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| 8-K - 8-K - COSTAR GROUP, INC. | form8-k7x24x18earningsrele.htm |
Exhibit 99.1
CoStar Group Second Quarter 2018 Revenue Grows 25% Year-over-Year,
Net Income Grows 98%, Company Raises Full-Year Revenue and Earnings Guidance
WASHINGTON - July 24, 2018 - 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 June 30, 2018 was $297 million, an increase of 25% over revenue of $237 million for the second quarter of 2017. Net income for the quarter ended June 30, 2018 increased $22 million to $44 million or $1.20 per diluted share compared to $22 million for the second quarter of 2017, an increase of 98%. Non-GAAP net income (defined below) for the quarter ended June 30, 2018, which excludes one-time costs associated with the acquisition of ForRent and other items, was $60 million or $1.66 per diluted share, an increase of $32 million or 114% versus the second quarter of 2017.
“We had an exceptional second quarter of 2018 as we delivered excellent revenue growth, strong margin expansion and continued positive momentum in net bookings,” said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. “In June 2018, we generated our first-ever $100 million revenue month and are now operating at a $1.2 billion annual revenue run rate. In the second quarter of 2018, CoStar Suite revenue growth was an impressive 18% compared to the second quarter of 2017 as we continue to successfully convert LoopNet information users to CoStar.”
Company-wide net new bookings were $45 million in the second quarter of 2018, an increase of 23% year-over-year. The Commercial Property and Land marketplaces had their best sales quarter ever in the second quarter of 2018 with a year-over-year increase of 105%, which featured significant sales of LoopNet Premium Lister and Power Ads on LoopNet.com.
“In Multifamily, we continue to expand our leadership position in unique visitors, visits, leads and revenue,” stated Florance. “I am very pleased with the progress of our integration of ForRent into the Apartments.com network. In June, our unified multifamily sales organization produced our best sales month ever. Since the acquisition, we have successfully signed up over 4,100 ForRent properties to our combined network and expect to complete the process of moving ForRent properties to the combined network later this year. Our emphasis on providing outstanding client service along with our superior network performance resulted in the reduction of average monthly cancels of ForRent by almost 35% since we integrated the sales force in May versus the monthly average in 2017. We expect to complete the ForRent integration in half the time we initially projected and deliver on our expected 45-55% margin goal for this acquisition.”
Year 2017-2018 Quarterly Results - Unaudited | |||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||
2017 | 2018 | ||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | ||||||||||||||
Revenues | $ | 227 | $ | 237 | $ | 248 | $ | 254 | $ | 274 | $ | 297 | |||||||
Net income | 22 | 22 | 34 | 44 | 52 | 44 | |||||||||||||
Net income per share - diluted | 0.68 | 0.68 | 1.04 | 1.22 | 1.44 | 1.20 | |||||||||||||
Weighted average outstanding shares - diluted | 32.6 | 32.7 | 32.8 | 36.1 | 36.4 | 36.5 | |||||||||||||
EBITDA | 55 | 44 | 73 | 66 | 70 | 64 | |||||||||||||
Adjusted EBITDA | 64 | 54 | 84 | 78 | 84 | 85 | |||||||||||||
Non-GAAP net income | 34 | 28 | 46 | 45 | 60 | 60 | |||||||||||||
Non-GAAP net income per share - diluted | 1.05 | 0.86 | 1.41 | 1.25 | 1.65 | 1.66 | |||||||||||||
Multifamily revenue for the second quarter of 2018 increased 54% to $105 million versus $68 million in the second quarter of 2017. Revenue by services can be found within the tables included in this release.
EBITDA in the second quarter of 2018 was $64 million, compared to $44 million in the second quarter of 2017, an increase of 47%. Adjusted EBITDA (which excludes stock-based compensation, acquisition-related costs and other items as described below) was $85 million for the second quarter of 2018, an increase of 57% over adjusted EBITDA for the second quarter of 2017. Adjusted EBITDA margin for the second quarter of 2018 was 29%, an increase of almost 600 basis points compared to the second quarter of 2017.
As of June 30, 2018, the Company had approximately $976 million in cash, cash equivalents and long-term investments, and no outstanding debt.
2018 Outlook
“Given our strong revenue and profit performance in the first half of the year, we are once again raising our guidance for the full year of 2018,” stated Scott Wheeler, Chief Financial Officer of CoStar Group. “With only six months left in 2018, we are confident we will meet or exceed our goal of 40% adjusted EBITDA margin for the fourth quarter of 2018.”
