Q4 2023 CoStar Group Inc Earnings Call

Operator: Discuss the fourth quarter and full year 2023 results of CoStar Group. Before I turn the call over to Andy Florence, CoStar's CEO and founder, and Scott Wheeler, our CFO, I would like to review our Safe Harbor. Certain portions of the discussion today may contain forward-looking statements, including the company's outlook and expectations for the first quarter and full year 2024, based on current beliefs and assumptions. Forward-looking statements involve many risks, uncertainties, assumptions, estimates, and other factors that can cause actual results to differ materially from those expressed.

I'll discuss the fourth quarter and full year 'twenty twenty-three results of Costar group before I turn the call over to Andy Florance, Costar, CEO and founder and Scott Wheeler, Our CFO I would like to review our Safe Harbor statement.

Certain portions of the discussion today may contain forward looking statements, including the company's outlook and expectations for the first quarter and full year 2024 based on current beliefs and assumptions forward looking statements involve many risks uncertainties assumptions estimates and other factors that could cause actual results to differ materially from such statements import.

Operator: Important factors that can cause actual results to differ include, but are not limited to, those stated in CoStar Group's press release issued earlier today and in our filings with the SEC, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q under the heading risk factors. All forward-looking statements are based on the information available to CoStar on the date of this call. CoStar assumes no obligation to update these statements, whether as a result of new information, future events, or otherwise.

Factors that can cause actual results to differ include but are not limited to those stated in Costar group's press release issued earlier today and in our filings with the SEC, including our most recent annual report on Form 10-K, and subsequent quarterly reports on Form 10-Q under the heading risk factors.

All forward looking statements are based on the information available to Costar on the date of this call.

STAAR assumes no obligation to update these statements whether as a result of new information future events or otherwise reconciliation to the most directly comparable GAAP measure of any non-GAAP financial measure discussed on this call are shown in the detail in our press release issued today along with the definitions for those terms. The press release is available on.

Operator: Reconciliation to the most directly comparable GAAP measure of any non-GAAP financial measure discussed on this call is shown in detail in our press release issued today, along with the definitions for those terms. The press release is available on our website located at CoStarGroup.com under the Press Room. As a reminder, today's conference call is being webcast, and a link is also available on our website under Investors. Please refer to today's press release for how to access the replay of this call.

Our website located at Costar group Dot Com under press room as a reminder, today's conference call is being webcast and the link is also available on our website under investors. Please refer to today's press release on how to access the replay of this call.

Operator: And with that, I would like to turn the call over to our founder and CEO, Andy Florence.

And with that I would like to turn the call over to our founder and CEO Andy Florance.

Fantastic job. Thank you.

Andrew C. Florance: Good evening, everyone, and thank you for joining us for CoStar Group's fourth quarter and year-end 2023 earnings. Total revenue for the full year of 23 was $2.46 billion, a 13% increase over the full year of 22. Coming in above the high end of our guidance range and above consensus estimates, revenue for the fourth quarter of 23 was $640 million, or 12% growth year-over-year. This is our 13th year in a row of double-digit revenue growth. We turned in another very strong year in sales in 2023, achieving our second highest net new bookings level ever of $286 million. The company's performance in the face of higher interest rates and demand shocks that kept property markets distressed in 23 demonstrates the resilience of our business.

Andrew C. Florance: Good evening, everyone and thank you for joining us for Costar group's fourth quarter and year end 2023 earnings call.

Andrew C. Florance: Total revenue for the full year of 2003 was $2 $4 6, billion% to 13% increase over the full year of 22 coming in above the high end of our guidance range and above consensus estimates.

Andrew C. Florance: Revenue for the fourth quarter of 2003 was $640 million or 12% growth year over year.

Andrew C. Florance: As our 13th year in a row of double digit revenue growth.

Andrew C. Florance: We turned in another very strong year in sales and 23, achieving our second highest net new bookings level ever of $286 million.

Andrew C. Florance: Performance in the face of higher interest rates and demand shocks that kept property markets distressed in 'twenty three demonstrates the resilience of our business.

Andrew C. Florance: Our full year 23 adjusted EBITDA was $492 million and $130 million for the fourth quarter, ahead of both the high end of our guidance range and Consensus S. I'm proud to say that we achieved a major profit milestone in 2023 in our commercial real estate information and marketplace businesses as we delivered adjusted EBITDA margins of 40% for the full year. For the past three years, thousands of our team members have worked with professionalism and committed focus to build the new Homes.com, the premier marketplace for buying, selling, and renting homes in the United States. We conducted dozens of focus groups across the country, listening to hundreds of agents, homebuyers, and home sellers, learning why they were so dissatisfied with the legacy offerings and what they hoped for in a better residential experience. We heard loud and clear that brokers, agents, sellers, buyers, and investors all dislike real estate portals that use agents' listings to win the debate to draw in home biders and then sell them off to other agencies leads with exorbitant commissions.

Andrew C. Florance: Our full year 23, adjusted EBITDA was $492 million and $130 million for the fourth quarter ahead of both the high end of our guidance range.

Andrew C. Florance: And consensus estimates I'm proud to say that we achieved a major profit milestone in 2023, and our commercial real estate information and marketplace businesses as we delivered adjusted EBITDA margins of 40% for the full year.

Andrew C. Florance: For the past three years thousands of our team members have worked with professionalism and committed focus to build the new homes Dot com.

Andrew C. Florance: The premier marketplace for buying selling and renting homes in the United States.

Andrew C. Florance: We've conducted dozens of focus groups across the country listening to hundreds of agents home buyers and home sellers learning why they were so dissatisfied with the legacy offerings and what they hope for in a better residential Porter.

Andrew C. Florance: We heard loud and clear that brokers agents sellers buyers and investors all dislike real estate portals that use agents listings.

Andrew C. Florance: To drill on homebuyers, and then sell them off to other agents is leads with exorbitant Commission splits.

Andrew C. Florance: We learned that home buyers buy a home in a community, not in isolation, so they want quality, in-depth information on neighborhood schools, parks, and restaurants. Our product teams have designed what we believe is clearly the best residential real estate site in the world. The site is clean, powerful, intuitive, appealing, and spam free.

Andrew C. Florance: We learned that homebuyers by at home in a community not in isolation. So they want quality in depth information on neighborhood schools parks restaurants, and local culture.

Andrew C. Florance: Our product teams have designed what we believe is clearly the best residential real estate site in the world the size clean powerful intuitive appealing.

Andrew C. Florance: Spam free.

Andrew C. Florance: Our software developers rose to the challenge and built a lightning fast reliable platform that met the design specifications perfectly.

Speaker Change: Good job Jerry intact and crew.

Andrew C. Florance: Our software developers rose to the challenge and built a lightning-fast, reliable platform that met the design specifications perfectly. Our content team, comprised of hundreds of photographers, drone pilots, writers, voiceover talent, musicians, geographers, and video editors, captured the essence of tens of thousands of U.S. neighborhoods, schools, and parks. Our team drove 2.6 million miles, captured 1.5 million images, shot 3.8 million video clips, and conducted over 350,000 drone flights.

Speaker Change: Our content team comprised of hundreds of photographers drone pilots writers voiceover talent musicians geographers and video editors capture the essence of tens of thousands of U S neighborhood schools and parks.

Speaker Change: <unk> team drove $2 6 million miles captured $1 5 million images shot $3 8 million video clips and conducted over 350000 drone flights.

This investment creates an experience that consumers love strengthens our SCO traffic position and provides a significant advantage over competitive sites.

Our efforts to grow traffic on homes Dot com in 2023 were a big success homes Dot com was the fastest growing real estate website at the end of 'twenty three with over 600% year over year growth in the fourth quarter. According to Google analytics, our residential network traffic in the fourth quarter totaled 95 million average month.

Speaker Change: Unique visitors growing 94% year over year.

Andrew C. Florance: This investment creates an experience that consumers love, strengthens our SEO traffic position, and provides a significant advantage over competitive sites. Our efforts to grow traffic on homes.com in 2023 were a big success. Homes.com was the fastest growing real estate website at the end of 23, with over 600% year over year growth in the fourth quarter, according to Google Analytics. Our residential network traffic in the fourth quarter totaled 95 million average monthly unique visitors, growing 94% year-over-year.

Speaker Change: We were easily in second place in traffic by this measure well ahead of the 66 million average monthly unique visitors at realtor Dot Com reported two weeks ago.

Speaker Change: Our largest competitors real realtor, and Zillow reported either flat or declining traffic in the fourth quarter of 2003, I believe we will be able to report even stronger traffic numbers in the near future.

Speaker Change: After building the site and traffic for over two years last week, we launched a massive marketing campaign for homes Dot com with four commercials during Super Bowl during the Super Bowl and event that was watched by an estimated 123 million viewers.

Speaker Change: We ran a clever apartments dot com commercial in the first quarter with invading aliens to say, Jeff Goldbloom up for a memorable cameo and the first homes dot com at in the second quarter connecting the two brands.

Speaker Change: In the spots Dan Levy plays.

Andrew C. Florance: We were easily in second place in traffic by this measure, well ahead of the 66 million average monthly unique visitors that Realtor.com reported two weeks ago. Our largest competitors, Realtor.com and Zillow, reported either flat or declining traffic in the fourth quarter of 2023. I believe we will be able to report even stronger traffic numbers in the near future. After building the site and driving traffic for over two years, last week we launched a massive marketing campaign for Homes.com, four commercials during the Super Bowl, an event that was watched by an estimated 123 million viewers. We ran a CleverApartments.com commercial in the first quarter with Invading Aliens to set Jeff Goldblum up for a memorable cameo in the first Homes.com ad in the second quarter connecting the two brands. In the spots, Dan Levy plays. Dan Levy plays the nephew inheriting his uncle's business, Holmes.com, and he sets out to reinvent the company and make it better than ever. He is supported by his hesitant sidekick, played by SNL's Heidi Gardner.

Speaker Change: Dan Levy it plays the nephew inheriting as uncles business homes, dotcom and he sets out to reinvent the company and make it better than ever. He is supported by US hesitant sidekick played by SNL is Heidi Gardner.

<unk> draw attention to the value of our neighbors in school data.

Speaker Change: That we offer home shoppers.

Speaker Change: The Super Bowl was only the kickoff in the week following the Super Bowl, we generated an estimated 560 million impressions across prime broadcast television syndicated TV cable TV morning shows late night shows major streaming audio and video platforms and of course on Google and various forms.

Speaker Change: During the course of the year, we will be in the Olympics. The Oscars. The Mes March madness. The U S. Open the Stanley Cup playoffs Major League baseball and much more.

We believe that we will generate approximately 80 billion impressions for homes Dot com and reached 90% of U S households, with our message in 2024, we believe that no other competitors investing close to what we are investing in this effort. We believe we can grow share. We believe that we have a better product and can significantly shift share.

Speaker Change: And create a very attractive ROI for our investors.

Speaker Change: While we have excellent traffic numbers, we do not yet have the unaided awareness, we need to sustain the top traffic position and to draw the volume of advertisers we seek.

Speaker Change: As we did with apartments dot com our plan is to grow unaided awareness from the low single digits to more than 50% that process will take time, but we believe that will drive brand awareness SCO SCM efficiency traffic audience consumer demand and revenue.

Andrew C. Florance: These spots draw attention to the value of our neighborhood and school data that we offer in Home Shop. The Super Bowl was only the kickoff. In the week following the Super Bowl, we generated an estimated 560 million impressions across prime broadcast TV, syndicated TV, cable TV, morning shows, late night shows, major streaming audio and video platforms, and, of course, on Google in various forms. During the course of the year, we will be on the Olympics, the Oscars, the Emmys, March Madness, the U.S. Open, and the Stanley Cup Playoffs. Major League Baseball, and much more.

Speaker Change: On Monday February 12, the day after the Super Bowl, we were ready to begin monetizing homes dot com selling memberships to agents a quarter earlier than we had previously communicated to you.

Speaker Change: As we did when we launched the new Loopnet, the new apartment stock and the new apartments Dot com, we deployed the entire Costar group's salesforce to sell homes Dot com. Our goal is to catapult our growth forward and quickly capitalize on the momentum and exposure generated from our marketing campaign.

Speaker Change: Our 1000, plus person sales force gives us instant national reach with experienced salespeople that live in many of the very same neighborhoods as the one 5 million residential property agents that we intend to reach.

Speaker Change: We trained the full sales team in January and rolled out very attractive incentive structures that reward our sellers to sell both homes and their primary brands like costar or apartments with along with humps.

Andrew C. Florance: We believe that we will generate approximately $80 billion in impressions for homes.com and reach 90% of U.S. households with our message in 2020. We believe that no other competitor is investing close to what we're investing in this effort. We believe we can grow share. We believe that we have a better product and can significantly shift share and create a very attractive ROI for our investors. While we have excellent traffic numbers, we do not yet have the unaided awareness we need to sustain the top traffic position and to attract the volume of advertisers we seek. As we did with apartments.com, our plan is to grow unaided awareness from the low single digits to more than 50%. That process will take time, but we believe that it will drive brand awareness, SEO, and SEM efficiency, traffic, audience, customer demand, and revenue. On Monday, February 12th, the day after the Super Bowl, we were ready to begin monetizing Homes.com, selling memberships to agents a quarter earlier than we had previously communicated.

The more they sell at both brands combined the more money they make.

Speaker Change: In addition to leveraging the strength of our entire Costar group sales team. We are rapidly building a sales force dedicated to selling only homes dot com, we've recruited vice president sales managers and 100 sellers to date and intend to have over 300 accounts sales representatives in place by the end of the year.

