Attached files
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| EX-10.1 - EXHIBIT 10.1 - COSTAR GROUP, INC. | a101-1xcostar_amendmentand.htm |
| 8-K - 8-K - COSTAR GROUP, INC. | form8-k10x25x17earningsrel.htm |
Exhibit 99.1
_________________________________________________________________________________________________________
CoStar Group Announces Third Quarter Revenue Growth of 16%, Net Income Increases 48% and Company Raises Full Year Revenue and Earnings Guidance
WASHINGTON – October 25, 2017 – CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, announced today that revenue for the quarter ended September 30, 2017 was $248 million, an increase of 16% over revenue of $213 million in the third quarter of 2016. Net income for the third quarter of 2017 increased to $34 million or $1.04 per diluted share compared to $23 million in the third quarter of 2016, an increase of 48%. EBITDA in the third quarter of 2017 was $73 million, an increase of 26% over the third quarter of 2016.
“In the third quarter, we built upon our solid momentum in 2017 driving excellent growth with profitable revenue and strong sales,” said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. “Company-wide net new bookings continued to be exceptionally strong at $34 million in the third quarter of 2017, up 31% year-over-year. Our marketplace businesses are performing extremely well as we achieved year-over-year revenue growth in the third quarter of 25% in Multifamily and 21% in Commercial property and land. CoStar Suite revenue accelerated to 14% year-over-year growth. Margins are also expanding, as we achieved 34% adjusted EBITDA margins in the third quarter, up 1,100 basis points from 23% in the second quarter of this year.”
Florance continued, “We have successfully completed the integration of our CoStar and LoopNet databases. At that time, we converted LoopNet.com to a pure pay-to-list marketing site eliminating free listings and creating more value for our paid listers. Beginning in early October, our sales force hit the ground running with our focused cross-selling campaign to convert LoopNet information users to CoStar Suite and sell more paid advertising on LoopNet. In the first twelve days of the campaign, we closed over 500 deals. The response from our sales teams, clients, and prospects has been overwhelmingly positive. We believe this will ultimately result in significant revenue opportunities for the next several years.”
Year 2016-2017 Quarterly Results - Unaudited | ||||||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||||
2016 | 2017 | |||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||
Revenues | $ | 200 | $ | 207 | $ | 213 | $ | 218 | $ | 227 | $ | 237 | $ | 248 | ||||||||
Net income | 17 | 16 | 23 | 30 | 22 | 22 | 34 | |||||||||||||||
Net income per share - diluted | 0.52 | 0.48 | 0.72 | 0.91 | 0.68 | 0.68 | 1.04 | |||||||||||||||
Weighted average outstanding shares - diluted | 32.4 | 32.4 | 32.4 | 32.5 | 32.6 | 32.7 | 32.8 | |||||||||||||||
EBITDA | 48 | 46 | 58 | 64 | 55 | 44 | 73 | |||||||||||||||
Adjusted EBITDA | 58 | 56 | 67 | 75 | 64 | 54 | 84 | |||||||||||||||
Non-GAAP net income | 31 | 29 | 36 | 42 | 34 | 28 | 46 | |||||||||||||||
Non-GAAP net income per share - diluted | 0.95 | 0.91 | 1.11 | 1.29 | 1.05 | 0.86 | 1.41 | |||||||||||||||
Non-GAAP net income (defined below) for the quarter ended September 30, 2017 was $46 million or $1.41 per diluted share, an increase of $10 million versus the third quarter of 2016. Adjusted EBITDA (which excludes stock-based compensation and other items as defined below) was $84 million for the third quarter of 2017, an increase of 25% over the third quarter of 2016.
As of September 30, 2017, the Company had approximately $633 million in cash, cash equivalents and long term investments, while short and long-term debt outstanding, net of debt issuance costs, totaled approximately $305 million. Subsequent to the end of the third quarter, the Company completed a public offering of common stock on October 3, 2017. The proceeds from the stock offering net of underwriting discounts and commissions totaled $833 million. In addition, the Company restructured its outstanding credit facility on October 19, 2017, by increasing the size of its revolving credit facility to $750 million, putting in place a new five-year term, and prepaying the outstanding term loan in full. The Company intends to use the proceeds from the public stock offering and the revolving credit facility to support future growth, to fund all or a portion of any strategic acquisitions, for working capital and other general corporate purposes.