The Company expects revenue in the range of $1.180 billion to $1.192 billion for the full year of 2018, an increase of $4 million to the prior midpoint and reflecting revenue growth of 23% at the midpoint of the range. We expect revenue for the third quarter of 2018 in the range of $304 million to $307 million, representing revenue growth of 23% over the third quarter of 2017 at the midpoint of the range.
The Company expects adjusted EBITDA in a range of $395 million to $405 million for the full year of 2018. For the third quarter of 2018, the Company expects adjusted EBITDA in a range of $102 million to $106 million.
We expect full-year 2018 non-GAAP net income per diluted share in a range of $7.75 to $7.95 based on 36.5 million shares, an increase of $0.31 at the midpoint versus the previously provided outlook. For the third quarter of 2018, we expect non-GAAP net income per diluted share in a range of $2.02 to $2.10 based on 36.5 million shares. These ranges include a non-GAAP tax rate of 25%.
The preceding forward-looking statements reflect CoStar Group’s expectations as of July 24, 2018, including forward-looking non-GAAP financial measures on a consolidated basis. 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) and loss on debt extinguishment, (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) loss on debt extinguishment. From this figure, we then subtract an assumed provision for income taxes to arrive at non-GAAP net income. In 2017, the company assumed a 38% tax rate, and in 2018 the company is assuming a 25% tax rate in order to approximate our statutory corporate tax rate excluding the impact of discrete items.
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 5:00 PM EDT on Tuesday, July 24, 2018 to discuss earnings results for the second quarter of 2018 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) 230-1092 (from the United States and Canada) or (612) 234-9960 (from all other countries) and refer to conference code 451455. 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 451455. 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 June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues | $ | 297,018 | $ | 237,153 | $ | 570,736 | $ | 463,706 | ||||||||
Cost of revenues | 67,136 | 55,273 | 129,613 | 106,619 | ||||||||||||
Gross profit | 229,882 | 181,880 | 441,123 | 357,087 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing (excluding customer base amortization) | 112,965 | 91,726 | 201,455 | 168,128 | ||||||||||||
Software development | 26,271 | 23,144 | 49,184 | 45,518 | ||||||||||||
General and administrative | 38,056 | 34,557 | 78,646 | 68,552 | ||||||||||||
Customer base amortization | 8,816 | 4,570 | 14,619 | 9,344 | ||||||||||||
186,108 | 153,997 | 343,904 | 291,542 | |||||||||||||
Income from operations | 43,774 | 27,883 | 97,219 | 65,545 | ||||||||||||
Interest and other income | 2,652 | 605 | 5,639 | 1,034 | ||||||||||||
Interest and other expense | (728 | ) | (2,693 | ) | (1,418 | ) | (5,379 | ) | ||||||||
Income before income taxes | 45,698 | 25,795 | 101,440 | 61,200 | ||||||||||||
Income tax expense | 1,863 | 3,611 | 5,374 | 16,886 | ||||||||||||
Net income | $ | 43,835 | $ | 22,184 | $ | 96,066 | $ | 44,314 | ||||||||
Net income per share - basic | $ | 1.22 | $ | 0.68 | $ | 2.67 | $ | 1.37 | ||||||||
Net income per share - diluted | $ | 1.20 | $ | 0.68 | $ | 2.64 | $ | 1.36 | ||||||||
Weighted average outstanding shares - basic | 36,073 | 32,406 | 35,983 | 32,341 | ||||||||||||
Weighted average outstanding shares - diluted | 36,450 | 32,739 | 36,400 | 32,651 | ||||||||||||
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 June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 43,835 | $ | 22,184 | $ | 96,066 | $ | 44,314 | ||||||||
Income tax expense | 1,863 | 3,611 | 5,374 | 16,886 | ||||||||||||