Speaker Change: The response to our sales effort is phenomenal from a standing start we sold almost $5 2 million.

Speaker Change: It was $5 million in half an hour ago.

$5 2 million of annualized subscription revenue and just a little over a week from a modest start on Monday, our sales climbed each day and by Friday, we were selling $1 $1 million and memberships in a single day.

Speaker Change: We sold more than 827 membership so far with approximately 90% of the agents selecting 12 month memberships with our rest choosing a six months subscription we've seen agents with larger portfolio signing up at price points in the thousands of dollars a month, so far tapping out at 7000.

Andrew C. Florance: As we did when we launched the new LoopNet and the new Apartments.com, we deployed the entire CoStar Group sales force to SellHomes.com. Our goal is to catapult our growth forward and quickly capitalize on the momentum and exposure generated by our market. Our 1,000-person sales force gives us instant national reach with experienced sales people that live in many of the very same neighborhoods as the 1.5 million residential property agents that we intend to reach. We trained the full sales team in January and rolled out very attractive incentive structures that reward our sellers to sell both homes and their primary brands like CoStar or Apartment, along with HUM. The more they sell of both brands combined, the more money they make.

Speaker Change: 400, a month, we have proposals out at much higher price points. We also have agents with just a listing or so signing up at price points of only 100 to $200 a month it doesn't matter if you're an agent with a large portfolio or small portfolio either way, we're charging a small fraction of the <unk>.

Speaker Change: Let's say high 30, or 40% commission of commissions being charged by Zillow and realtors to realtor dot com to agents.

Speaker Change: We have only demos, 0.02% of the agents out there at this point.

Speaker Change: If we maintain this pace, we could sell around $200 million in annual reoccurring revenue in our first 12 months of selling.

Speaker Change: The great news is that agents are definitely willing to spend for advertising exposure and they absolutely love the homes Dot Com your listing your lead business model.

Our direct field sales team telephone sales teams and E. Commerce sales channels are all producing results. We are initially focused on approximately 500000 of the $1 5 million agents in the country.

Andrew C. Florance: In addition to leveraging the strength of our entire CoStar Group sales team, we are rapidly building a sales force dedicated to selling only homes.com. We have recruited a vice president, sales managers, and 100 sellers to date, and intend to have over 300 account sales representatives in place by the end of the year. The response to our sales effort is phenomenal. From a standing start, we sold almost 5.2 million, five million half an hour ago. $5.2 million annualized subscription revenue in just a little over a week. From a modest start on Monday, our sales climbed each day, and by Friday, we were selling $1.1 million in memberships a single day. We've sold more than 827 memberships so far, with approximately 90% of the agents selecting 12-month memberships, and the rest choosing a six-month subscription. We've seen agents with larger portfolios signing up at price points in the thousands of dollars a month, so far topping out at $7,400 a month.

Speaker Change: The annual revenue potential of this initial pool of agents for a basic homes dotcom membership is over $2 5 billion.

Speaker Change: Knowing that apartments dot com basic silver ads comprise around 25% of all apartments dot com listings, if the same ratio where to apply to homes dot com than the potential opportunity could be as high as <unk>.

Speaker Change: 10 billion.

Speaker Change: Overall I'm very proud of what the team that has worked so hard to accomplish with homes dot com in only three years and believe it will be.

Speaker Change: Successful product launch in Costar group history. This coming year also marks a turning point as we've reached the peak year of our residential investments.

Speaker Change: With sales and revenue growing in the months ahead, we expect overall company profit levels to increase each quarter throughout the year and for the foreseeable future.

Speaker Change: In December we successfully closed our acquisition of on the market in the United Kingdom for 100 million pounds. We believe that at time of the acquisition of on the market. We believe that the time of the acquisition on the market was one of the top three residential portals in the UK 100 million pounds is 2%.

Andrew C. Florance: We have proposals out at much higher prices, but we also have agents with just a listing or so signing up at price points of only $100 to $200. It doesn't matter if you're an agent with a large portfolio or a small portfolio. Either way, we're charging a small fraction of the serious, ridiculously high 40% of commissions being charged by Zillow and Realtor.com to agents. We have only demoed 0.02% of the agents out there.

Speaker Change: The current leading portal right moves four 4 billion pound market cap.

Speaker Change: Alright move currently has significantly more traffic than on the market. So a top priority for us is to grow the appeal of the site for homebuyers and sellers and grow traffic.

Speaker Change: Just one months in we're making huge progress increasing January 'twenty 'twenty four site traffic to on the market by 81% year over year. According to Google analytics, we didn't waste time, we believe that we are now the fastest growing residential portal in the UK.

Andrew C. Florance: If we maintain this pace, we could sell around $200 million in annual reoccurring revenue in our first 12 months of selling. The great news is that agents are definitely willing to spend on advertising exposure, and they absolutely love TheHomes.com. Your listing, your lead business model, our direct field sales team, telephone sales team, and eCommerce sales channels are all producing results. We are initially focused on approximately 500,000 of the 1.5 million agents in the country.

Speaker Change: As our traffic has grown our leads have also grown 81% since December of 2023.

Speaker Change: Great move announced at their recent Investor day that they plan to grow revenue per agent by 42% over 2000 pounds per agent per month over the next five years that is 10 times what on the market charges agents today right.

Speaker Change: Alright move is also committed to maintaining at least 70% profit margin levels through 2028, leaving them little room for investing in product and technology.

Andrew C. Florance: Annual revenue potential of this initial pool of agents for a basichomes.com membership is over $2.5 billion. Knowing that Apartments.com's basic silver ads comprise around 25% of all Apartments.com listings, If the same ratio were to apply to Homes.com, then the potential opportunity could be as high as... $10 billion. Overall, I'm very proud of what the team has worked so hard to accomplish with homes.com in only three years and believe it'll be the most successful product launch in CoStar Group history. This coming year also marks a turning point as we've reached the peak year of our residential investment. With sales and revenue growing in the months ahead, we expect overall company profit levels to increase each quarter throughout the year and for the foreseeable future. In December, we successfully closed our acquisition of On The Market in the United Kingdom for £100 million.

Speaker Change: Simply cannot make this stuff up but you have to love it.

Speaker Change: In Sharp contrast, we plan to continue Costar long standing strategy of investing and partnering with agents in the industry to generate and attract high intent leads at a fraction of the cost of other UK portals, while still achieving an attractive margin.

Speaker Change: Agents are telling us that they are in searching alternative to rate moves unfriendly agent listing fees and are supportive of out in the market. Since acquisition. We have added over 1000 agent advertisers and 57000 listings to the site.

Speaker Change: In a matter of.

Speaker Change: Two months.

Speaker Change: Our long term intention is to create the number one property portal in the UK by combining costar is marketing and traffic generation expertise the market leading technology, we've developed in homes Dot Com Costars research and content generation capabilities and the strength of our established commercial real estate platform in the U K.

Speaker Change: The European residential market opportunity is estimated to be $17 billion, and we intend to build and expand our share of the residential opportunity in Europe, beginning with on the market.

Andrew C. Florance: We believe that at the time of the acquisition of On The Market, we believe that at the time of the acquisition, On The Market was one of the top three residential portals. £100 million is 2% of the current leading Portal Right Moves £4.4 billion market. RightMove currently has significantly more traffic than on the market, so a top priority for us is to grow the appeal of the site for home buyers and sellers and grow traffic. Just one month in, we're making huge progress, increasing January 2024 site traffic on the market by 81% year-over-year, according to Google Analytics. We didn't waste any time.

Speaker Change: Apartments Dot com had a phenomenal year revenue for the year with $914 million or 23% growth over 22.

Speaker Change: This is almost $170 million of incremental annual revenue the largest contribution evel ever for any of our brands.

Speaker Change: As of January this year apartments Dot com is now not only the largest business by revenue at Costar, but also officially our first.

Speaker Change: Billion dollar revenue run rate business.

Speaker Change: But here comes Costar right behind it.

Speaker Change: And then homes.

Speaker Change: The sales team delivered exceptional results at apartments Dot com in 'twenty, three with annualized net new bookings growing 34% over 2002.

Andrew C. Florance: We believe that we are now the fastest-growing residential portal in the UK. As our traffic has grown, our leads have also grown 81% since December of 2023. Rightmove announced at their recent investor day that they plan to grow revenue per agent by 42 percent to over 2,000 pounds per agent per month over the next five years. That is 10 times what On-the-market charges agents today. Rightmove is also committed to maintaining at least 70% profit margin levels through 2028, leaving them little room for investing in product and technology. You simply cannot make this stuff up, but you have to love it.

Speaker Change: We now have almost 71000 communities advertising their availabilities on apartments Dot com, which is 11% above the fourth quarter of 'twenty, two and almost twice that of our nearest competitor.

Speaker Change: Our highly productive sales team conducted over 623000 quality meetings in 'twenty, three which was 37% higher than in 2022 and a new record.

Speaker Change: Our customers love, our sales team rewarding them with a 94% 94 net promoter score rating for the full year of 2023.

Speaker Change: We continue to expand our mid market sales effort by growing our sales team and developing targeted product offerings that suit the needs of mid sized communities.

Speaker Change: Net productivity for our sales team increased by 14% in 2023 as compared to 2022, which resulted in a 44% growth in properties under 50 units advertising on apartments Dot com.

Andrew C. Florance: In sharp contrast, we plan to continue CoStar's long-standing strategy of investing in and partnering with agents in the industry to generate and attract high-intent leads at a fraction of the cost of other UK portals while still achieving an attractive margin. Agents are telling us that they're in search of an alternative to write moves on friendly agent listing fees and are supportive of on-the-mark. Since acquisition, we have added over 1,000 agent advertisers and 57,000 listings to the site again in a matter of, well, two months. Our long-term intention is to create the number one property portal in the UK by combining CoStar's marketing and traffic generation expertise. The market-leading technology we've developed in Homes.com, CoStar's research and content generation capabilities, and the strength of our established commercial real estate platform in the UK. The European residential market opportunity is estimated to be $17 billion, and we intend to build and expand our share of the European residential opportunity in Europe, beginning with on the market. Apartments.com had a phenomenal year.

Speaker Change: The opportunity in the small property sectors massive at almost $7 billion and our penetration in this sector is still below 5%.

Our award winning marketing campaign, featuring a wonderful and very funny, Jeff Goldbloom as Brad Bellflower inventor of the apart from Internet entertained audiences and delivered over 12 billion media impressions and almost 1 billion visits to our websites during the year.

Speaker Change: We jump started our 2020 for media campaign with a Super Bowl AD.

Speaker Change: Year 10 of our brand building marketing campaigns since we launched apartments dot com back in 2015.

Speaker Change: This consistent long term brand marketing strategy continues to prove successful as we finished the year with 52% unaided brand awareness with renters in the fourth quarter, 6% six percentage points above our closest competitor.

Speaker Change: Based on recent study by market research firm market connections industry decision makers, representing 15000 communities named apartments Dot com as the most widely used advertising solution at 74%. The research also found that apartments Dot com was the most well known advertising solution.

Speaker Change: Beating our closest competitor by 25%.

Speaker Change: The apartments Dot com brand is stronger than it's ever been delivering almost a 1 billion visits to our websites and 43 million average monthly unique visitors during 2023, according to Google analytics, our customers care about the number of potential renters utilizing our site every month to find a place to live making unique visitors a key metric for the <unk>.

Andrew C. Florance: Revenue for the year was $914 million, or 23% growth over last year. This is almost $170 million of incremental annual revenue, the largest contribution ever for any of our brands. As of January this year, Apartments.com is now not only the largest business by revenue at CoStar but also officially our first. Billion Dollar Revenue Run Rate Business, And here comes CoStar right behind me.

Speaker Change: Past eight quarters in a row barbers dotcom held the number one position in terms of monthly average unique visitors when comparing to our traffic <unk> publicly disclosed average monthly unique visitors.

Speaker Change: Overall economic conditions are expected to remain favorable for rental property advertising vacancy rates increased in 2023 for three to five star properties by 160 basis points to nine 1% and are expected to increase in 2010, three four as new unit deliveries are expected to remain high in 2020.

Andrew C. Florance: The sales team delivered exceptional results at Aparvis.com in 23, with annualized net new bookings growing 34% over 22. We now have almost 71,000 communities advertising their availabilities on Apartments.com, which is 11% above the fourth quarter of 22, and almost twice that of our nearest competitor. Our highly productive sales team conducted over 623,000 quality meetings in 23, which was 37% higher than in 2022 and a new record. Our customers love our sales team, rewarding them with a 94% net promoter score rating for the full year of 2020. We continue to expand our mid-market sales effort by growing our sales team and developing targeted product offerings that suit the needs of mid-sized communities. Net productivity for our sales team increased by 14% in 2023 as compared to 2022, which resulted in a 44% growth in properties under 50 units advertising on apartments.com. The opportunity in the small property sector is massive, at almost $7 billion, and our penetration in this sector is still below 5%. Our award-winning marketing campaign featuring the wonderful and very funny Jeff Goldblum as Brad Bellflower, inventor of the Apartament, entertained audiences and delivered over 12 billion media impressions and almost 1 billion visits to our websites during the year.

Speaker Change: Four at approximately 470000 units.

Speaker Change: We expect to see apartments dot com generate strong double digit revenue growth in 2024 somewhere in the high teens or more which is balanced to some degree by the level of homes Dot com sales effort. This top performing advertising juggernaut delivers in 2024.

Speaker Change: Costar delivered another strong quarter with revenues of $925 million and 11% year over year growth rate fourth quarter revenue grew 8% year over year to $238 million. We have never seen this level of positive revenue growth for costar, while we're at the bottom of a severe property market downturn.