2017 Outlook
“We exceeded our third quarter top and bottom line estimates, and we are raising our full year 2017 earnings and revenue guidance,” stated Scott Wheeler, Chief Financial Officer of CoStar Group
The Company expects revenue to be in a range of approximately $962 million to $965 million for the full year of 2017, increasing the midpoint of the revenue outlook by approximately $7 million. For the fourth quarter, the Company expects revenue in a range of $251 million to $254 million.
Adjusted EBITDA for the full year of 2017 is expected to be in a range of $287 million to $291 million, an increase of $17 million at the midpoint from the prior outlook. For the fourth quarter, the Company expects adjusted EBITDA in a range of $85 million to $89 million.
For the full year of 2017, the Company expects non-GAAP net income per diluted share (defined below) in a range of approximately $4.65 to $4.73. The non-GAAP net income per diluted share outlook includes a $0.31 increase at the midpoint versus the previous outlook from strong operating performance, partially offset by approximately $0.09 net dilution related to the Company’s recent common stock offering and debt reduction, for a net increase of $0.22 per diluted share. For the fourth quarter, the Company expects non-
GAAP net income per diluted share in a range of $1.31 to $1.38, which includes net dilution of $0.11 from the common stock offering and debt restructuring.
The Company’s outlook excludes any impact from the pending acquisition of ForRent, which was announced September 12, 2017. Based on preliminary estimates and assuming a close date at the end of November 2017, the Company expects that ForRent will contribute $6 million - $8 million in revenue in the fourth quarter of 2017, and be slightly dilutive on a non-GAAP net income per share basis due to the impact of integration and purchase accounting adjustments.
The preceding forward-looking statements reflect CoStar Group’s expectations as of October 25, 2017, including forward-looking non-GAAP financial measures on a consolidated basis. We are not able to forecast with certainty whether or when certain events, such as acquisition-related costs, closing of the ForRent acquisition, the exact amounts or timing of investments, transition, restructuring, settlements or impairments will occur in any given quarter. Given the risk factors, uncertainties and assumptions discussed above, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.
Reconciliation of EBITDA, adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share and all of the disclosed non-GAAP financial measures to their GAAP basis results are shown in detail below, along with definitions for those terms. A reconciliation of forward-looking non-GAAP guidance to the most directly comparable GAAP measure, net income, can be found within the tables included in this release.
Non-GAAP Financial Measures
For information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the Company’s financial condition and results of operations, please refer to the Company’s latest periodic report.
EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before (i) interest income (expense), (ii) provision for income taxes, and (iii) depreciation and amortization.
Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before (i) stock-based compensation expense, (ii) acquisition and integration related costs, (iii) restructuring charges and related costs, and (iv) settlements and impairments incurred outside the Company’s normal business operations.
Non-GAAP net income is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before (i) amortization of acquired intangible assets, (ii) stock-based compensation expense, (iii) acquisition and integration related costs, (iv) purchase accounting adjustments, (v) restructuring charges and related costs, (vi) settlements and impairments and (vii) debt restructuring costs. From this figure, we then subtract an assumed provision for income taxes to arrive at non-GAAP net income. The company assumes a 38% tax rate in order to approximate our long-term effective corporate tax rate.
Non-GAAP net income per diluted share (also referred to as non-GAAP EPS) is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period. For periods with GAAP net losses and non-GAAP net income, the weighted-average outstanding
shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.
Earnings Conference Call
Management will conduct a conference call at 11:00 AM EDT on Thursday, October 26, 2017 to discuss earnings results for the third quarter of 2017 and the Company’s outlook. The audio portion of the conference call will be broadcast live over the Internet at www.costargroup.com/investors/events. To join the conference call by telephone, please dial (800) 230-1096 (from the United States and Canada) or (612) 288-0340 (from all other countries) and refer to conference code 431618. An audio recording of the conference call will be available for replay approximately one hour after the call's completion and will remain available for a period of time following the call. To access the recorded conference call, please dial (800) 475-6701 (from the U.S. and Canada) or (320) 365-3844 (from all other countries) using access code 431618. The webcast replay will also be available in the Investors section of CoStar Group's website for a period of time following the call.