Income before income taxes | 45,698 | 25,795 | 101,440 | 61,200 | ||||||||||||
Amortization of acquired intangible assets | 14,140 | 9,340 | 24,551 | 20,233 | ||||||||||||
Stock-based compensation expense | 11,228 | 10,103 | 21,640 | 19,460 | ||||||||||||
Acquisition and integration related costs | 9,506 | 411 | 13,028 | 772 | ||||||||||||
Settlements and impairments | — | — | — | (760 | ) | |||||||||||
Non-GAAP income before income taxes | 80,572 | 45,649 | 160,659 | 100,905 | ||||||||||||
Assumed rate for income tax expense * | 25 | % | 38 | % | 25 | % | 38 | % | ||||||||
Assumed provision for income tax expense | (20,143 | ) | (17,347 | ) | (40,165 | ) | (38,344 | ) | ||||||||
Non-GAAP net income | $ | 60,429 | $ | 28,302 | $ | 120,494 | $ | 62,561 | ||||||||
Net income per share - diluted | $ | 1.20 | $ | 0.68 | $ | 2.64 | $ | 1.36 | ||||||||
Non-GAAP net income per share - diluted | $ | 1.66 | $ | 0.86 | $ | 3.31 | $ | 1.92 | ||||||||
Weighted average outstanding shares - basic | 36,073 | 32,406 | 35,983 | 32,341 | ||||||||||||
Weighted average outstanding shares - diluted | 36,450 | 32,739 | 36,400 | 32,651 | ||||||||||||
* A 25% and 38% tax rate is assumed for 2018 and 2017, respectively, which approximates our statutory corporate tax rate. | ||||||||||||||||
Reconciliation of Net Income to EBITDA and Adjusted EBITDA | ||||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 43,835 | $ | 22,184 | $ | 96,066 | $ | 44,314 | ||||||||
Amortization of acquired intangible assets in cost of revenues | 5,324 | 4,770 | 9,932 | 10,889 | ||||||||||||
Amortization of acquired intangible assets in operating expenses | 8,816 | 4,570 | 14,619 | 9,344 | ||||||||||||
Depreciation and other amortization | 6,444 | 6,520 | 13,016 | 12,925 | ||||||||||||
Interest and other income | (2,652 | ) | (605 | ) | (5,639 | ) | (1,034 | ) | ||||||||
Interest and other expense | 728 | 2,693 | 1,418 | 5,379 | ||||||||||||
Income tax expense | 1,863 | 3,611 | 5,374 | 16,886 | ||||||||||||
EBITDA | $ | 64,358 | $ | 43,743 | $ | 134,786 | $ | 98,703 | ||||||||
Stock-based compensation expense | 11,228 | 10,103 | 21,640 | 19,460 | ||||||||||||
Acquisition and integration related costs | 9,506 | 411 | 13,028 | 772 | ||||||||||||
Settlements and impairments | — | — | — | (760 | ) | |||||||||||
Adjusted EBITDA | $ | 85,092 | $ | 54,257 | $ | 169,454 | $ | 118,175 | ||||||||
CoStar Group, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(in thousands) | ||||||||
June 30, 2018 | December 31, 2017 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 966,278 | $ | 1,211,463 | ||||
Accounts receivable, less allowance for doubtful accounts of approximately $5,065 and $6,469 as of June 30, 2018 and December 31, 2017, respectively | 69,984 | 60,900 | ||||||
Prepaid expenses and other current assets | 39,723 | 15,572 | ||||||
Total current assets | 1,075,985 | 1,287,935 | ||||||
Long-term investments | 10,070 | 10,070 | ||||||
Deferred income taxes, net | 4,046 | 5,431 | ||||||
Property and equipment, net | 84,648 | 84,496 | ||||||
Goodwill | 1,549,517 | 1,283,457 | ||||||
Intangible assets, net | 299,611 | 182,892 | ||||||
Deferred commission costs, net | 76,159 | — | ||||||
Deposits and other assets | 7,660 | 6,179 | ||||||
Income tax receivable | 14,878 | 12,981 | ||||||
Total assets | $ | 3,122,574 | $ | 2,873,441 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 9,394 | $ | 9,262 | ||||
Accrued wages and commissions | 45,593 | 54,104 | ||||||
Accrued expenses | 37,343 | 22,193 | ||||||
Deferred gain on the sale of building | 2,523 | 2,523 | ||||||
Income taxes payable | 94 | 8,166 | ||||||
Deferred rent | 4,632 | 4,732 | ||||||
Deferred revenue | 46,341 | 45,686 | ||||||
Total current liabilities | 145,920 | 146,666 | ||||||
Deferred gain on the sale of building | 14,930 | 16,192 | ||||||