Speaker Change: The strength of Costar continues to be our ability to expand the information content and analytic capabilities and the product to diversify into bigger and broader customer sets like owners lenders and corporate tenants.

Speaker Change: In 'twenty three we sold twice as much to the owner lender and corporate tenant sectors than we did to brokers net.

Speaker Change: Net sales in the fourth quarter to owner lender and tenant customers grew almost 30% compared to the third quarter of this year.

Speaker Change: The Costar lender product had an exceptional year in 2003, nearly doubling our customer base and delivering over five times the revenue that we realized in 2002.

Speaker Change: We now have over 1000 active users for our lender product our opportunity pipeline is large with over 300 institutions progressing through our sales process. Our competitive data advantage has helped us win virtually every deal versus the main competitors in this space, including winning seven of the loss.

Andrew C. Florance: We jump-started our 2024 media campaign with a Super Bowl ad. This is year 10 of our brand building marketing campaign since we launched apartments.com back in 2015. Our consistent long-term brand marketing strategy continues to prove successful as we finish the year with 52% unaided brand awareness among renters in the fourth quarter, six percentage points above our closest competitors. Based on a recent study by market research firm Market Connection, industry decision-makers representing 15,000 communities named Apartments.com as the most widely used advertising solution at 74%.

Just CRE lenders in the industry.

Speaker Change: Looking ahead, there is significant opportunity to expand the costar lender addressable market beyond our initial focus on depository institutions as regional banks and credit unions tighten up their credit lending requirements or commercial lending requirements private lenders are stepping in to fill the void.

Speaker Change: We believe the total addressable market for our expanded target customer set is over $600 million.

Speaker Change: We're currently serving less than 15% of this opportunity and have plans to increase our sales and product teams to accelerate our growth next year.

Speaker Change: We released our hospitality benchmarking product in the Costar platform in 'twenty, three and are rapidly migrating our STR customer base into the Costar environment.

Speaker Change: Over 600 customers are now using the benchmark pricing costar with a remaining customers to be migrated in the first half of 'twenty for.

Andrew C. Florance: The research also found that Apartments.com was the most well-known advertising solution, beating our closest competitor by 25%. The Apartments.com brand is stronger than it's ever been, delivering almost a billion visits to our websites and 43 million average monthly unique visitors in 2023, according to Google Analytics. Our customers care about the number of potential renters using our site every month to find a place to live, making unique visitors a key metric. For the past eight quarters in a row, Barbers.com held the number one position in terms of monthly average unique visitors when comparing our traffic to Zillow's publicly disclosed average monthly unique visitors.

Speaker Change: More than 18000 users are now in Costar, managing their hotels performance and optimizing the revenue through the re imagined tools and additional analytic capabilities.

Speaker Change: As a result of the movement of STR benchmarking to Costar revenues from our hospitality benchmark subscriptions will now be reported as part of Costar similar to our integrated approach of our lender products for financial institutions being Costar.

The transition of STR benchmarking to Costar in 'twenty four is a major milestone for our roadmap to build the full suite of <unk> product capabilities in Costar.

Speaker Change: We plan to incorporate forward booking information complete P&L benchmarking and international market performance this year and the next.

Speaker Change: STR overall had an incredible year 'twenty three revenue grew 13% over last year delivering the highest annual ever results since we brought.

Andrew C. Florance: Overall economic conditions are expected to remain favorable for rental property advertising. Vacancy rates increased in 2023 for three to five-star properties by 160 basis points to 9.1 percent and are expected to increase in 2024 as new unit deliveries are expected to remain high in 2024 at approximately $470,000. We expect to see Apartments.com generate strong, double-digit revenue growth in 2024, somewhere in the high teens or more, which is balanced to some degree by the level of Homes.com sales this top-performing advertising juggernaut delivers. CoStar delivered another strong quarter with revenues of $925 million and an 11% year-over-year growth rate.

Speaker Change: Since we bought STR 19.

Speaker Change: The team had a record record sales.

Order to end the year growing 54% over the fourth quarter of last year subscription.

Speaker Change: Subscription revenue grew 17% and 23 over the prior year and now makes up 81% of the overall revenue the highest percentage since the acquisition.

Speaker Change: Str's quarterly renewal rate is now in a very impressive 98%.

Speaker Change: Okay.

Speaker Change: With the full capability of Costar to STR combined we expect to unlike unlock increased value for our customers and grow strong double digit revenue towards what we believe is a 300 million hospitality market opportunity.

Speaker Change: Overall, we remain very confident in the strength and value of Costar platform and our growth performance in the downturn.

Speaker Change: Renewal rates for Costar remain rock solid at 92% and were seeing early indications of increased leasing and sales activity as we move into the first quarter of 2024.

Andrew C. Florance: In the fourth quarter, revenue grew 8% year-over-year to $238 million. We have never seen this level of positive revenue growth for CoStar while we're at the bottom of a severe property market downturn. The strength of CoStar continues to be our ability to expand the information, content, and analytic capabilities in the product to diversify into bigger and broader customer sets like owners, lenders, and corporate tenants. In 2023, we sold twice as much to the owner, lender, and corporate tenant sectors than we did to brokers. Net sales in the 4th quarter to owner, lender, and tenant customers grew almost 30% compared to the 3rd quarter of this year.

Speaker Change: Although it's too early to call a recovery in the property markets. We expect solid mid single digit revenue growth from Costar in 2004.

Speaker Change: Loopnet revenue was $265 million and 23 up 15% year over year and at the high end of our guidance range Cigna.

Speaker Change: Signature listings signature AD listings were up 11% in the fourth quarter, delivering more traffic and leads to our customers.

Speaker Change: International revenue in the fourth quarter was up 33% and net new bookings were up 186% over the fourth quarter of 'twenty two.

Speaker Change: Loopnet continues to be the number one listing site for commercial properties average monthly unique visitors to the global network in the fourth quarter were up 11% year over year.

Speaker Change: <unk> was seven times.

Speaker Change: The traffic of the next largest competitor in.

Speaker Change: In the UK Loopnet is now the number one dedicated commercial property marketplace by traffic after launching only a little over a year ago.

Andrew C. Florance: CoStar Lender had an exceptional year in 23, nearly doubling our customer base and delivering over five times the revenue that we realized in 22. We now have over 1,000 active users for our lender product. Our opportunity pipeline is large, with over 300 institutions progressing through our sales process.

Speaker Change: We continued to expand internationally given our success to date and the size of the opportunity we plan to launch Loopnet in France in Spain in 2024.

Speaker Change: In 2000, 22023 was a year of growth for <unk>.

Speaker Change: <unk> sales team.

Speaker Change: At the end of 'twenty, two only 40% of the sales were managed by a loopnet dedicated sales representatives.

Speaker Change: And we have now effectively transition to 80% of those accounts.

Andrew C. Florance: Our competitive data advantage has helped us win virtually every deal versus the main competitors in this space, including winning seven of the largest FIRI lenders in the world. Looking ahead, there is significant opportunity to expand the CoStar Lender addressable market beyond our initial focus on depository institutions, as regional banks and credit unions tighten their credit lending requirements or commercial lending requirements, while private lenders are stepping in to fill the void.

Speaker Change: From Costar reps to Loopnet reps.

Speaker Change: Loopnet sales team is focused on ramping up activity face to face meetings and NPS scores. Following the success formula of apartments Dot com.

Speaker Change: As a result, we expect to deliver increased sales productivity and bookings as we move through 2024.

Speaker Change: <unk> continues to demonstrate the value of our digital sales platform for our commercial properties in the year with sales transactions were down 49% Tenex brought $4 5 billion in assets the platform, which was a modest decline of 9% relative to the markets.

Andrew C. Florance: We believe the total addressable market for our expanded target customer set is over 600 million. We are currently serving less than 15% of this opportunity and have plans to increase our sales and product teams to accelerate our growth next year. We released our Hospitality Benchmarking product in the CoStar platform in 2023 and are rapidly migrating our SDR customer base into the CoStar environment. Over 600 customers are now using the benchmarking product in CoStar, with the remaining customers to be migrated in the first half, so 24.

Speaker Change: <unk> decline.

Speaker Change: We delivered a 52% trade rate in 'twenty, three nearly double the offline trade rate, but below the rates we achieved in 2002.

Speaker Change: Overall <unk> revenue finished the year around 20% below prior year levels. Despite this decline we increased our share of property sales in the $1 million to $10 million asset category during the year moving more transactions from offline to online the.

Speaker Change: The market outlook for the coming year remains uncertain, although interest rates have stabilized and near term bid ask spreads in that constraints remain a challenge.

Speaker Change: <unk>. These uncertainties in the first 45 days of 2024, our trade rate and number of bidders per asset have increased from the fourth quarter of 2003 levels.

Andrew C. Florance: More than 18,000 users are now in CoStar managing their hotel's performance and optimizing their revenue through the reimagined tools and additional analytic capabilities. As a result of the movement of SDR benchmarking at CoStar, revenues from our hospitality benchmark subscriptions will now be reported as part of CoStar, similar to our integrated approach of our lender products for financial assistance.

Speaker Change: There are still billions of dollars of transactions occurring each year in the 1% to $10 billion asset category.

Speaker Change: Which we continue to pursue as part of what we believe is a $3 billion long term market opportunity.

Speaker Change: The real estate capital markets in the fourth currency continued to be impacted by higher higher borrowing cost tight lending standards and deteriorating real estate fundamentals.

Speaker Change: In 'twenty three transaction volumes were down, 49% and price declines range from 10% to 35% across all sectors.

Andrew C. Florance: The transition of STR benchmarking to CoStar in 24 is a major milestone for our road map to build the full suite of STR product capabilities in CoStar. We plan to incorporate forward booking information, complete P&L benchmarking, and international market performance this year and the next. STR Overall had an incredible year.

Speaker Change: Banks continue to slow their loan growth is property fundamentals decline in delinquencies rise with interest rates expected to decline later this year.

Current expectations are for sales volumes to increase compared to last year. We saw some early indications in January with sales volumes rising six 4%.

Speaker Change: The office sector continues to be the most challenged with 58 million square feet of negative absorption in 2003.

Andrew C. Florance: Twenty-three revenue grew 13% over last year, delivering the highest annual ever result since we bought STR in 19, and the team had a record sales quarter to end the year, growing 54% over the fourth quarter of last year. Subscription revenue grew 17% in 2023 over the prior year and now makes up 81% of the overall revenue, the highest percentage since the acquisition. SDR's quarterly renewal rate is now, at a very impressive, 9

Speaker Change: Absorptions since the pandemic now sits at negative 178 million square feet office attendance is 60% of what it was before 2020, though that understates demand since hybrid work requires higher peak use.

Speaker Change: The market sits at a record high of 13, 5% vacancy rate.

Speaker Change: The silver lining is the decline in construction starts which we predict will eventually result in a shortage of premium office space.

Speaker Change: Since our 15 year lease at our Washington D. C headquarters location is set to expire in 2025, we assess more than 25% viable sites in the greater Washington D C Metro area.

Andrew C. Florance: With the full capability of CoStar and SDR combined, we expect to unlock increased value for our customers and grow strong, double-digit revenue towards what we believe is a $300 million hospitality market opportunity. Overall, we remain very confident in the strength and value of CoStar's platform and our growth performance in the downturn. Renewal rates for CoStar remain rock-solid at 92%, and we're seeing early indications of increased leasing and sales activity as we move into the first quarter of 2024. Although it's too early to call a recovery in the property markets, we expect solid mid-single-digit revenue growth from CoStar. 24.

Speaker Change: We ultimately decided to purchase a five star Trophy LEED Platinum office building located at 12 O. One Wilson Boulevard in Arlington, Virginia.

Speaker Change: We were able to purchase the building and the.

Speaker Change: The land lease for a significant discount to both recent valuations and current replacement cost.

Speaker Change: We also received nearly $7 million in both tax and economic incentives.

Speaker Change: While past performance does not ensure future performance you might recall that back in 2010 during the great financial crisis, we acquired our 13th or anyone else Street location for $42 million.

Speaker Change: Then significant discount to replacement cost and.

Andrew C. Florance: LubeNet revenue was $265,023,000, up 15% year-over-year and at the high end of our guidance. See signature listing. Signature ad listings were up 11% in the fourth quarter, delivering more traffic and leads to our customers. International revenue in the fourth quarter was up 33 percent, and net new bookings were up 186 percent over the fourth quarter of 2020. LoopNet continues to be the number one listing site for commercial property. Average monthly unique visitors to the global network in the fourth quarter were up 11% year-over-year and was seven, uh... times the traffic of the next largest competitor. In the UK, Lupna is now the number one dedicated commercial property marketplace by traffic after launching only a little over a year ago. We continue to expand internationally, given our success to date and the size of the opportunity, and plan to launch LubeNet in France and Spain in 2024.

Speaker Change: And sold it within two years in a sale leaseback for $101 million more than twice, what we bought it for.

We are betting that the office market has added an eight or again.

Speaker Change: We will likely execute a sale leaseback on 12 Owen Wilson Boulevard at some point in the future.

Speaker Change: The industrial sector has also seen historic wave of new construction push push vacancies up from all time lows, but at five 7% industrial vacancies are still have their peak levels industrial demand has remained positive, though and the rise in vacancy should be mitigate.

<unk> by a pullback in construction starts in the second half of 'twenty three.

Speaker Change: The retail sector continued to be the best performing in the fourth quarter with both positive absorption and limited new construction.

Speaker Change: <unk> was vacancy rates dropping to 4% an all time low.

Speaker Change: Conditions should remain healthy for retail with under construction at near all time level lows.