CoStar Group, Inc. | ||||||||||||||||
Condensed Consolidated Statements of Operations-Unaudited | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Revenues | $ | 247,533 | $ | 212,711 | $ | 711,239 | $ | 619,319 | ||||||||
Cost of revenues | 55,483 | 42,222 | 162,102 | 127,801 | ||||||||||||
Gross margin | 192,050 | 170,489 | 549,137 | 491,518 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing | 72,705 | 75,414 | 240,833 | 231,086 | ||||||||||||
Software development | 21,536 | 19,357 | 67,054 | 56,539 | ||||||||||||
General and administrative | 35,998 | 30,572 | 104,550 | 88,275 | ||||||||||||
Customer base amortization | 4,298 | 5,550 | 13,642 | 17,602 | ||||||||||||
134,537 | 130,893 | 426,079 | 393,502 | |||||||||||||
Income from operations | 57,513 | 39,596 | 123,058 | 98,016 | ||||||||||||
Interest and other income | 555 | 344 | 1,589 | 587 | ||||||||||||
Interest and other expense | (2,901) | (2,498) | (8,280) | (7,462) | ||||||||||||
Income before income taxes | 55,167 | 37,442 | 116,367 | 91,141 | ||||||||||||
Income tax expense | 20,990 | 14,241 | 37,876 | 35,643 | ||||||||||||
Net income | $ | 34,177 | $ | 23,201 | $ | 78,491 | $ | 55,498 | ||||||||
Net income per share - basic | $ | 1.05 | $ | 0.72 | $ | 2.42 | $ | 1.73 | ||||||||
Net income per share - diluted | $ | 1.04 | $ | 0.72 | $ | 2.40 | $ | 1.71 | ||||||||
Weighted average outstanding shares - basic | 32,444 | 32,186 | 32,375 | 32,152 | ||||||||||||
Weighted average outstanding shares - diluted | 32,814 | 32,440 | 32,705 | 32,423 | ||||||||||||
CoStar Group, Inc. | ||||||||||||||||||||
Reconciliation of Non-GAAP Financial Measures-Unaudited | ||||||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||||||
Reconciliation of Net Income to Non-GAAP Net Income | ||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Net income | $ | 34,177 | $ | 23,201 | $ | 78,491 | $ | 55,498 | ||||||||||||
Income tax expense | 20,990 | 14,241 | 37,876 | 35,643 | ||||||||||||||||
Income before income taxes | 55,167 | 37,442 | 116,367 | 91,141 | ||||||||||||||||
Amortization of acquired intangible assets | 8,498 | 11,286 | 28,731 | 34,721 | ||||||||||||||||
Stock-based compensation expense | 9,743 | 9,311 | 29,203 | 26,981 | ||||||||||||||||
Acquisition and integration related costs | 1,224 | — | 1,996 | 2,258 | ||||||||||||||||
Restructuring and related costs | — | 66 | — | 66 | ||||||||||||||||
Settlements and impairments | — | — | (760 | ) | — | |||||||||||||||
Non-GAAP income before income taxes | 74,632 | 58,105 | 175,537 | 155,167 | ||||||||||||||||
Assumed rate for income tax expense * | 38 | % | 38 | % | 38 | % | 38 | % | ||||||||||||
Assumed provision for income tax expense | (28,360) | (22,080) | (66,704) | (58,963) | ||||||||||||||||
Non-GAAP net income | $ | 46,272 | $ | 36,025 | $ | 108,833 | $ | 96,204 | ||||||||||||
Net income per share - diluted | $ | 1.04 | $ | 0.72 | $ | 2.40 | $ | 1.71 | ||||||||||||
Non-GAAP net income per share - diluted | $ | 1.41 | $ | 1.11 | $ | 3.33 | $ | 2.97 | ||||||||||||
Weighted average outstanding shares - basic | 32,444 | 32,186 | 32,375 | 32,152 | ||||||||||||||||
Weighted average outstanding shares - diluted | 32,814 | 32,440 | 32,705 | 32,423 | ||||||||||||||||
* A 38% tax rate is assumed, which approximates our long-term effective corporate tax rate. | ||||||||||||||||||||
