indicating that the sell-off was driven almost entirely by CoStar’s earnings report and outlook.
The stock had already been under pressure in recent weeks following the departure of the company’s chief financial officer and a series of analyst price target reductions.
In pre-market trading, shares fell to $25.99, leaving the stock trading close to its 52-week low of $26.68.
Guidance Cut Overshadows Strongest Margin Performance in Years
Despite delivering its strongest profitability in several years, CoStar was unable to overcome investor concerns surrounding its weaker revenue outlook.
The combination of a reduced sales forecast, third-quarter guidance below Wall Street expectations, a sharp decline in bookings and a fresh analyst downgrade proved enough to outweigh the company’s earnings beat and substantial margin expansion.
CoStar Group