The U S hotel sector ended the year with Revpar growth of four 9% outpacing inflation and being driven by ADR growth of four 3% and occupancy growth of 6% robust group demand in corporate transient demand were the primary contributors to growth.

Andrew C. Florance: 2020-2023 was a year of growth for the Lubeck sales team. At the end of 22, only 40% of the sales were managed by a LoopNet dedicated sales representative, and we've now effectively transitioned 80% of those accounts from CoStar Reps to LoopNet Reps. The LubeNet sales team is focused on ramping up activity, face-to-face meetings, and MPS scores following the success formula of Apartments.com. As a result, we expect to deliver increased sales productivity and bookings as we move through 2024. Tenex continues to demonstrate the value of our digital sales platform for our commercial products. In a year when sales transactions were down 49%, 10X brought 4.5 billion in assets to the platform, which was a modest decline of 9% relative to the market's steeper decline. We delivered a 52% trade rate in 23, nearly double the offline trade rate, but below the rates we achieved in 22. Overall, 10X revenue finished the year around 20% below the prior year level.

Speaker Change: Revpar is expected to continue to outpace inflation in 'twenty four with four 1% growth projected.

Speaker Change: In the U S residential sector mortgage rates have come down from seven 8% to six 6%, but rates are still high enough to prevent homeowners from selling creating low inventory of homes for sale and low levels of homes being sold.

Speaker Change: But if interest rates continue to drop affordability will improve and even have dropped to 6% would mean home ownership would become affordable for an additional 37 million Americans.

Speaker Change: In the context of a distressed commercial real estate market Costar turned in an outstanding performance in 'twenty, three growing revenue, 13% with record levels of profitability in our CRE business. It.

Speaker Change: It is clear that Costar group's diversified subscription business is highly resilient in a distressed property cycle. We believe that we will improve profits and margins again in 'twenty four.

Speaker Change: $1 1 billion and adjusted EBITDA was 42% margins.

Our entire team has worked extraordinarily hard in building the Homestar com platform and business. We believe that we've just launched Costar group's next transformative billion dollar business.

Speaker Change: And the conversations we're having with brokerage leaders and agents. They tell us are 100% behind our Youre listing your lead business model, but gets better for brokers agents home buyers and home sellers.

Speaker Change: I'm thrilled to see that support with $5 2 million in annualized subscription sales in just the first six business days of selling homes Dot com.

Andrew C. Florance: Despite this decline, we increased our share of property sales in the $1-$10 million asset category during the year, moving more transactions from offline to online. The market outlook for the coming year remains uncertain, although interest rates have stabilized near-term. Bid-ask spreads and debt constraints remain a challenge. Regardless of these uncertainties, in the first 45 days of 2024, our trade rate and number of bidders per asset increased from the fourth quarter of 2023 level. There are still billions of dollars of transactions occurring each year in the $1 to $10 billion asset category, which we continue to pursue as part of what we believe is a $3 billion long-term market opportunity. The real estate capital markets in the fourth quarter continued to be impacted by higher borrowing costs, tight lending standards, and deteriorating real estate fundamentals. Transaction volumes were down 49%, and price declines ranged from 10 to 35% across all sectors. Banks continue to slow their loan growth as property fundamentals decline.

Speaker Change: The first half of 'twenty four is the peak investment for homes Dot Com and we believe profits and margins will start showing significant growth in the second half of 'twenty four.

Speaker Change: After my brief remarks, I'm going to turn the call over to our Chief Financial Officer, Scott Wheeler are you still there Scott still here ready to go. Thank you for those brief remarks.

Speaker Change: Yes.

Scott Wheeler: Okay. So.

Scott Wheeler: Clearly 2023 was a very strong year for the company, but that's sure feels like a long time ago doesn't it. Please.

Scott Wheeler: These last few weeks have really been like turning a page when you get into the launch of homes Dot com. The advertising brand campaign, the selling efforts I think 'twenty 'twenty four is going to be a great year I can already tell.

Scott Wheeler: But first let's wrap up on 2023.

Scott Wheeler: The full year revenue growth was an impressive 13% versus prior year, which was ahead of our guidance and forecast what I found interesting was that 2023 was the 13th consecutive year of double digit growth and we grew 13%.

Scott Wheeler: All of that.

Scott Wheeler: And last year, when our 12 consecutive year of double digit revenue growth we grew 12%.

Speaker Change: Hi, I wonder what that means this year, we will see.

Speaker Change: Let's not get ahead of ourselves, but we actually turned into great revenue performance in 2023 prop.

Our profit results also came in above expectations with full year, adjusted EBITDA at $492 million and 20% margin exceeding the high end of our guidance range.

Speaker Change: But I think most impressive is that you can still see our core costar business, delivering 40% profit margins and a record high 45% in the fourth quarter before you consider the investments, we're making moving into the residential sector.

Andrew C. Florance: The Bulletproof Executive 2013, with interest rates expected to decline later this year. Current expectations are for sales volumes to increase compared to last year. We saw some early indications in January with sales volumes rising 6.4%. The office sector continues to be the most challenged with 58 million square feet of negative absorption in 23.

Speaker Change: I think it's important we keep an eye on the underlying strength of this business portfolio.

Speaker Change: As we exited the investment phase of homes Dot com, particularly and we will expect profitability to increase as Andy mentioned once again as we move through 2024.

Speaker Change: So looking at our revenue by our different businesses apartments Dot com grew 23% in the fourth quarter and the full year in line with our expectations.

Speaker Change: Apartments Dot com added twice the amount of revenue in 'twenty three than its nearest competitor and increased revenue in the fourth quarter of 'twenty three sequentially over the third quarter, which.

Andrew C. Florance: Absorption since the pandemic now sits at negative 178 million square feet, and office attendance is 60% of what it was before 2020, though that understates demand since hybrid work requires higher peak use. The market sits at a record high, 13.5% vacancy rate. The silver lining is the decline in construction starts, which we predict will eventually result in a shortage of premium office space. Since our 15-year lease at our Washington, D.C., Headquarters location is set to expire in 2025, we have assessed more than 25 viable sites in the greater Washington, D.C. metro area. We ultimately decided to purchase a five-star trophy LEED Platinum office building located at 1201 Wilson Boulevard in Arlington, Virginia.

Speaker Change: Which demonstrates both the strength of our product platform and our 97% subscription model and apartments Dot com.

Speaker Change: Now our competitors are still in the game of chasing transaction revenue, which is why their revenue cycles up in the middle of the year and then drops back in the fourth quarter.

Speaker Change: These transactions sure feel good during an upswing in market demand, but we'll leave your weak and unable to invest in a cyclical downturn.

Speaker Change: We expect department is dot com revenue growth rates somewhere in the 17% to 18% range for the full year of 2024, and we're estimating 20% revenue growth for the first quarter.

We expect our renewal pricing levels to moderate this coming year as inflation in the economy has come down.

Speaker Change: So we continue to grow aggressively in the smaller property space, which carries lower price points relative to institutional scale communities.

Andrew C. Florance: We were able to purchase the building and the land lease for a significant discount to both recent valuations and current replacement costs. We also received nearly $7 million in both tax and economic incentives. However, past performance does not ensure future performance.

Speaker Change: We're going to see increased levels of productivity in 2024 from our large and more experienced sales force in apartments. Now. The question is will this increased output benefit apartments or homes Dot com.

Speaker Change: So far the sales team is proving very effective at selling both.

Speaker Change: Costar revenue grew 8% in the fourth quarter and 11% for the full year of 2023 at the top end of our full year guidance range.

Andrew C. Florance: You might recall that back in 2010, during the great financial crisis... We acquired our 1331 L Street location for $42 million, a then-significant discount to replacement costs, and sold it within two years in a sale lease back for $101 million, more than twice what we bought it for. We are banging on the office market again with Adam Nadar. We will likely execute a sales lease back on 1201 Wilson Boulevard at some point. The industrial sector has also seen a historic wave of new construction, pushing vacancies up from an all-time low. But at 5.7%, industrial vacancies are still at half their peak level.

Speaker Change: As Andy mentioned in 2024, we will report STR benchmarking revenue in Costar as the STR product is now fully integrated into the Costar platform and customer by customer migrations will be complete this year.

Speaker Change: Including our benchmarking revenue, we expect full year and first quarter Costar revenue growth in the range of 11% to 12%.

Speaker Change: So in 2020 for Costar will become our second brand business producing over $1 billion in revenue.

Speaker Change: On a pro forma basis adjusting for the STR revenue shift, we expect costar revenue growth of between 7% to 8% consistent with what we indicated in our third quarter earnings call back in October.

Speaker Change: Loopnet revenue grew 12% in the fourth quarter exceeding our 11% guidance revenue for the full year was $265 million or 15% increase over prior year.

Andrew C. Florance: Industrial demand has remained positive, though, and the rise in vacancies should be mitigated by a pullback in construction starts in the second half of 2023. The retail sector continued to be the best performing in the fourth quarter with both positive absorption and limited new construction. The result was vacancy rates dropping to 4%, an all-time low.

Speaker Change: Top end of our guidance range of 14% to 15%.

Speaker Change: We expect to see first quarter Loopnet revenue growth in the range of 8% to 9% as the sales results for Loopnet in the fourth quarter were lower than earlier in the year. Following the full account transitions from Costar to Loopnet.

We expect our loopnet sales team to make meaningful contributions to selling both loopnet and homes dot com in 2024.

Speaker Change: So accordingly, our Loopnet 2000 totaling four forecast range assumes revenue growth in the mid single digit range.

Andrew C. Florance: Conditions should remain healthy for retail, with under construction at near all-time lows. The U.S. hotel sector ended the year with Repar growth of 4.9%, outpacing inflation and being driven by ADR growth of 4.3% and occupancy growth of 0.6%. Robust Group Demand and Corporate Transient Demand were the primary contributors to growth. REVPAR is expected to continue to outpace inflation in 2024 with 4.1% growth projected. In the U.S. residential sector, mortgage rates have come down from 7.8% to 6.6%, but rates are still high enough to prevent homeowners from selling, creating a low inventory of homes for sale and low levels of homes being sold.

Speaker Change: Revenue from information services grew 9% for the full year as expected.

Speaker Change: As a reminder, information services includes STR real estate manager, our original lender products and a few smaller information related products, Thomas daily and business ammo in Europe.

In 2024, a big piece of this revenue the STR benchmarking will move up into Costar.

Speaker Change: Also as we continue to grow our integrated Costar lender product more and more of the original lender products residing in information services are also moving into Costar.

Speaker Change: This is good news of course is we are executing on our strategy to integrate all of the information services products inside the Costar platform.

Speaker Change: When the dust settles on all of this we expect information services revenue for 2024 in the range of approximately $130 million to $135 million with $33 million of revenue in the first quarter.

Speaker Change: Our real estate manager business is now the largest single component of information services, which we expect to grow in the mid to high single digits in 2024 for real estate manager.

Speaker Change: Other marketplace revenue was $134 million for the full year of 2023 ahead of our expectations for the fourth quarter with modestly higher transaction revenues from tenants are.

Andrew C. Florance: But if interest rates continue to drop, affordability will improve, and even a drop to 6% would mean home ownership would become affordable for an additional 37 million Americans. In the context of a distressed commercial real estate market, CoStar turned in an outstanding performance in 2023, growing revenue 13% with record levels of profitability in our series. It is clear that CoStar Group's diversified subscription business is highly resilient in a distressed property cycle. We believe that we will improve profits and margins again in 24, to 1.1 billion adjusted EBITDA with a 42% margin. Our entire team has worked extraordinarily hard in building the Homes.com platform and business.

Speaker Change: Our subscription marketplace businesses lands in business for sale contributed solid double digit growth as they do year in and year out.

Speaker Change: We expect similar outcomes in 2024 with revenue relatively flat to the 2023 overall and first quarter revenue a little below $30 million.

Speaker Change: Our 2020 for revenue outlook includes double digit revenue growth in the subscription marketplace businesses and a rather conservative view I must say, a 10 X transaction revenue.

Speaker Change: Built any transaction market recovery assumption into 2024, so if a recovery does materialize in the months ahead, then we should benefit.

Speaker Change: Residential revenue I saved the best for last I can finally talk about forward growth expectations for homes Dot com.

Speaker Change: First round off on 2023, our residential revenue was $10 million in the fourth quarter and 44 million for the full year of 2023 in line with our expectations for the legacy home snap revenue and inclusive of a small amount of revenue from the all of the market acquisition.

Andrew C. Florance: We believe that we just launched CoStar Group's next transformative billion-dollar business. The conversations we're having with brokers, leaders, and agents tell us they're 100% behind our year-list and year-lead business model, but it gets better for brokers, agents, homebuyers, and home sellers. I am thrilled to see that support with $5.2 million in annualized subscription sales in just the first six business days of SellingHomes.com. Her first half of 24 is the peak investment for Homes.com, and we believe profits and margins will start showing significant growth in the second half. After my brief remarks, I'm going to turn the call over to our Chief Financial Officer, Scott Wheeler. Are you still there, Scott?

Speaker Change: Our 2024 residential revenue outlook includes three components.

Speaker Change: These are homes dot com on the market and the legacy residential products, formerly known as hometown.

Speaker Change: Homes Dot com is generating revenue.

Been waiting three years to say that I'm, just going to have to say it again homes dot com is generating revenue.

Speaker Change: I think it definitely felt better the second time.

Speaker Change: So it was exciting to see our first homes dot com membership product putting points on the sales board this year.

Speaker Change: Every brand sales team in every city across the country competing to sell homes Dot com and this is certainly going to be fun to watch.

Speaker Change: I think the Costar team is a little bit salt he still from having apartments reached $1 billion in revenue first and they are currently leading the homes dot com top selling contest ahead of apartments.