Reconciliation of Net Income to EBITDA and Adjusted EBITDA | ||||||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Net income | $ | 34,177 | $ | 23,201 | $ | 78,491 | $ | 55,498 | ||||||||||||
Amortization of acquired intangible assets in cost of revenues | 4,200 | 5,736 | 15,089 | 17,119 | ||||||||||||||||
Amortization of acquired intangible assets in operating expenses | 4,298 | 5,550 | 13,642 | 17,602 | ||||||||||||||||
Depreciation and other amortization | 6,621 | 6,794 | 19,546 | 18,320 | ||||||||||||||||
Interest and other income | (555) | (344) | (1,589) | (587) | ||||||||||||||||
Interest and other expense | 2,901 | 2,498 | 8,280 | 7,462 | ||||||||||||||||
Income tax expense | 20,990 | 14,241 | 37,876 | 35,643 | ||||||||||||||||
EBITDA | $ | 72,632 | $ | 57,676 | $ | 171,335 | $ | 151,057 | ||||||||||||
Stock-based compensation expense | 9,743 | 9,311 | 29,203 | 26,981 | ||||||||||||||||
Acquisition and integration related costs | 1,224 | — | 1,996 | 2,258 | ||||||||||||||||
Settlements and impairments | — | — | (760) | — | ||||||||||||||||
Restructuring and related costs | — | 66 | — | 66 | ||||||||||||||||
Adjusted EBITDA | $ | 83,599 | $ | 67,053 | $ | 201,774 | $ | 180,362 | ||||||||||||
CoStar Group, Inc. | |||||||||
Condensed Consolidated Balance Sheets | |||||||||
(in thousands) | |||||||||
September 30, 2017 | December 31, 2016 | ||||||||
(Unaudited) | |||||||||
ASSETS | |||||||||
Current assets: | |||||||||
Cash and cash equivalents | $ | 622,995 | $ | 567,223 | |||||
Accounts receivable, net | 60,871 | 48,537 | |||||||
Income tax receivable | — | 129 | |||||||
Prepaid expenses and other current assets | 16,215 | 11,602 | |||||||
Total current assets | 700,081 | 627,491 | |||||||
Long-term investments | 9,952 | 9,952 | |||||||
Deferred income taxes, net | 6,477 | 7,273 | |||||||
Property and equipment, net | 84,326 | 87,568 | |||||||
Goodwill | 1,283,190 | 1,254,866 | |||||||
Intangible assets, net | 191,178 | 195,965 | |||||||
Deposits and other assets | 5,392 | 1,948 | |||||||
Total assets | $ | 2,280,596 | $ | 2,185,063 | |||||
LIABILITIES AND STOCKHOLDERS' EQUITY | |||||||||
Current liabilities: | |||||||||
Accounts payable, accrued expenses and other current liabilities | $ | 94,109 | $ | 83,916 | |||||
Current portion of long-term debt | 36,910 | 31,866 | |||||||
Deferred revenue | 45,568 | 39,164 | |||||||
Total current liabilities | 176,587 | 154,946 | |||||||
Long-term debt, less current portion | 268,586 | 306,473 | |||||||
Deferred gain on sale of building | 16,823 | 18,715 | |||||||
Deferred rent | 30,090 | 31,589 | |||||||
Deferred income taxes, net | 22,101 | 18,386 | |||||||
Income taxes payable | 3,982 | 741 | |||||||
Stockholders' equity | 1,762,427 | 1,654,213 | |||||||
Total liabilities and stockholders' equity | $ | 2,280,596 | $ | 2,185,063 | |||||
CoStar Group, Inc. | |||||||||
Condensed Consolidated Statements of Cash Flows - Unaudited | |||||||||
(in thousands, unaudited) | |||||||||
Nine Months Ended September 30, | |||||||||
2017 | 2016 | ||||||||
Operating activities: | |||||||||
Net income | $ | 78,491 | $ | 55,498 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
Depreciation and amortization | 48,277 | 53,041 | |||||||
Amortization of debt issuance costs | 2,157 | 2,407 | |||||||
Stock-based compensation expense | 29,203 | 26,981 | |||||||
Deferred income tax expense, net | 6,087 | 5,554 | |||||||
Provision for losses on accounts receivable | 3,992 | 6,462 | |||||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||||