Deferred rent | 32,230 | 33,909 | ||||||
Deferred income taxes, net | 62,830 | 12,070 | ||||||
Income taxes payable | 16,046 | 13,354 | ||||||
Total liabilities | 271,956 | 222,191 | ||||||
Total stockholders’ equity | 2,850,618 | 2,651,250 | ||||||
Total liabilities and stockholders’ equity | $ | 3,122,574 | $ | 2,873,441 | ||||
CoStar Group, Inc. | |||||||
Condensed Consolidated Statements of Cash Flows - Unaudited | |||||||
(in thousands, unaudited) | |||||||
Six Months Ended June 30, | |||||||
2018 | 2017 | ||||||
Operating activities: | |||||||
Net income | $ | 96,066 | $ | 44,314 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 37,567 | 33,158 | |||||
Amortization of deferred commissions costs | 24,275 | — | |||||
Amortization of debt issuance costs | 436 | 1,487 | |||||
Stock-based compensation expense | 21,640 | 19,460 | |||||
Deferred income tax expense, net | 4,291 | 3,434 | |||||
Bad debt expense | 2,857 | 2,349 | |||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | (5,089 | ) | (5,177 | ) | |||
Prepaid expenses and other current assets | (17,655 | ) | (7,887 | ) | |||
Deferred commissions | (29,554 | ) | — | ||||
Deposits and other assets | (1,444 | ) | (103 | ) | |||
Accounts payable and other liabilities | (16,619 | ) | 605 | ||||
Deferred revenue | 2,546 | 3,723 | |||||
Net cash provided by operating activities | 119,317 | 95,363 | |||||
Investing activities: | |||||||
Purchases of property and equipment and other assets | (15,851 | ) | (12,674 | ) | |||
Cash paid for acquisitions, net of cash acquired | (340,074 | ) | (45,068 | ) | |||
Net cash used in investing activities | (355,925 | ) | (57,742 | ) | |||
Financing activities: | |||||||
Payments of long-term debt | — | (35,000 | ) | ||||
Repurchase of restricted stock to satisfy tax withholding obligations | (22,394 | ) | (13,456 | ) | |||
Proceeds from exercise of stock options and employee stock purchase plan | 14,214 | 7,683 | |||||
Net cash used in financing activities | (8,180 | ) | (40,773 | ) | |||
Effect of foreign currency exchange rates on cash and cash equivalents | (397 | ) | 567 | ||||
Net (decrease) in cash and cash equivalents | (245,185 | ) | (2,585 | ) | |||
Cash and cash equivalents at the beginning of period | 1,211,463 | 567,223 | |||||
Cash and cash equivalents at the end of period | $ | 966,278 | $ | 564,638 | |||
CoStar Group, Inc. | |||||||||||||||
Results of Segments - Unaudited | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
Revenues | |||||||||||||||
North America | $ | 288,288 | $ | 229,826 | $ | 553,083 | $ | 449,167 | |||||||
International | |||||||||||||||
External customers | 8,730 | 7,327 | 17,653 | 14,539 | |||||||||||
Intersegment revenues * | 16 | 11 | 29 | 22 | |||||||||||
Total International revenues | 8,746 | 7,338 | 17,682 | 14,561 | |||||||||||
Intersegment eliminations | (16 | ) | (11 | ) | (29 | ) | (22 | ) | |||||||
Total revenues | $ | 297,018 | $ | 237,153 | $ | 570,736 | $ | 463,706 | |||||||
EBITDA | |||||||||||||||
North America | $ | 64,762 | $ | 43,364 | $ | 135,817 | $ | 97,797 | |||||||
International | (404 | ) | 379 | (1,031 | ) | 906 | |||||||||
Total EBITDA | $ | 64,358 | $ | 43,743 | $ | 134,786 | $ | 98,703 | |||||||
* 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 June 30, | Six Months Ended June 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Information and analytics | ||||||||||||||||
CoStar Suite | $ | 133,812 | $ | 113,794 | $ | 264,173 | $ | 223,773 | ||||||||
Information services | 15,681 | 18,312 | 30,890 | 36,648 | ||||||||||||
Online marketplaces | ||||||||||||||||
Multifamily | 104,793 | 68,076 | 192,476 | 132,067 | ||||||||||||
Commercial property and land | 42,732 | 36,971 | 83,197 | 71,218 | ||||||||||||
Total revenues | $ | 297,018 | $ | 237,153 | $ | 570,736 | $ | 463,706 | ||||||||