Scott Wheeler: Still here. Ready to go. Thank you for those brief remarks. Okay, so clearly 2023 was a very strong year for the company, but that sure feels like a long time ago, doesn't it? These last few weeks have really been like turning a page when you get into the launch of homes.com, the advertising brand campaign, the selling efforts. I think 2024 is going to be a great year. I can already tell.

Speaker Change: What's fun is that every sales team no matter, how big or small has a shot at victory.

Speaker Change: Pound for pound I'm seeing land is dot com sales team is ahead of everyone in terms of net sales per person of homes Dot com and.

Speaker Change: And Theres team is 110th the size of apartments.

Speaker Change: Momentum is certainly building in all nine of our brand sales teams have contributed net new sales for homes Dot com.

Speaker Change: Of course, it's very early in the year and with every salesperson in Costar incentivized to sell both our core brand products as well as homes Dot com.

Scott Wheeler: But first, let's wrap up on 2023. The full-year revenue growth was an impressive 13% versus the prior year, which was ahead of our guidance and forecast. What I found interesting was that 2023 was the 13th consecutive year of double-digit growth, and we grew 13%. Did you know that?

Speaker Change: A bit challenging as you might imagine to pin down the sales and revenue outlook by brand this year.

Speaker Change: Will we sell more homes dot com or will we sell more of our commercial brand products.

Speaker Change: Too early to tell but I believe we're going to sell a whole lot of both.

Speaker Change: Is a great problem to have and regardless of the specific mix of products. We sell we believe that 2024 will be the best net sales year in the company's history by a wide margin.

Scott Wheeler: And last year, when we had our 12th consecutive year of double-digit revenue growth, we grew by 12. Huh, I wonder what that means this year. Let's not get ahead of ourselves, but we actually turned in a great revenue performance in 2020. Profit results also came in above expectations, with full-year adjusted EBITDA at $492 million and a 20% margin, exceeding the high end of our guidance. What I think is most impressive is that you can still see our core CoStar business delivering 40% profit margins and a record high 45% in the fourth quarter before you consider the investments we're making moving into residential. I think it's important we keep an eye on the underlying strength of this business portfolio as we exit the investment phase of Homes.com, particularly, and we'll expect profitability to increase, as Andy mentioned, once again as we move through 2020. So looking at our revenue by our different businesses, Apartments.com grew 23% in the fourth quarter and the full year, in line with our expectations.

Speaker Change: Well, let's look at what happened the last time, we took this approach which was back in February 2015, when we pointed the entire sales force at the launch of apartments Dot com.

Speaker Change: As we came into 2015, our total net sales bookings for the company, we're growing around 15% year over year.

Speaker Change: In 2015 with everyone's selling our new apartments Dot Com AD products. In addition to their core branded products are net new bookings increased almost 80% with sales of all brands growing year over year.

Speaker Change: Now it appears Mr. Florence, a few moments ago, we all know that past performance is not indicative of future results.

Speaker Change: However, there are a number of factors working in our favor with homes Dot com.

We know the size of the residential market opportunity is multiple times bigger than multifamily.

Speaker Change: We just launched the biggest marketing campaign in real estate history, four times the size of our apartments Dot Com initial marketing campaign and.

Speaker Change: And nobody else in the industry is competing with your listing your lead business model that doesn't try to take agent commissions, but lets them by advertising exposure to sell their listings.

Speaker Change: These are all very positive relative to our apartments dot com experience back in 2015.

Speaker Change: So taking our best educated guess, our 2024 forecast assumes revenue contribution from homes Dot com memberships in the $50 million to $60 million range in 2024, starting from zero in the first quarter and exiting the year with an approximate $100 million quarterly run rate.

Speaker Change: Now you might think my forecast looks a bit wimpy as you keep hearing Andy talked about updating our sales efforts every minute over here, but one step at a time, we're just getting started.

Speaker Change: We expect on the market, our new UK residential business to deliver approximately $40 million in revenue in 2024.

Scott Wheeler: Departments.com added twice the amount of revenue in the 23rd quarter than its nearest competitor and increased revenue in the fourth quarter by 23 sequentially over the third quarter, which demonstrates both the strength of our product platform and our 97% subscription model for apartments.com. Our competitors are still in the game of chasing transaction revenue, which is why their revenue cycles up in the middle of the year and then drops back in the fourth quarter. These transactions sure feel good during an upswing in market demand but will leave you weak and unable to invest in a cyclical downturn.

Speaker Change: First quarter revenue is expected to be in the $10 million range.

Speaker Change: The results of on the market were insignificant to our overall financial results in 2023 as the acquisition closed in the middle of December.

Speaker Change: We expect legacy residential products to continue to decline in 2024, as we saw customers homes Dot com memberships, we expect full year 2020 for revenue of around $20 million from the legacy products.

Speaker Change: So combining all of the components of our residential business our forecast assumes revenue in the range of $110 million to $120 million in 2024.

Speaker Change: Starting the year with a little over $15 million in the first quarter and growing to over $40 million in the fourth quarter of 2024.

Speaker Change: Year over year total revenue growth is expected to be 150%.

Speaker Change: And year over year organic revenue growth in residential is around 70% in 2024.

Speaker Change: So to wrap up on 2023 net income was $96 million for the fourth quarter and $375 million for all of 2023.

Speaker Change: An increase of around $5 million compared to 2022.

Scott Wheeler: We expect Apartments.com revenue growth rates somewhere in the 17% to 18% range for the full year of 2024, and we're estimating 20% revenue growth for the first quarter. We expect our renewal pricing levels to moderate this coming year as inflation in the economy has come down. Also, we continue to grow aggressively in the smaller property space, which carries lower price points relative to institutional scale communities. We're going to see increased levels of productivity in 2024 for our large and more experienced sales force and department. Now the question is, will this increased output benefit apartments or homes.com? So far, this sales team is proving very effective at selling both. CoStar revenue grew 8% in the fourth quarter and 11% for the full year of 2023, at the top end of our full year guidance. As Andy mentioned, in 2024, we will report STR benchmarking revenue in CoStar as the STR product is now fully integrated in the CoStar platform, and customer migrations will be complete this year.

Speaker Change: It's nice to see net income improved while we are in a major investment cycle and thats. Thanks to our net interest income, which was an impressive $220 million in 2023.

We earned roughly 5% on around a $4 $2 billion net cash balance for the year.

Speaker Change: Just talk about a few of our performance metrics first with our sales force, which totaled approximately 1160 people at the end of the year with modest increases in 2023 focussed on our marketplace businesses of apartments Dot com in Loopnet.

Speaker Change: Sales force expansion in 2024 will be primarily concentrated in our homes dot com residential business.

Speaker Change: Contract renewal rates were 90% in the fourth quarter 2023.

Speaker Change: These remained strong at 95% for customers who've been subscribers for five years or longer.

Speaker Change: Subscription revenue on annual contracts was 81% for the fourth quarter of 2022 up from 80% in the prior year.

Speaker Change: Looking ahead to 2024, and we expect full year revenue to range from $2 75 to $2 77 billion, implying an annual growth rate of between 12 and 13%.

Speaker Change: First quarter 2024 revenue is expected to range from $645 million to $650 million, representing revenue growth of 11% year over year at the midpoint.

Scott Wheeler: Including our benchmarking revenue, we expect full-year and first-quarter CoStar revenue growth in the range of 11 to 12 percent. So, in 2024, CoStar will become our second brand business, producing over $1 billion in revenue. On a pro forma basis, adjusting for the STR revenue shift, we expect CoStar revenue growth of between 7 to 8 percent, consistent with what we indicated in our third quarter earnings call back in October. LoopNet revenue grew 12% in the fourth quarter, exceeding our 11% guide.

Speaker Change: 2024, adjusted EBITDA is expected in the range of $1 $70 million to $190 million, reflecting an adjusted EBITDA margin rate of around 7% for the entire year.

Speaker Change: First quarter 2024, adjusted EBITDA is expected to dip slightly into negative territory as we launch our brand marketing campaign ahead of the revenue growth in homes Dot com.

Speaker Change: We expect to see positive margins return after the first quarter and grow for the remainder of the year with adjusted EBITDA margins in the 12% to 13% range in the second half of 2024 and exiting much higher than that.

Speaker Change: Our financial strategy for 2020 for us to once again drive operating leverage and profit generation in our commercial businesses, while we fund our residential marketplace strategy.

Scott Wheeler: Revenue for the full year was $265 million, or a 15% increase over the prior year, at the top end of our guidance range of $14 to $15 million. We expect to see first quarter LoopNet revenue growth in the range of 8 to 9 percent as the sales results for LoopNet in the fourth quarter were lower than earlier in the year, following the full account transitions from CoStar to LoopNet. We expect our LoopNet sales team to make meaningful contributions to selling both LoopNet and Homes.com in 2024. So accordingly, our LoopNet 2024 forecast range assumes revenue growth in the mid-single-digits. Revenue from information services grew 9% for the full year as expected. As a reminder, Information Services includes STR, Real Estate Manager, our original lender products, and a few smaller information-related products, such as Thomas Daly and Business Imo in Europe.

Speaker Change: We expect to increase profit margins in our commercial portfolio, which.

Speaker Change: Which should be generating approximately $1 $1 billion of profit before investments in homes Dot com and on the market in 2024.

We're off to a strong start with homes dot com sales yet this year with plans to increase our total residential investment levels in 2024 to support the brand launch and build our sales capabilities.

Speaker Change: 2024 will be the peak net investment year for residential which includes our full marketing campaign on the market in the U K and our team is reaching full strength in content technology and sales.

Speaker Change: Our level of capital expenditures is expected to increase in 2024 from around $150 million in 2023 to around $800 million in 2024, as we enter the big construction years for our Richmond campus and at our New headquarters building building in Arlington, Virginia.

Speaker Change: The operating capital apart from the building projects as expected in the 40% to $45 million range in 2024, which is consistent with the same spending levels in 2023.

Scott Wheeler: In 2024, a big piece of this revenue, the STR Benchmarking, will move into CoStar. Also, as we continue to grow our integrated CoStar lender product, more and more of the original lender products residing in information services are also moving into CoStar. This is good news, of course, as we are executing on our strategy to integrate all of the information services products inside the CoStar platform. When the dust settles on all this, we expect information services revenue for 2024 in the range of approximately $130 million to $135 million, with $33 million of revenue in the first quarter. Our real estate manager business is now the largest single component of information services, which we expect to grow in the mid to high single digits in 2024 for real estate.

Speaker Change: Our forecast for net income.

Speaker Change: Net interest income is around $200 million for 2024, which takes into account our increased capital spend and the possible interest rate reductions in the years ahead.

Speaker Change: In summary, I'm very proud of the exceptional results we delivered in 2023 during the year complicated by high interest rates inflation and continued economic uncertainties.

Speaker Change: We remain focused on our strategic investment in residential markets, while producing record profit levels in our established commercial businesses.

Speaker Change: With monetization of homes Dot com. This year, we're adding another strong double digit growth revenue stream to our brand portfolio and moving past the peak of the residential investment cycle and onto the next phase of profit growth and profitability improvement for the company.

Speaker Change: Overall, we're making great progress towards our long term revenue and profit objectives and.

Speaker Change: And we remain confident in our ability to grow homes dot com to come yet another high margin $1 billion revenue business for Costar.

Speaker Change: Having said all that I think it's time to turn the call back over to our operator for the question and answer session.

Speaker Change: Thank you to ask a question you will need to press star one one on your telephone analysts you may ask a question were notified in advance and may enter into the queue. Now please standby will be compile the Q&A roster.

Scott Wheeler: Other marketplace revenue was $134 million for the full year of 2023, ahead of our expectations for the fourth quarter, with modestly higher transaction revenues from 10X. Our subscription marketplace businesses, lands, and businesses for sale, contributed solid double-digit growth as they do year in and year out. We expect similar outcomes in 2024, with revenue relatively flat to 2023 overall and first quarter revenue a little below $30 million. Our 2024 revenue outlook includes double-digit revenue growth in the subscription marketplace businesses and a rather conservative view, I must say, of 10X transaction revenue. We've not built any transaction market recovery assumption into 2024, so if a recovery does materialize in the months ahead, then we should benefit. Residential revenue. I saved the best for last.

Speaker Change: Okay.

Speaker Change: Our first question comes from Pete Christiansen with Citi. Your line is open.

Speaker Change: Okay.

Peter Corwin Christiansen: Good evening. Thanks, Thanks for the opportunity to ask a question here.

Peter Corwin Christiansen: Andy I guess.

Peter Corwin Christiansen: Top of mind here.

Peter Corwin Christiansen: I appreciate the sales Blitz, as you're dedicating the whole team here to get homes dotcom off onto a great footing.

Peter Corwin Christiansen: What are you looking towards I guess throughout the year to start migrating.

Peter Corwin Christiansen: Although sales activity back to a dedicated.

Peter Corwin Christiansen: Sales force and how are you thinking about cost of acquisition ongoing cost to serve them from a marketing perspective, Prs <unk> attractive agents to the platform.

Speaker Change: Thank you.

Speaker Change: Well. Thank you for the question Pete I just wanted to update you since we came in here and began the call. We're now at $5 3 million, we sold 58 more accounts.

Speaker Change: Yes.

Speaker Change: So they need to stop looking at them I think are addicted to that meter.

Speaker Change: So the.