Accounts receivable | (15,809) | (13,808) | |||||||
Prepaid expenses and other current assets | (3,561) | (1,398) | |||||||
Deposits and other assets | (3,387) | 473 | |||||||
Accounts payable and other liabilities | 11,888 | 12,864 | |||||||
Deferred revenue | 5,969 | 386 | |||||||
Net cash provided by operating activities | 163,307 | 148,460 | |||||||
Investing activities: | |||||||||
Proceeds from sale and settlement of investments | — | 4,700 | |||||||
Purchases of property and equipment and other assets | (19,754) | (11,692) | |||||||
Acquisitions, net of cash acquired | (47,767) | (10,443) | |||||||
Net cash used in investing activities | (67,521) | (17,435) | |||||||
Financing activities: | |||||||||
Payments of long-term debt | (35,000) | (20,000) | |||||||
Payments of issuance costs | (643) | — | |||||||
Repurchase of restricted stock to satisfy tax withholding obligations | (14,309) | (14,573) | |||||||
Proceeds from exercise of stock options and employee stock purchase plan | 9,058 | 4,791 | |||||||
Net cash used in financing activities | (40,894) | (29,782) | |||||||
Effect of foreign currency exchange rates on cash and cash equivalents | 880 | (962) | |||||||
Net increase in cash and cash equivalents | 55,772 | 100,281 | |||||||
Cash and cash equivalents at the beginning of period | 567,223 | 421,818 | |||||||
Cash and cash equivalents at the end of period | $ | 622,995 | $ | 522,099 | |||||
CoStar Group, Inc. | |||||||||||||||
Results of Segments-Unaudited | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | ||||||||||||||
2017 | 2016 | 2017 | 2016 | ||||||||||||
Revenues | |||||||||||||||
North America | $ | 239,537 | $ | 205,637 | $ | 688,704 | $ | 598,757 | |||||||
International | |||||||||||||||
External customers | 7,996 | 7,074 | 22,535 | 20,562 | |||||||||||
Intersegment revenues * | 5 | 3 | 27 | 24 | |||||||||||
Total International revenues | 8,001 | 7,077 | 22,562 | 20,586 | |||||||||||
Intersegment eliminations | (5) | (3) | (27) | (24) | |||||||||||
Total revenues | $ | 247,533 | $ | 212,711 | $ | 711,239 | $ | 619,319 | |||||||
EBITDA | |||||||||||||||
North America | $ | 72,267 | $ | 56,305 | $ | 170,064 | $ | 148,296 | |||||||
International | 365 | 1,371 | 1,271 | 2,761 | |||||||||||
Total EBITDA | $ | 72,632 | $ | 57,676 | $ | 171,335 | $ | 151,057 | |||||||
*Intersegment revenues recorded were attributable to services performed for the Company's wholly owned subsidiary, CoStar Portfolio Strategy by Grecam S.A.S. (“Grecam”), a wholly owned subsidiary of CoStar Limited, the Company’s wholly owned U.K. holding company. Intersegment revenues are recorded at an amount the Company believes approximates fair value. North America EBITDA includes a corresponding cost for the services performed by Grecam for CoStar Portfolio Strategy. | |||||||||||||||
CoStar Group, Inc. | ||||||||||||||||
Revenues by Services-Unaudited | ||||||||||||||||
(in thousands) | ||||||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||
Information and analytics | ||||||||||||||||
CoStar Suite | $ | 117,314 | $ | 103,261 | $ | 341,087 | $ | 301,969 | ||||||||
Information services | 18,716 | 19,486 | 55,364 | 58,336 | ||||||||||||
Online marketplaces | ||||||||||||||||
Multifamily | 72,257 | 57,654 | 204,324 | 164,752 | ||||||||||||
Commercial property and land | 39,246 | 32,310 | 110,464 | 94,262 | ||||||||||||
Total revenues | $ | 247,533 | $ | 212,711 | $ | 711,239 | $ | 619,319 | ||||||||