CoStar Group, Inc. Reconciliation of Non-GAAP Financial Measures with 2017-2018 Quarterly Results - Unaudited | ||||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||
Reconciliation of Net Income to Non-GAAP Net Income | ||||||||||||||||||||
2017 | 2018 | |||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | |||||||||||||||
Net income | $ | 22.1 | $ | 22.2 | $ | 34.2 | $ | 44.2 | $ | 52.2 | $ | 43.8 | ||||||||
Income tax expense | 13.3 | 3.6 | 21.0 | 4.5 | 3.5 | 1.9 | ||||||||||||||
Income before income taxes | 35.4 | 25.8 | 55.2 | 48.7 | 55.7 | 45.7 | ||||||||||||||
Amortization of acquired intangible assets | 10.9 | 9.3 | 8.5 | 8.7 | 10.4 | 14.1 | ||||||||||||||
Stock-based compensation expense | 9.4 | 10.1 | 9.7 | 9.8 | 10.4 | 11.2 | ||||||||||||||
Acquisition and integration related costs | 0.4 | 0.4 | 1.2 | 2.0 | 3.5 | 9.5 | ||||||||||||||
Settlements and impairments | (0.8 | ) | — | — | — | — | — | |||||||||||||
Loss on debt extinguishment | — | — | — | 3.8 | — | — | ||||||||||||||
Non-GAAP income before income taxes | 55.3 | 45.6 | 74.6 | 73.0 | 80.1 | 80.6 | ||||||||||||||
Assumed rate for income tax expense * | 38 | % | 38 | % | 38 | % | 38 | % | 25 | % | 25 | % | ||||||||
Assumed provision for income tax expense | (21.0 | ) | (17.3 | ) | (28.4 | ) | (27.7 | ) | (20.0 | ) | (20.1 | ) | ||||||||
Non-GAAP net income | $ | 34.3 | $ | 28.3 | $ | 46.3 | $ | 45.2 | $ | 60.1 | $ | 60.4 | ||||||||
Non-GAAP net income per share - diluted | $ | 1.05 | $ | 0.86 | $ | 1.41 | $ | 1.25 | $ | 1.65 | $ | 1.66 | ||||||||
Weighted average outstanding shares - basic | 32.3 | 32.4 | 32.4 | 35.7 | 35.9 | 36.1 | ||||||||||||||
Weighted average outstanding shares - diluted | 32.6 | 32.7 | 32.8 | 36.1 | 36.4 | 36.5 | ||||||||||||||
* A 25% and 38% tax rate is assumed for 2018 and 2017, respectively, which approximates our statutory corporate tax rate. | ||||||||||||||||||||
Reconciliation of Net Income to EBITDA and Adjusted EBITDA | ||||||||||||||||||||
2017 | 2018 | |||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | |||||||||||||||
Net income | $ | 22.1 | $ | 22.2 | $ | 34.2 | $ | 44.2 | $ | 52.2 | $ | 43.8 | ||||||||
Amortization of acquired intangible assets | 10.9 | 9.3 | 8.5 | 8.7 | 10.4 | 14.1 | ||||||||||||||
Depreciation and other amortization | 6.4 | 6.5 | 6.6 | 6.7 | 6.6 | 6.4 | ||||||||||||||
Interest and other income | (0.4 | ) | (0.6 | ) | (0.6 | ) | (2.5 | ) | (3.0 | ) | (2.6 | ) | ||||||||
Interest and other expense | 2.7 | 2.7 | 2.9 | 0.7 | 0.7 | 0.7 | ||||||||||||||
Loss on debt extinguishment | — | — | — | 3.8 | — | — | ||||||||||||||
Income tax expense | 13.3 | 3.6 | 21.0 | 4.5 | 3.5 | 1.9 | ||||||||||||||
EBITDA | $ | 55.0 | $ | 43.7 | $ | 72.6 | $ | 66.0 | $ | 70.4 | $ | 64.3 | ||||||||
Stock-based compensation expense | 9.4 | 10.1 | 9.7 | 9.8 | 10.4 | 11.2 | ||||||||||||||
Acquisition and integration related costs | 0.4 | 0.4 | 1.2 | 2.0 | 3.5 | 9.5 | ||||||||||||||
Settlements and impairments | (0.8 | ) | — | — | — | — | — | |||||||||||||
Adjusted EBITDA | $ | 63.9 | $ | 54.3 | $ | 83.6 | $ | 77.9 | $ | 84.4 | $ | 85.1 | ||||||||
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 September 30, 2018 | Ended December 31, 2018 | ||||||||||||||
Low | High | Low | High | ||||||||||||
Net income | $ | 46,000 | $ | 52,000 | $ | 216,000 | $ | 228,000 | |||||||
Income tax expense | 15,000 | 17,000 | 38,000 | 42,000 | |||||||||||
Income before income taxes | 61,000 | 69,000 | 254,000 | 270,000 | |||||||||||
Amortization of acquired intangible assets | 14,000 | 14,000 | 52,000 | 52,000 | |||||||||||
Stock-based compensation expense | 12,000 | 11,000 | 46,000 | 44,000 | |||||||||||
Acquisition and integration related costs | 8,000 | 6,000 | 22,000 | 19,000 | |||||||||||
Restructuring and related costs | 3,000 | 2,000 | 3,000 | 2,000 | |||||||||||