Scott Wheeler: I can finally talk about forward growth expectations for homes.com. First, to round off on 2023, our residential revenue was $10 million in the fourth quarter and $44 million for the full year of 2023, in line with our expectations for the legacy home SNAP revenue and inclusive of a small amount of revenue from the On the Market Act. Our 2024 Residential Revenue Outlook includes three components. These are Homes.com in the market and the legacy residential products formerly known as Homes. Homes.com is generating revenue; I've been waiting three years to say that. I'm just going to have to say it again. Homes.com is generating revenue. I think it definitely felt better the second time around.

Speaker Change: Yes, so we we will engage the entire sales force throughout 'twenty, four and selling the product to be honest with you. The wholesales force I believe wants to participate in selling the product and I think it works best So nothing sounds better than when you listen to a salesperson.

Speaker Change: Talking to a prospect and saying.

Speaker Change: Thanks.

Speaker Change: I'm.

Speaker Change: Couple of blocks away I, just got another uptick.

Speaker Change: Yeah.

Speaker Change: It doesn't look real so.

Speaker Change: The.

Speaker Change: It really is effective when someone when we can assign these 500000 accounts to people right in their own neighborhoods. The salesperson can save three blocks away from your office had come by Tomorrow that works really well. So it will take us a full year and half to build up a dedicated homes dot com sales team do not believe that this has.

Scott Wheeler: So it was exciting to see our first Homes.com membership product putting points on the sales board this year. We have every brand sales team in every city across the country competing to sell Homes.com, and this is certainly going to be fun to watch.

Speaker Change: As dramatically more I think it will be similar to any other product in terms of service and support it as like apartments Dot Com you do have to touch base with the customers make sure that they are well taken care of and that they understand the performance of their membership.

Scott Wheeler: I think the CoStar team is a little bit salty still from having apartments reach $1 billion in revenue first, and they are currently leading the Homes.com top-selling contest ahead of apartments. What's fun is that every sales team, no matter how big or small, has a shot at victory. Pound for pound, I'm seeing Lans.com's sales team is ahead of everyone in terms of net sales per person on Homes.com, and their team is one-tenth the size of an apartment. Momentum is certainly building, and all nine of our brand sales teams have contributed net new sales for homes.com. Of course, it's very early in the year, and with every salesperson in CoStar incentivized to sell both their core brand products as well as homes.com, it's a bit challenging, as you might imagine, to pin down a sales and revenue outlook by brand this year.

Speaker Change: But I would say that in 2005, you would begin to see the shifting back to the general group.

Speaker Change: But right now we want speed of sales.

Speaker Change: Great. Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from Heather <unk> with Bank of America. Please proceed with your question.

Heather: Hi, Thanks for taking my question I appreciate it.

So I realize this is a big year.

Heather: We're excited by the launch I'm excited here the next update on the bookings.

Heather: Okay sure for homes Dotcom.

Heather: But can you help us better understand that.

Speaker Change: From here you.

Speaker Change: <unk> talked about this being the ERP spending.

Speaker Change: What should we expect kind of as we move out into 'twenty five 'twenty six 'twenty seven.

Speaker Change: And the target that you laid out for 2027, what are your thoughts on them today now that you've officially started to monetize dotcom.

Speaker Change: Thanks for the question Heather I'll give you just some some context there like I mentioned that.

Speaker Change: The peak net investment this year as we finalize resource growth obviously in sales you'll see some of those costs annualized forward into 2025 off 2024, but the rest of the cost basis now in 2020 forward doesn't really move much in.

Scott Wheeler: Will we sell more homes.com, or will we sell more of our commercial brand products? It's really too early to tell, but I believe we are going to sell a whole lot of bull. It's a great problem to have, and regardless of the specific mix of products we sell, we believe that 2024 will be the best net sales year in the company's history by a wide margin. Well, let's look at what happened the last time we took this approach, which was back in February 2015, when we hired the entire sales force at the launch of Apartments.com. As we came into 2015, our total net sales bookings for the company were growing around 15% year over year. In 2015, with everyone selling our newapartments.com ad products in addition to their core branded products, our net new bookings increased almost 80 percent, with sales of all brands growing year over year. Now, to parrot Mr. Florence a few moments ago, we all know that past performance is not indicative of future results.

In the years ahead, so that's really how we're thinking about it and we think we have plenty of investment here to now be growing the homes dot com business for a long long time, but really strong rates.

Speaker Change: The yes. The update that you are looking forward to next quarter is going to be a fun one because we all want to start drawing those lines around the revenue growth for homes, and how that will perform which obviously sets us on a track towards those 2027 goals. So I think we'll talk more about that next quarter, but we are still seeing traction towards 2020.

Speaker Change: Seven.

And we're committed to still reaching those levels too early to tell yet on the revenue leverage rates for our homes Dot com with makeup which makes a big difference as you would expect with over a week of experience with only a week of experience.

Speaker Change: More to come but thanks for the question.

Speaker Change: Thank you.

Speaker Change: One moment for our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from George Tong with Goldman Sachs. Please proceed with your question Hi, Thanks, Good afternoon, you're investing approximately $1 billion in residential this year, which is nearly double the amount of spend from 2023 can you discuss where the residential investments are going in and then from a.

Scott Wheeler: However, there are a number of factors working in our favor with Homes.com. We know the size of the residential market opportunity is multiple times bigger than multi-family. We just launched the biggest marketing campaign in real estate history, four times the size of our Apartments.com initial marketing campaign. And nobody else in the industry is competing with your listing, your lead business model that doesn't try to take agent commissions but lets them buy advertising exposure to sell their listing. I think these are all very positive relative to our apartments.com experience back in. So, taking our best educated guess, our 2024 forecast assumes revenue contribution from homes.com memberships in the 50 to $60 million range in 2024, starting from zero in the first quarter and exiting a year with an approximate $100 million quarterly run. Now you might think my forecast looks a bit wimpy as you keep hearing Andy talk about updating our sales efforts every minute over here We're just getting started. We expect OnTheMarket, our new UK residential business, to deliver approximately $40 million in revenue in 2024. Quarterly revenue is expected to be in the $10 million range.

George K. Tong: Margin perspective, we talked about how margins should improve in the back half could you give us a little bit more color.

George K. Tong: Clarity on the margin cadence by quarter as you move through the year.

George K. Tong: Sure George let me take the margin cadence question.

George K. Tong: <unk> mentioned that will be in the 12% to 13% in the second half I think exiting the year will be over 15%, probably 16% going out of the year.

And then the first the first quarter, we mentioned the minus eight to 12 million Bucks. There and then we will we'll take a step between first and third quarter and the second so you see a steady sequential increase in the margin profile overall.

George K. Tong: For the company.

George K. Tong: When you look at where the investment going for residential we've added on the market and as you've watched the.

George K. Tong: The announcements around what we're doing there we committed to putting in.

George K. Tong: $50 million of marketing that right now has us moving up rather quickly with both listings.

Traffic and inching up closer towards the number two position. So that's that's proving to be very valuable right now.

George K. Tong: And then the rest of the investment as you would expect it in the homes Dot Com U S business.

George K. Tong: Which is the biggest part is going to be our marketing investments and then followed by the teams that run our.

George K. Tong: <unk> research and technology. So those have been the biggest pieces all along they'll continue to be the biggest pieces probably in that order as we go forward and we don't anticipate those growing.

George K. Tong: The out years, we anticipate them moderating.

So we have probably been a bit more aggressive we have been more aggressive in year, one than we were with apartments Dot com <unk> Com group, two or three years to build up at this time, we went right at it.

Scott Wheeler: The results of OnTheMarket were insignificant to our overall financial results in 2023 as the acquisition closed in the middle of June. We expect legacy residential products to continue to decline in 2024 as we sell customers their homes.com membership. We expect full-year 2024 revenue of around $20 million from the Legacy Project. So, combining all the components of our residential business, our forecast assumes revenue in the range of $110 to $120 million in 2024, starting the year with a little over $15 million in the first quarter and growing to over $40 million in the fourth quarter of 2021. Year-over-year total revenue growth is expected to be 150%.

Speaker Change: Got it.

Speaker Change: Thank you.

Speaker Change: One moment our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from Alexia <unk> with Jpmorgan. Please proceed with your questions.

Alexia: Thank you everyone just to clarify.

Alexia: The previous comment Andy So do you feel like.

Alexia: Your front loading some of the investments that may have initially been planned for 2025 and 2026 Europe from London.

Speaker Change: In closing it into 2024.

Speaker Change: Randy.

Randy: Well given the fact that.

Randy: More than half of the investment is marketing between the United Kingdom, and the United States.

I think that's fair to say so.

Randy: When you look back I believe in year, one we spent $40 million in marketing on apartments for branding for Brandon.

Randy: So I think we're a touch more aggressive this time around.

Randy: And Thats, an understatement, but we are doing that with I think a pretty sober eye on ROI and what we hope to achieve and I think the.

Randy: So it's only a week of sales. It gives you an idea that.

Scott Wheeler: And year-over-year organic revenue growth in residential is around 70% in 2020. So to wrap up on 2023, net income was $96 million for the fourth quarter and $375 million for all of 2023. An increase of around $5 million compared to 2022. It's nice to see net income improve while we are in a major investment cycle, and that's thanks to our net interest income, which was an impressive $220 million in 2023. We earned roughly 5% on around a $4.2 billion net cash balance for the year.

Randy: There is a market there there's a product there and.

Randy: We think it will enable us to move faster.

Randy: Than any competitor expected us to move.

Speaker Change: Understood perfect.

Speaker Change: Scott could you help us reconcile the net new bookings figure.

Scott Wheeler: I fully recognize that it was a record figure for the year $286 million, but could you talk a bit more about the dynamic in the fourth quarter.

Scott Wheeler: And whether there was any cyclicality in there.

Scott Wheeler: Yes, yes, certainly we see a little bit in the fourth quarter cyclicality on those numbers I think that the 286 this year was.

Scott Wheeler: Slightly behind the $300. So we've made last year still.

Scott Wheeler: Still as you look at the components apartments Dot com is delivering the strongest performance given the vacancy levels in that industry and what that team is able to do.

Scott Wheeler: And then costar and Loopnet relatively softer in the fourth quarter.

Scott Wheeler: Then than what we would've seen previously and that really makes up the bulk of all of our net revenue.

Scott Wheeler: As we get into next year Youll see less of a drag from the.

Scott Wheeler: Let's talk about a few of our performance metrics, first with our sales force, which totaled approximately 1,160 people at the end of the year, with modest increases in 2023, focused on our marketplace businesses of Apartments.com and Lupin. Salesforce expansion in 2024 will be primarily concentrated in our homes.com residential business. Contract renewal rates were 90% in the fourth quarter of 2073, and these remain strong at 95% for customers who have been subscribers for five years or longer.

Scott Wheeler: The legacy residential products, but it also helps us.

Scott Wheeler: As we add homes dot com to get higher growth than our total company sales next year, which is.

Scott Wheeler: Which is something that we expect to happen with the sales force and the productivity. They can give us right out of the gates here.

Okay I appreciate that Scott. Thank you.

Speaker Change: Youre welcome.

Speaker Change: One moment our next question.

Speaker Change: Okay.

Speaker Change: Our next question comes from Ryan Tomasello with <unk>. Please proceed with your question.

Speaker Change: Okay.

Ryan Tomasello: Hi, everyone. Thanks for taking the question.

Ryan Tomasello: Understanding that the homes brand campaign is still early innings of <unk>.

Ryan Tomasello: Seeing how that plays out but.

Ryan Tomasello: Maybe you could elaborate on what flexibility you might maintain around <unk>.

Ryan Tomasello: Investments this year, depending on how performance evolves.

Speaker Change: I'm curious if there are specific milestones our circuit breakers, you've built in.

Speaker Change: Around agent adoption traffic et cetera, inform and revisit those plans as the year plays out.

Scott Wheeler: Subscription revenue on annual contracts was 81% for the fourth quarter of 2022, up from 80% in the prior year. Looking ahead to 2024, we expect full-year revenue to range from $2.75 to $2.77 billion, implying an annual growth rate of between 12 and 13 percent. First quarter 2024 revenue is expected to range from $645 million to $650 million, representing revenue growth of 11 percent year-over-year at the midpoint. 2024 adjusted EBITDA is expected in the range of $170 million to $190 million, reflecting an adjusted EBITDA margin rate of around 7% for the entire year.

Speaker Change: That's laying on the gas even more perhaps pulling it back just trying to understand how set in stone the investment plans are this year.

Speaker Change: Sure.

Speaker Change: From what I can see here in February with a relatively early.

Q of traffic and.

Speaker Change: Sales.

Speaker Change:

Speaker Change: We're at the we're.

Speaker Change: I am very pleased with our initial results and pleased with what we think we see in traffic.

So it did.

Speaker Change: It exceeds our it meets and exceeds my best expectation for we'd be at this point.

Speaker Change: And frankly pretty excited about it.

Speaker Change: I don't see a scenario, where we accelerate the investment in marketing I think we went to we.

Speaker Change: Went to the put the accelerator to the.

Speaker Change: Pedal to the floor and the floor is pretty tough and I don't think theres any where to go from here.

Speaker Change: 80 billion impressions are 600 impressions per household is pretty aggressive.

Scott Wheeler: First quarter 2024 adjusted EBITDA is expected to dip slightly into negative territory as we launch our brand marketing campaign ahead of the revenue growth in homes.com. We expect to see positive margins return after the first quarter and grow for the remainder of the year with adjusted EBITDA margins in the 12-13% range in the second half of 2024 and exiting much higher than that. Our financial strategy for 2024 is to once again drive operating leverage and profit generation in our commercial businesses while we fund our residential marketplace strategy. We expect to increase profit margins in our commercial portfolio, which should be generating approximately $1.1 billion of profit before investments in homes.com and on the market in 2024. We're off to a strong start with Homes.com sales this year, with plans to increase our total residential investment levels in 2024 to support the brand launch and build our sales capability.