CoStar Group, Inc. Reconciliation of Non-GAAP Financial Measures with 2016-2017 Quarterly Results - Unaudited | ||||||||||||||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||||||||||||
Reconciliation of Net Income to Non-GAAP Net Income | ||||||||||||||||||||||||||||||
2016 | 2017 | |||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||||||||||
Net income | $ | 16.7 | $ | 15.6 | $ | 23.2 | $ | 29.6 | $ | 22.1 | $ | 22.2 | $ | 34.2 | ||||||||||||||||
Income tax expense | 11.2 | 10.2 | 14.2 | 16.0 | 13.3 | 3.6 | 21.0 | |||||||||||||||||||||||
Income before income taxes | 27.9 | 25.8 | 37.4 | 45.5 | 35.4 | 25.8 | 55.2 | |||||||||||||||||||||||
Amortization of acquired intangible assets | 11.9 | 11.5 | 11.3 | 10.8 | 10.9 | 9.3 | 8.5 | |||||||||||||||||||||||
Stock-based compensation expense | 8.3 | 9.3 | 9.3 | 9.4 | 9.4 | 10.1 | 9.7 | |||||||||||||||||||||||
Acquisition and integration related costs | 1.5 | 0.8 | — | — | 0.4 | 0.4 | 1.2 | |||||||||||||||||||||||
Restructuring and related costs | — | — | 0.1 | 1.8 | — | — | — | |||||||||||||||||||||||
Settlements and impairments | — | — | — | — | (0.8) | — | — | |||||||||||||||||||||||
Non-GAAP income before income taxes | 49.6 | 47.5 | 58.1 | 67.5 | 55.3 | 45.6 | 74.6 | |||||||||||||||||||||||
Assumed rate for income tax expense * | 38 | % | 38 | % | 38 | % | 38 | % | 38 | % | 38 | % | 38 | % | ||||||||||||||||
Assumed provision for income tax expense | (18.9) | (18.0) | (22.1) | (25.6) | (21.0) | (17.3) | (28.4) | |||||||||||||||||||||||
Non-GAAP net income | $ | 30.7 | $ | 29.4 | $ | 36.0 | $ | 41.8 | $ | 34.3 | $ | 28.3 | $ | 46.3 | ||||||||||||||||
Non-GAAP net income per share - diluted | $ | 0.95 | $ | 0.91 | $ | 1.11 | $ | 1.29 | $ | 1.05 | $ | 0.86 | $ | 1.41 | ||||||||||||||||
Weighted average outstanding shares - basic | 32.1 | 32.2 | 32.2 | 32.2 | 32.3 | 32.4 | 32.4 | |||||||||||||||||||||||
Weighted average outstanding shares - diluted | 32.4 | 32.4 | 32.4 | 32.5 | 32.6 | 32.7 | 32.8 | |||||||||||||||||||||||
* A 38% tax rate is assumed, which approximates our long-term effective corporate tax rate. | ||||||||||||||||||||||||||||||
Reconciliation of Net Income to EBITDA and Adjusted EBITDA | ||||||||||||||||||||||||||||||
2016 | 2017 | |||||||||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||||||||||
Net income | $ | 16.7 | $ | 15.6 | $ | 23.2 | $ | 29.6 | $ | 22.1 | $ | 22.2 | $ | 34.2 | ||||||||||||||||
Amortization of acquired intangible assets | 11.9 | 11.5 | 11.3 | 10.8 | 10.9 | 9.3 | 8.5 | |||||||||||||||||||||||
Depreciation and other amortization | 5.6 | 5.9 | 6.8 | 6.3 | 6.4 | 6.5 | 6.6 | |||||||||||||||||||||||
Interest and other income | (0.1) | (0.2) | (0.3) | (1.2) | (0.4) | (0.6) | (0.6) | |||||||||||||||||||||||
Interest and other expense | 2.5 | 2.5 | 2.5 | 2.6 | 2.7 | 2.7 | 2.9 | |||||||||||||||||||||||
Income tax expense | 11.2 | 10.2 | 14.2 | 15.9 | 13.3 | 3.6 | 21.0 | |||||||||||||||||||||||
EBITDA | $ | 47.8 | $ | 45.6 | $ | 57.7 | $ | 64.0 | $ | 55.0 | $ | 43.7 | $ | 72.6 | ||||||||||||||||
Stock-based compensation expense | 8.3 | 9.3 | 9.3 | 9.4 | 9.4 | 10.1 | 9.7 | |||||||||||||||||||||||
Acquisition and integration related costs | 1.5 | 0.8 | — | — | 0.4 | 0.4 | 1.2 | |||||||||||||||||||||||
Restructuring and related costs | — | — | 0.1 | 1.8 | — | — | — | |||||||||||||||||||||||
Settlements and impairments | — | — | — | — | (0.8) | — | — | |||||||||||||||||||||||