Non-GAAP income before income taxes | 98,000 | 102,000 | 377,000 | 387,000 | |||||||||||
Assumed rate for income tax expense * | 25 | % | 25 | % | 25 | % | 25 | % | |||||||
Assumed provision for income tax expense | (24,300 | ) | (25,400 | ) | (94,000 | ) | (97,000 | ) | |||||||
Non-GAAP net income | $ | 73,700 | $ | 76,600 | $ | 283,000 | $ | 290,000 | |||||||
Net income per share - diluted | $ | 1.26 | $ | 1.42 | $ | 5.92 | $ | 6.25 | |||||||
Non-GAAP net income per share - diluted | $ | 2.02 | $ | 2.10 | $ | 7.75 | $ | 7.95 | |||||||
Weighted average outstanding shares - diluted | 36,500 | 36,500 | 36,500 | 36,500 | |||||||||||
* A 25% tax rate is assumed, which approximates our statutory 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 September 30, 2018 | Ended December 31, 2018 | ||||||||||||||
Low | High | Low | High | ||||||||||||
Net income | $ | 46,000 | $ | 52,000 | $ | 216,000 | $ | 228,000 | |||||||
Amortization of acquired intangible assets | 14,000 | 14,000 | 52,000 | 52,000 | |||||||||||
Depreciation and other amortization | 6,000 | 6,000 | 26,000 | 26,000 | |||||||||||
Interest and other expense, net | (2,000 | ) | (2,000 | ) | (8,000 | ) | (8,000 | ) | |||||||
Income tax expense | 15,000 | 17,000 | 38,000 | 42,000 | |||||||||||
Stock-based compensation expense | 12,000 | 11,000 | 46,000 | 44,000 | |||||||||||
Acquisition and integration related costs | 8,000 | 6,000 | 22,000 | 19,000 | |||||||||||
Restructuring and related costs | 3,000 | 2,000 | 3,000 | 2,000 | |||||||||||
Adjusted EBITDA | $ | 102,000 | $ | 106,000 | $ | 395,000 | $ | 405,000 | |||||||
All Contacts
Scott Wheeler
Chief Financial Officer
(202) 336-6920
swheeler@costar.com
Richard Simonelli
Vice President
Investor Relations and Public Relations
(202) 346-6394
rsimonelli@costar.com
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 approximately 5 million monthly unique visitors per month. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com 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. CoStar Group’s websites attracted an average of approximately 40 million unique monthly visitors in aggregate in the second quarter of 2018. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of over 3,800 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, net income, non-GAAP net income, EBITDA, adjusted EBITDA, margin expansion, bookings, sales, unique visitors, visits, leads, and the ForRent cancel rate; the risk that the Company is unable to sustain current revenue and earnings growth rates or increase them; the risk that the Company is unable to convert the remaining ForRent properties to the combined network when and as expected; the risk that the ForRent integration is not completed when expected; the risk that the Company is unable to achieve the stated ForRent margin goal; the risk that the Company is unable to achieve its stated goal of 40% adjusted EBITDA margin for the fourth quarter 2018; the risk that revenues for the third quarter and full year 2018 will not be as stated in this press release; the risk that net income for the third quarter and full year 2018 will not be as stated in this press release; the risk that adjusted EBITDA for the third quarter and full year 2018 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 third quarter and full year 2018 will not be as stated in this press release; the risk that the tax rate estimates stated in this press release are incorrect or may change; 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, or may take longer to realize than expected; and 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. 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, 2017, and CoStar’s Quarterly Report on Form 10-Q for the quarter ended March 31, 2018, 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.