Speaker Change: We think it will pay off.

Speaker Change: In terms of circuit breaker in terms of circuit breaker going the other way becoming more conservative.

Speaker Change: Again, we don't see early stage, we don't see any indication of.

Speaker Change: A reason to pull back.

Speaker Change: We're exceeding our expectations right now.

Speaker Change: Dramatically and.

So we could and we do have significant flexibility so if.

Speaker Change: The unlikely were to happen, we could pull back dramatically, but I don't anticipate that being the case I think the.

Speaker Change: The bigger question is do we moderate the level in 25 or 26 based on what we're achieving.

Speaker Change: Yes.

Speaker Change: Great. Thanks for the color.

One moment our next question.

Speaker Change: Our next question comes from John Campbell with Stephens. Your line is open.

John Campbell: Guys. Thanks for taking my questions good afternoon.

John Campbell: Hello, John.

John Campbell: Hey, Andy.

John Campbell: As much as I want to ask you if the homes that com bookings meter have moved over the last couple of minutes I'm going to hold off I'm guessing, we're going to get plenty updates in the quarters ahead, but a bigger picture question here just on the industry kind of legal backdrop, obviously, a lot of moving parts. There I think it's clear at least from where I sit that things seem to be progressing in the favor of homes Dot com.

Scott Wheeler: 2024 will be the peak net investment year for residential, which includes our full marketing campaign on the market in the UK and our teams reaching full strength in content, technology, and sales. Our level of capital expenditures is expected to increase in 2024 from around $150 million in 2023 to around $800 million in 2024 as we enter the big construction years for our Richmond campus and at our new headquarters building in Arlington, Virginia. The operating capital, apart from the building projects, is expected to be in the $40 to $45 million range in 2024, which is consistent with the same spending levels in 2021, our forecast for net income. Net interest income is around $200 million for 2024, which takes into account our increased capital expenditure and possible interest rate reductions during the year.

John Campbell: As the value proposition, but wanted to get your take specifically on dual agency, whether you think thats, where the market is heading and how you think homes dot com is uniquely positioned to capitalize on that.

Speaker Change: Sure so.

Speaker Change: Obviously, the legal situation is complex and they're going to be lots of.

Speaker Change: Angles and views on that and I will not be the leading expert on that but certainly things are in flux I know the big brokerage firms are pursuing settlements I know the major brokerage firms don't want to fight and extended protracted battle on whether or not seller should be forced to compensate by our agents.

Speaker Change: I would not be surprised if there wasn't an.

Speaker Change: An outcome, where buyers paid their own agent they can finance that I believe.

Speaker Change: I do believe that.

Speaker Change: Homes Dot com is advantaged competitively for sure in that our revenue model is agnostic.

Scott Wheeler: In summary, I'm very proud of the exceptional results we delivered in 2023 during a year complicated by high interest rates, inflation, and continued economic uncertainty. We remain focused on our strategic investment in residential markets while producing record profit levels in our established commercial business. With the monetization of Homes.com this year, we're adding another strong double-digit growth revenue stream to our brand portfolio and moving past the peak of the residential investment cycle and on to the next phase of profit growth and profitability improvement for the community. Overall, we're making great progress towards our long-term revenue and profit objectives, and remain confident in our ability to grow. Homes.com to become yet another high-margin, billion-dollar revenue business. Having said all that, I think it's time to turn the call back over to our operator for the question and answer session. Thank you. To ask a question, you will need to press star one one on your telephone.

Speaker Change: Agnostic to whether or not there is a buyer broker participation rule in place our product is generating buyer agency leads it's generating seller leads is helping people sell homes.

With more exposure and more lead generation.

Speaker Change: <unk>.

Speaker Change: This is unlike any of the competing models that rely on the seller agent, having a pre agreed split with a buyer agent. So if it works and again I don't know what's going to happen, but if.

It were to shift to the buyer paying the buyer agent I would think that we would have.

Speaker Change: Significant advantage in.

Speaker Change: And funding our business moving forward I think that some of the competitors have tried to begin to migrate their business.

Speaker Change: To a world in which there is not a buyer broker.

Speaker Change: Participation rule, but I believe it.

Speaker Change: Requires a level of cannibalization that they haven't yet processed and what theyre doing is sort of a.

Speaker Change: <unk> measure.

Speaker Change: So.

Speaker Change: I think we're going to.

Speaker Change: Do well and win whatever happens, but I think it would create tailwind.

Operator: Analysts who may ask a question were notified in advance and may enter into the queue. Now, please stand by. A Q&A roster will be compiled. Our first question comes from Pete Christiansen with Citi. Your line is open. Good evening.

Speaker Change: If the.

Speaker Change: If we ended up with a settlement that required buyers to pay the.

Their buyer broker.

Speaker Change: Commission, but.

Speaker Change: People like their buyer broker, we're helping people were sending hundreds of thousands of leads for buyer brokers for buyer brokerage.

Peter Corwin Christiansen: Thanks. Thanks for the opportunity to ask a question here. Andy, I guess... top of mind here.

Speaker Change: But we will send seller listing leads will sudden leads for people buying homes will be here generating leads and we're not on one side just one side, we're more diversified than our competitors.

Andrew C. Florance: I appreciate the sales blitz as you're dedicating the whole team here to get homes.com off onto a great footing. What are you looking towards, I guess, throughout the year to start migrating, you know, all those sales activities back to a dedicated... Salesforce? And how are you thinking about cost of acquisition and ongoing cost to serve from a marketing perspective here as you attract customers? Thank you. Well, thank you for the question, Pete. I just wanted to update you.

Speaker Change: Okay. It makes a lot of sense and then somewhat related to that you mentioned assuming free leads.

Speaker Change: When you guys refer to the home Satcom revenue model you often refer to the term membership I'm, hoping if you could maybe unpack what exactly that means maybe starting off with the base level of spend and then what other products and services are kind of included in that quote unquote membership.

Speaker Change: Sure membership is pretty straightforward. It means that your your you as an agent that is sold to the agent and it is priced based upon.

Andrew C. Florance: Since we came in here and began the call, we're now at 5.3 million. We've sold 58 more accounts. I think I'm addicted to that.

Speaker Change: The <unk> transaction volumes, you historically do and the price point you operate in and we will eventually be based on the market year end.

But it is.

Andrew C. Florance: So we will engage the entire sales force throughout 24 and sell the product. To be honest with you, the whole sales force, I believe, wants to participate in selling the product, and I think it works best. So nothing sounds better than when you listen to a salesperson, uh... talking to a prospect and saying, I'm a couple blocks away. I just got another update on this. It doesn't look real.

Very price competitive with what has been out there historically.

Speaker Change: When you are a member.

Speaker Change: Or listings sort higher and have.

Speaker Change: And have more agent branding on them you have a number of your listing detailed pages have more agent branding on it as well as your other listings.

Speaker Change: When you go to the agent Directory of the neighborhood page of the school page the agents, who are members sort to the top of those different neighborhood pages school attendance zoned pages whatnot.

Andrew C. Florance: It really is effective when we can assign these 500,000 accounts to people right in their own neighborhoods. The salesperson can say, well, I'm three blocks away from your office. I can come by tomorrow. That works really well. So it will take us a full year and a half to build up a dedicated Homes.com sales team. I do not believe that this dramatically changes anything. I think it'll be similar to any other product in terms of service and support. It is like apartments.com.

Speaker Change: Aggressively re target.

Speaker Change: Traffic, who are engaging with member listings and agent profiles.

Speaker Change: So to simplify it not to simplify it but you.

Speaker Change: And a member might receive on average one 3 million impressions a month for their listings and their agent via a nonmember, while they get leads for free gets 5000, so 5000 versus $1 3 million impressions as a significant advantage.

Speaker Change: And <unk>.

Speaker Change: Being a member and right now depending upon the firm we are seeing a 8% to 14 times increase in lead flow for members if theyre sorting.

Andrew C. Florance: You do have to touch base with the customers, make sure that they're well taken care of and that they understand the performance of their membership. But I would say that in 25, you would begin to see the shifting back. But right now, we want the speed of sound.

Speaker Change: The top of these pages and where they're getting the most dramatic increase in lead flow is on the agent bio pages. So homeowners.

Speaker Change: Homebuyers will tend to go a couple of pages deep looking for the right home, but home buyers or sellers are not willing to go past page, one or two of agents that they might higher so.

Heather Balsky: Great, thank you. One moment for our next question. Our next question comes from Heather Balsky with Bank of America. Please proceed with your question. Hi, thanks for taking my question. I appreciate it. So I realize this is a big year. You're excited by the launch.

Speaker Change: That's where we see the highest advantage in winning selling listings and winning by our agency owners site.

Speaker Change: But the good news is it's working.

Speaker Change: Very helpful. Thanks, Andy.

Speaker Change: Thank you Amit one moment for our next question.

Scott Wheeler: I'm excited to hear the next update on the bookings for homes.com, but can you help us better understand the spend from here? You talked about this being the year of peak spending. So what should we expect kind of as we move out into 25, 26, 27?

Speaker Change: Our last question comes from Ashish <unk> with RBC capital markets. Please proceed with your question.

ashish: Thanks for taking my question I, just wanted to drill down further on the royalty monetization.

ashish: Thanks again.

ashish: Billion dollars annual recurring bookings.

ashish: At this pace.

Scott Wheeler: And the targets that you laid out for 2027, what are your thoughts on them today, now that you've officially started to monetize homes.com? Thanks. Thanks for the question, Heather. I'll give you just some context there.

ashish: I was just wondering as we think about like the agent.

ashish: Within that bookings.

ashish: Are you thinking you talked about a wide range there from 100 to $100 per month to as much as 7400.

ashish: Certain time, so he can think youre targeting.

Speaker Change: Any color there would be helpful. Thanks.

Speaker Change: Sure. So we are there is $1 6 million agents I think we are initially targeting 540000 agents.

Andrew C. Florance: Like I mentioned, the peak net investment this year, as we finalize resource growth, obviously in sales, you'll see some of those costs annualized forward into 2025, off 2024. But the rest of the cost base that's now in 2024 doesn't really move much in the years ahead. So that's really how we're thinking about it, and we think we have plenty of investment here to keep growing the homes.com business for a long, long time at really strong rates. The update that you're looking forward to next quarter is going to be a fun one, because we all want to start drawing those lines around the revenue growth for HOMES and how that will perform, which obviously sets us on a track towards those 2027 goals. So I think we'll talk more about that next quarter, but we are still seeing traction towards 2027, and we're committed to still reaching those levels. It's too early to tell yet on the revenue leverage rates for HOMES.com, which make a big difference with over a week of experience, but with only a week of experience.

I think we set a floor of I wont get the exact number but I think $30 $40000.

Speaker Change: Annual earnings is what we or higher.

Speaker Change: So, it's a pretty broad pretty broad broad swath.

Speaker Change: Price points are from.

Speaker Change: 100, $200 at the lower end up to tens of thousands of dollars to a $100000 a month for one of these bigger teams with lots of agents on them.

I've spent the last week monitoring sales calls listening to the sort of reaction in that dialogue and the discussion one of the things I'm very pleased with is that I would say overall, though the price points are different.

Speaker Change: The prospects and buyers have been.

Speaker Change: Pretty pretty resonant with what we're doing so I think we've dialed in correctly and we'll be refining the strategy as we go through the year Scott would you add anything on that.

Scott Wheeler: That's the initial population of course, so we came out with with the targets and what we're seeing is that the inbound lead flow is very strong from all agents. So our sales forces.

George K. Tong: More to come, but thanks for the question. Thank you. One moment for our next question. Our next question comes from George Tang with Goldman Sachs. Please proceed with your question. Hi, thanks. Good afternoon.

Scott Wheeler: Going after their top prospects in the target list, but also responding to all the leads that are coming in as quickly as possible.

Scott Wheeler: And then on top of that we have our E Commerce channel, which agents, who can go in and sign up with a few clicks.

Scott Wheeler: And have all the information and Theyre ready to go. So so all of those are performing well and will continue to expand the group, we target, but right out of the gates. We've got a lot to lot to cover quickly turn more memberships.

Scott Wheeler: You're investing approximately one billion in residential this year, which is nearly double the amount of spend from 2023. Can you discuss where the residential investments are going? And then from a margin perspective, we talked about how margins should improve in the back half. Could you give us a little bit more clarity on the margin cadence by quarter as you move through the year? Here, George, let me take the margin cadence question.

Scott Wheeler: [laughter] another 50.

Scott Wheeler: [laughter].

Speaker Change: Thanks for that color. Thank you.

Speaker Change: And now I'd like to turn the conference back to Andy for closing remarks.

Andrew C. Florance: Thank you I appreciate that.

Andrew C. Florance: So today I have got more interesting concluding marks remarks, and I normally have.

Andrew C. Florance: So I have some news to share with you Scott Wheeler joined us as our CFO eight years ago or so during those eight years he's done a fantastic job at the helm of our finance Department, we've seen our revenues triple in that time period, and we've gone from strength to strength.

Scott Wheeler: I mentioned that we'll be in the 12 to 13% in the second half; I think exiting the year will be over 15%, probably 16% going out of the year. And then in the first quarter, we mentioned minus eight to 12 million bucks there. And then we'll take a step between the first and third quarters in the second. So you see a steady sequential increase in the margin profile overall for the company. When you look at where the investment is going for residential, The announcement around what we're doing there, we committed to putting in around $50 million in marketing that right now has us moving up rather quickly with both listings and traffic and inching closer towards the number two position. So that's proving to be very valuable right now. And then the rest of the investment is, as you would expect, it's in the homes.com U.S. business, which is the biggest part is going to be our marketing investments and then followed by the teams that run our content, research, and technology. So those have been the biggest pieces all along.