Adjusted EBITDA | $ | 57.6 | $ | 55.7 | $ | 67.1 | $ | 75.2 | $ | 63.9 | $ | 54.3 | $ | 83.6 | ||||||||||||||||
CoStar Group, Inc. | |||||||||||||||||||
Reconciliation of Forward-Looking Guidance-Unaudited | |||||||||||||||||||
(in thousands, except per share data) | |||||||||||||||||||
Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income | |||||||||||||||||||
Guidance Range | Guidance Range | ||||||||||||||||||
For the Three Months | For the Twelve Months | ||||||||||||||||||
Ended December 31, 2017 | Ended December 31, 2017 | ||||||||||||||||||
Low | High | Low | High | ||||||||||||||||
Net income | $ | 33,500 | $ | 38,200 | $ | 112,000 | $ | 116,700 | |||||||||||
Income tax expense | 17,100 | 19,500 | 55,000 | 57,400 | |||||||||||||||
Income before income taxes | 50,600 | 57,700 | 167,000 | 174,100 | |||||||||||||||
Amortization of acquired intangible assets | 8,300 | 8,300 | 37,000 | 37,000 | |||||||||||||||
Stock-based compensation expense | 11,800 | 9,800 | 41,000 | 39,000 | |||||||||||||||
Acquisition and integration related costs | 3,000 | 2,000 | 5,000 | 4,000 | |||||||||||||||
Restructuring and related costs | — | — | — | — | |||||||||||||||
Settlements and impairments | — | — | (800) | (800) | |||||||||||||||
Debt restructuring costs | 3,000 | 3,000 | 3,000 | 3,000 | |||||||||||||||
Non-GAAP income before income taxes | 76,700 | 80,800 | 252,200 | 256,300 | |||||||||||||||
Assumed rate for income tax expense * | 38 | % | 38 | % | 38 | % | 38 | % | |||||||||||
Assumed provision for income tax expense | (29,100) | (30,700) | (95,800) | (97,400) | |||||||||||||||
Non-GAAP net income | $ | 47,600 | $ | 50,100 | $ | 156,400 | $ | 158,900 | |||||||||||
Net income per share - diluted | $ | 0.93 | $ | 1.06 | $ | 3.33 | $ | 3.47 | |||||||||||
Non-GAAP net income per share - diluted | $ | 1.31 | $ | 1.38 | $ | 4.65 | $ | 4.73 | |||||||||||
Weighted average outstanding shares - diluted | 36,200 | 36,200 | 33,600 | 33,600 | |||||||||||||||
* A 38% tax rate is assumed, which approximates our long-term effective corporate tax rate. | |||||||||||||||||||
Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA | |||||||||||||||||||
Guidance Range | Guidance Range | ||||||||||||||||||
For the Three Months | For the Twelve Months | ||||||||||||||||||
Ended December 31, 2017 | Ended December 31, 2017 | ||||||||||||||||||
Low | High | Low | High | ||||||||||||||||
Net income | $ | 33,500 | $ | 38,200 | $ | 112,000 | $ | 116,700 | |||||||||||
Amortization of acquired intangible assets | 8,300 | 8,300 | 37,000 | 37,000 | |||||||||||||||
Depreciation and other amortization | 7,400 | 7,400 | 27,000 | 27,000 | |||||||||||||||
Interest and other expense, net | 4,200 | 4,200 | 11,000 | 11,000 | |||||||||||||||
Income tax expense | 17,100 | 19,500 | 55,000 | 57,400 | |||||||||||||||
Stock-based compensation expense | 11,800 | 9,800 | 41,000 | 39,000 | |||||||||||||||
Acquisition and integration related costs | 3,000 | 2,000 | 5,000 | 4,000 | |||||||||||||||
Restructuring and related costs | — | — | — | — | |||||||||||||||
Settlements and impairments | — | — | (800) | (800) | |||||||||||||||
Adjusted EBITDA | $ | 85,300 | $ | 89,400 | $ | 287,200 | $ | 291,300 | |||||||||||
All Contacts
Scott Wheeler
Chief Financial Officer
(202) 336-6920
Richard Simonelli
Vice President, Investor Relations
(202) 346-6394
_______________________
About CoStar Group, Inc.
CoStar Group, Inc. (NASDAQ: CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. LoopNet is the most heavily trafficked commercial real estate marketplace online with over 5 million monthly unique visitors per month. Apartments.com, ApartmentFinder.com, ApartmentHomeLiving.com, Westside Rentals and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. Through an exclusive partnership with Move, a subsidiary of News Corporation, Apartments.com is the exclusive provider of apartment community listings across Move’s family of websites, which include realtor.com®, doorsteps.com and move.com. CoStar Group’s websites attracted an average of approximately 37 million unique monthly visitors in aggregate in the third quarter of 2017. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of over 3,600 worldwide, including the industry’s largest professional research organization. For more information, visit www.costargroup.com.
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group's financial expectations, the Company's plans, objectives, expectations and intentions and other statements including words such as “hope,” "anticipate," "may," "believe," "expect," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar Group and are subject to significant risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the risk that the trends stated or implied by this release cannot or will not be sustained at the current pace, including trends related to revenue, bookings, sales, margins, and earnings; the risk that the Company is unable to sustain current revenue and earnings growth rates or increase them; the risk that returns on the Company’s CoStar and LoopNet integration efforts, related investments and sales efforts will not continue in line with early results or that those efforts and investments will not result in significant sales and revenue opportunities for CoStar and LoopNet for the next several years as expected; the risk that revenues for the fourth quarter and full year 2017 will not be as stated in this press release; the risk that net income for the fourth quarter and full year 2017 will not be as stated in this press release; the risk that adjusted EBITDA for the fourth quarter and full year 2017 will not be as stated in this press release; the risk that non-GAAP net income and non-GAAP net income per diluted share for the fourth quarter and full year 2017 will not be as stated in this press release; the risk that the acquisition of ForRent does not close when expected or at all; the risk that the businesses of ForRent, Apartments.com, and CoStar may not be combined successfully or in a timely and cost-efficient manner; the risk that the combination does not produce the expected results or benefits; the risk that business disruption relating to the ForRent acquisition may be greater
than expected; the risk that synergies and expected operating efficiencies from the acquisition of ForRent may not be as expected, may not be fully realized, may take longer to realize than expected or may not drive revenue and earnings growth; the risk that the combination and integration of ForRent will disrupt CoStar's operations or result in the loss of consumers, property owners or key employees; the risk that the company’s estimates and assumptions regarding ForRent change from current expectations, including as a result of the timing of the acquisition; the risk that the amount of fourth quarter 2017 revenue from the ForRent acquisition differs from expectations and that dilution on a non-GAAP net income per share basis due to the impact of integration and purchase accounting adjustments as a result of the ForRent acquisition differs from expectations; and the risk that costs actually incurred in connection with the Xceligent litigation differ from estimates included within the Company’s forecast, which differences may be material. Additional factors that could cause results to differ materially from those anticipated in the forward-looking statements can be found in CoStar’s Annual Report on Form 10-K for the year ended December 31, 2016, and Quarterly Report on Form 10-Q for the quarter ended June 30, 2017, each of which is filed with the SEC, including in the “Risk Factors” section of those filings, and the Company’s other filings with the SEC available at the SEC’s website (www.sec.gov). CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.