Andrew C. Florance: I would count more I would count Scott more than just a valued colleague he has become a good friend of mine.

As you May know Scott loves to climb mountains. He was the first father, daughter team to summit the tallest mountain in every U S state.

Scott Wheeler: It wasn't much of an accomplishment in Florida. It was a much bigger accomplishment in Alaska.

Scott Wheeler: Scott has accomplished as much as anyone could wish to professionally. So now he has earned the opportunity to retire and pursue his climbing passion and the Golden years ahead.

Scott Wheeler: The old and that was off.

Hello Bruno.

Scott will remain with the company until June to facilitate a transition.

Speaker Change: And I will bring back the other two former CFO to help in the transition as well Scott.

Scott Wheeler: They'll continue to be the biggest pieces, probably in that order as we go forward. And we don't anticipate those growing in the future years, moderators. So we've probably been a bit more aggressive in year one than we were with the part. Department of Psychology, two to three years to build up; this time we went right after, Got it.

Speaker Change: Scott is there a third public company CFO with each of our prior Cfo's also having served exactly eight year tenure.

Speaker Change: We will begin a search for a 24 to 2032 CFO immediately.

I would have let Scott announces one retirement, but the last CFO to retire became for clamped when he announced his retirement, so I wanted to avoid that awkwardness today.

Alexei Gogolev: Very helpful. Thank you. One moment for our next question. The next question comes from Alexei Gogolev with J.P. Morgan. Please proceed with your question. Thank you, everyone. Just to clarify the previous comment, Andy, so do you feel like you're frontloading some of the investments that may have initially been planned for 2025 and 2026, you're frontloading them into 2024? and Rezi.

Speaker Change: Scott leaves with no disagreements or issue he simply wants to enjoy the fruits of his labor Godspeed, Scott and thank you so much.

Speaker Change: I would like to thank everyone for joining us for our fourth quarter your fourth quarter and year end 23 earnings call. We look forward to speaking with you again in our first quarter call on April 23, 24. Thank you.

Scott Wheeler: Um, given the fact that more than half of the investment is in marketing between the United Kingdom and the United States, I think that's fair to say. When you look back, I believe in year one, we spent $40 million on marketing on apartments. For branding, yeah. For branding.

Speaker Change: Very much for participating thank you Mr. Scott Wheeler.

Thank you Andy.

Speaker Change: After the call.

Speaker Change: Tissue man.

Speaker Change: That was kind of you.

Speaker Change: This concludes today's conference call. Thank you for participating you may now disconnect.

Andrew C. Florance: So I think we're a touch more aggressive this time around. This is an understatement, but we are doing that with, I think, a pretty sober eye on the ROI and what we hope to achieve. Though it's only a week of sales, it gives you an idea that there is a market there, and there is a product there. We think it will enable us to move faster.

Yes.

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Ryan Tomasello: More than any competitor expected us, understood perfectly. And Scott, could you help us reconcile the net new bookings figure? I fully recognize that it was a record figure for the year, $286 million. But could you talk a bit more about the dynamics in the fourth quarter? And whether there was any technicality in, Yeah, certainly we see a little bit of cyclicality in the fourth quarter cyclicality on those numbers. I think that, you know, the 286 this year was... Slightly behind the 300 and so we made last year.

Okay.

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Scott Wheeler: Still, as you look at the components, Apartments.com is delivering the strongest performance given the vacancy levels in that industry and what that team is able to do. And then, you know, CoStar and LoopNet, relatively softer in the fourth quarter than what we would have seen previously, and that really makes up the bulk of all of our net revenue. As we get into next year, you'll see less of a drag from the legacy residential products, which also helps as we add homes.com to get higher growth in our total company sales next year, which is something that we expect to happen with the sales force and the productivity they can give us right out of the gate. Perfect. I appreciate it, Scott. Thank you. You're welcome.

Speaker Change: Sure.

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Scott Wheeler: One moment for our next question. Our next question comes from Ryan Tomasello with KBW. Please proceed with your question, https://www.youtube.com or www.facebook.com?version?version?version?

Speaker Change: Sure.

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John Campbell: Hi everyone, thanks for taking the question, um understanding that the Holmes brand campaign is still in the early innings of, seeing how that plays out, but Maybe you could elaborate on what flexibility you might maintain around investments this year, depending on how performance evolves. Curious if there are specific milestones or circuit breakers you've built in around agent adoption, traffic, et cetera, to inform and revisit those plans as the year plays out, whether that's laying on the gas even more or perhaps pulling it back to just trying to understand how set in stone the investment plans are this year. Sure, uh... from what I can see here in February with a relatively early view of traffic and Films, um, you know, we're at the, we're very, I'm very pleased with our initial results and pleased with what we think we see in traffic.

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John Campbell: So it meets and exceeds my best expectations for where we'd be at this point, and I'm, you know, frankly, pretty excited about it. I don't see a scenario where we accelerate the investment in marketing. I think we went to, we went to the, we put the accelerator on the pedal to the floor, and the floor is pretty tough, and I don't think there's anywhere to go from here.

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Andrew C. Florance: 80 billion impressions or 600 impressions per household is pretty aggressive, but we think it will pay off. In terms of circuit breaker going the other way, becoming more conservative, Again, we don't see, at this early stage, any indication of a reason to pull back. We're exceeding our expectations right now, dramatically. So we could, and we do have significant flexibility, so if the unlikely were to happen, we could pull back dramatically, but I don't anticipate that being the case. I think the bigger question is, do we moderate the level in 25 or 26 based on what we're achieving?

Speaker Change: Yes.

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Andrew C. Florance: Great. Thanks for the call. One moment for our next question. Our next question comes from John Campbell with Stevens. Your line is open. Hey guys, thanks for taking our questions. Good afternoon.

Andrew C. Florance: Hey, so Andy, as much as I want to ask you if the Homes.com bookings meter has moved over the last couple of minutes, I'm going to hold off. I'm guessing we're going to get plenty of updates in the quarters ahead, but a bigger picture question here, just on the industry's kind of legal backdrop, obviously a lot of moving parts there. I think it's clear, at least from where I sit, that things seem to be progressing in the favor of Homes.com, you know, as far as the value proposition is concerned, but I want to get your take specifically on dual agency, whether you think that's where the market is heading and how you think Homes.com is uniquely positioned to capitalize on that. Sure, so obviously the legal situation is complex, and there can be lots of...

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Andrew C. Florance: And, you know, I will not be the leading expert on that. But certainly, things are in flux. I know the big brokerage firms are pursuing settlements. I know the major brokerage firms don't want to fight an extended, protracted battle on whether or not sellers should be forced to compensate buyer agents. I would not be surprised if there wasn't an outcome where buyers paid their own agent. They can finance that, I believe.

Speaker Change: Okay.

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Andrew C. Florance: I do believe that... Homes.com is advantaged competitively for sure in that our revenue model is agnostic to whether or not there is a buyer-broker participation rule in place. Our product is generating buyer agency leads, it's generating seller leads, and it's helping people sell homes with more exposure and more lead generation. And this is unlike any of the competing models that rely on the seller agent having a pre-agreed split with the buyer agent. If that works, and again, I don't know what's going to happen, but if...

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Andrew C. Florance: If it were to shift to the buyer paying the buyer agent, I would think that we would have a significant advantage in funding our business moving forward. I think that some of the competitors have tried to begin to migrate their business to a world in which there's not a buyer-broker. This is a very simple rule, but I believe it requires a level of cannibalization that they haven't yet processed, and what they're doing is sort of a half measure at best. I think we're going to do well and win whatever happens, but I think it would create tailwinds.

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Andrew C. Florance: If the... if we ended up with a settlement that required buyers to pay the... FIREBRO, There are hundreds of thousands of leads for buyer brokerage. But we'll send seller listing leads. We'll send leads for people buying homes. We'll be here generating leads. And we're not on just one side.

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Andrew C. Florance: We're more diversified than the competitor. Okay, that makes a lot of sense. And then, somewhat related to that, you mentioned, you know, sending free leads. When you guys refer to the homes.com revenue model, you often refer to the term membership. I'm hoping if you could maybe unpack what exactly that means, maybe starting off with the base level of spend and then what other products and services are kind of included in that quote, unquote, membership. Membership is pretty straightforward. It means that you, as an agent, it's sold to the agent, and it is priced based on the sort of transaction volumes you historically do and the price point you operate in and will eventually be based on the market you're in. But it is very price competitive with what has been out there historically.

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Andrew C. Florance: When you are a member, your listings sort higher and have more agent branding on them. You have a number of your listing detail pages have more agent branding on them, as well as your other listings. When you go to the agent directory, the neighborhood page, the school page, the agents who are members sort to the top of those different neighborhood pages, school attendance zone pages, and whatnot. We aggressively re-target traffic who are engaging with member listings and agent profiles. So to simplify it, you know, or not simplify it, but you... A member might receive on average 1.3 million impressions a month for their listings and their agent bio. A non-member, well, they get leads for free. 5,000.

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Andrew C. Florance: So 5,000 versus 1.3 million impressions is a significant advantage to being a member. And right now, depending upon the firm, we're seeing an eight to 14 times increase in lead flow for members if they're sorting to the top of these pages, and where they're getting the most dramatic increase in lead flow is on the agent bio pages. So homeowners, homebuyers will tend to go a couple pages deep looking for the right home. But homebuyers or home sellers are not willing to go past page one or two of an agent bio that they might hire.

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Andrew C. Florance: So that's where we see the highest advantage in winning selling listings and. Winning Buyer Agency Owner. But the good news is, it's working.

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Andrew C. Florance: Very helpful. Thanks, Andy. One moment.

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Ashish Sabadra: One moment for our next question. Our last question comes from Ashish Sabadra with RBC Capital Markets. Please proceed with your question.

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Andrew C. Florance: Thanks for taking my question. I just wanted to drill down further on resume monetization and the commentary around $200 million in annual recurring bookings continuing at this pace. I was just wondering, as we think about the agent within that booking, how are you thinking? You talked about a wide range there, from $100 to $200 per month to as much as $7,400. Are there certain kinds of agents that you're targeting? Any kind of that would be helpful.

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Andrew C. Florance: Sure, so we are, there are 1.6 million agents. I think we're initially targeting 540,000 agents. I think we set a floor of, I won't get the exact number, but I think $30,000, $40,000 annual earnings is what we, or higher. So it's a pretty broad, pretty broad swath. Price points are from, you know... $100, $200 at the lower end up to. $10,000 to $100,000 a month for one of these bigger teams with lots of agents on them. Um, I've spent the last week monitoring sales calls, listening to the sort of reaction and the dialogue and the discussion. One of the things I'm very pleased with is that, overall, though the price points are different. The prospects and buyers have been... pretty responsive to what we're doing, so I think we've dialed it in correctly, and we'll be refining the strategy as we go through the year. You know, that's the initial population, of course, that we came up with with the targets.

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Andrew C. Florance: And what we're seeing is that the inbound lead flow is very strong from all agents. SalesForces.com is going after their top prospects in the target list, but also responding to all the leads that are coming in as quickly as possible. And then on top of that, we have our e-commerce channel, where agents can go in and sign up with a few clicks, and have all their information in there ready to go.

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Andrew C. Florance: So all those are performing well, and we'll continue to expand the group we target, but right out of the gates, we have a lot to cover quickly. 10 more. That's another $50,000.

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Andrew C. Florance: Thanks for that. We would now like to turn the conference back to Andy for closing remarks. Thank you. I appreciate that.

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Andrew C. Florance: So today I've got more interesting concluding remarks than I normally have. So I have some news to share with you. Scott Wheeler joined us as our CFO eight years ago or so. During those eight years, he's done a fantastic job at the helm of our finance department. We've seen our revenues triple in that time period, and we've gone from strength to strength.

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Andrew C. Florance: I would count Scott more than just a valued colleague; he's become a good friend of mine. As you may know, Scott loves to climb mountains. He was the first father-daughter team to summit the tallest mountain in every U.S. state. It wasn't much of an accomplishment in Florida; it was a much bigger accomplishment in Alaska.

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Andrew C. Florance: Scott has accomplished as much as anyone could wish to professionally. So now he's earned the opportunity to retire and pursue his climbing passion in the golden years ahead.

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Andrew C. Florance: Oh, that was awful. That's cruel. Scott will remain with the company until June to facilitate a transition, and I will bring back the other two former CFOs to help in the transition as well. Scott is our third public company CFO, with each of our prior CFOs also having served exactly 8 years. We'll begin a search for our 24 to 2032 CFO immediately. I would have let Scott announce his own retirement, but the last CFO to retire became verklempt when he announced his retirement. So I wanted to avoid that awkwardness today. Scott left with no disagreements or issues.

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Andrew C. Florance: He simply wants to enjoy the fruits of his labor. Godspeed, Scott, and thank you so much. I would like to thank everyone for joining us for our fourth quarter and year-end 23 earnings call. We look forward to speaking with you again during our first quarter call on April 23-24.

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Speaker Change: [music].

Andrew C. Florance: Thank you. Thank you very much for participating. Thank you, Mr. Scott Wheeler. Thank you, Andy. I'll cry after the call, this kind of view.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: Yes.

Speaker Change: Okay.

Speaker Change: Okay.

Operator: This concludes today's conference call. Thank you for participating. You may now disconnect. © The Ultimate Parody Site! A sustained note is played. Thanks for watching! ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ??

Okay.

Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Okay.

Speaker Change: [music].

Speaker Change: Yes.