Q1 2024 CoStar Group Inc Earnings Call

April 23, 2024

Okay.

Thank you Josh and good evening.

Speaker Change: Good day and thank you for standing by welcome to the Costar Group first quarter 2024 earnings call. At this time all participants are in a listen only mode. After the speaker's presentation there'll be a question and answer session to ask a question. During the session you will need to press star one on your telephone you will then hear an automated message.

Speaker Change: And your hand is Reyes. Please be advised that today's conference is being recorded I would now like turn the conference over to Cindy Aching head of Investor Relations, who will read the safe Harbor statement Cindy you may begin.

Cyndi Eakin: Mike Thank you, Josh and good evening and thank you all for joining us to discuss the first quarter 2024 results of the Costar group before I turn the call over to Andy Florance, Costar, Costar, CEO and founder and Scott Wheeler, Our CFO I would like to review our Safe Harbor statement.

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

Cyndi Eakin: 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 for it.

Looking statements are based on 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 reconciliation to the most directly comparable GAAP measure of any non-GAAP financial measures discussed on this call are shown in the detail.

Cyndi Eakin: In our press release issued today, along with definitions for those terms the press release.

Cyndi Eakin: This is available on 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 and with that I would like to thank the turn the call over to our founder and see.

Andrew C. Florance: <unk> Andy Florance.

Andrew C. Florance: Good day, good east good evening, everyone and thank you for joining us for Costar group's first quarter 2024 earnings call first quarter 2024 revenue was $656 million at 12% increase over first quarter of 'twenty three coming in above the high end of our guidance range and up.

Andrew C. Florance: Above consensus estimates.

Andrew C. Florance: Apartments, dot com and Costar surpassed the $1 billion revenue Mark.

Andrew C. Florance: In the first quarter, a tremendous milestone for the company congratulations to both teams.

Andrew C. Florance: Company wide net new bookings achieved an all time high in the first quarter of $86 million fueled by a very strong launch of our homes dot com membership product and.

Andrew C. Florance: In the first quarter, 60% of our net new bookings were from sales of our commercial products and 40% were from net new bookings from our new homes Dot com memberships and residential products.

Andrew C. Florance: Overall traffic to our global websites reached a record 170 million average monthly unique visitors in the first quarter According to Google analytics.

Andrew C. Florance: 93% above the first quarter of last year, and an impressive 34% above our previous all time high.

Andrew C. Florance: This chart group has now reached 90% of the 194 million unique visitors ill report in the last earnings call. Our residential network reached a record 156 million monthly unique visitors in March According to Google analytics I believe we have clearly established homes dot com and our residential network is one of the two moist.

Operator: Thank you, Josh. Good evening. Good day, and thank you for standing by. Welcome to the CoStar Group First Quarter 2024 Earnings Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone.

Andrew C. Florance: Traffic residential marketplaces in the United States.

Andrew C. Florance: Yesterday, we announced we reached a definitive agreement to acquire matter port the global leader in immersive three D. Digital twins in artificial intelligence for the real estate industry for $5 50 per share.

Cyndi Eakin: You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to Cyndi Eakin, head of investor relations, who will read the safe harbor statement. Cyndi, you may begin.

Andrew C. Florance: Founded in 2011 matter Port pioneered the development of the first <unk> capture solution to deliver dementia accurate photo realistic virtual tours or digital twins for.

Cyndi Eakin: Why? Thank you, Josh. Good evening. And thank you all for joining us to discuss the first quarter 2024 results of the 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 statement. Certain portions of this discussion today may contain forward-looking statements, including the company's outlook and expectations for the second quarter and the full year 2024, based on current beliefs and assumptions.

Andrew C. Florance: Any type of property.

Andrew C. Florance: <unk> proprietary and patented technology enables anyone to digitize a property using a variety of camera technologies, including cameras found on most smartphones.

Cyndi Eakin: Forward-looking statements involve many risks, uncertainties, assumptions, estimates, and other factors that can cause actual results to differ materially from those expressed. 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. 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.

Andrew C. Florance: <unk> <unk> technology is utilized in nearly every sector of real estate spanning residential commercial hospitality retail and industrial spaces among others.

Andrew C. Florance: Over the years matter Port has curated what is considered the largest and most precise collection of spatial property data worldwide with over 12 million space is captured in 177 countries and representing more than 38 billion square feet of digital commercial property under management.

Andrew C. Florance: <unk> of thousands of new <unk> digital twins for properties around the world are being added to this impressive database each month.

Andrew C. Florance: Matter of Port makes it possible to experienced real estate remotely people now select their next home apartment office store hotel or warehouse on their mobile device often without ever visiting the property the pandemic accelerated the moat remote real estate shopping trend and we believe it is the new normal.

Cyndi Eakin: Reconciliation to the most directly comparable gap measure of any non-gap financial measures discussed on this call is shown in detail in our press release issued today, along with 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 the 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.

Andrew C. Florance: Costar group and matter Port have nearly identical mission statements of digitizing the world's real estate.

Andrew C. Florance: Costar group was one of the first adapters adopters of matter of <unk> technology, and currently has almost 300000 matter port digital twins available in the Costar information product and online property marketplaces in March this year, there were over $7 4 million views of matter Boart <unk> tours on apartment.

Andrew C. Florance: And with that, I would like to turn the call over to our founder and CEO, Andy Florence. Good evening, everyone. Thank you for joining us for CoStar Group's first quarter 2024 earnings call. First quarter 2024 revenue was $656 million, a 12% increase over the first quarter of 2023, coming in above the high end of our guidance range and above consensus estimates. Both Apartments.com and CoStar surpassed the $1 billion revenue mark in the first quarter, a tremendous milestone for the company. Congratulations to both teams.

Andrew C. Florance: Dot com.

Andrew C. Florance: Company-wide net new bookings achieved an all-time high of $86 million in the first quarter, fueled by a very strong launch of our Homes.com membership product. In the first quarter, 60% of our net new bookings were from sales of our commercial products, and 40% were from net new bookings from our new Homes.com memberships and residential products. Overall, traffic to our global websites reached a record 170 million average monthly unique visitors in the first quarter, according to Google Analytics, which is 93% above the first quarter of last year, an impressive 34% above our previous all-time high. CoStar Group has now reached 90% of the 194 million unique visitors they'll report in their last earnings call.

Andrew C. Florance: Visitors, who interact with a matter port on apartments Dot com spend 16 six minutes on the site, which is 134% more than the seven one minutes time onsite if they do not interact with a matter port.

Andrew C. Florance: They're comfortable selecting their next department without visiting the property at all.

Andrew C. Florance: As we listened to corporate real estate executives, who use loopnet discussed their challenges of buying and leasing properties around the world. They tell us three D. Digital twins are invaluable and facilitating technology for them.

Andrew C. Florance: In residential focus groups homebuyers are clearly telling us that they prefer listings that offer <unk> digital twins. So they can best understand the property.

Andrew C. Florance: We believe that our substantial empirical data and our market research clearly shows that consumers and advertisers prefer real estate portals with digital twins.

Andrew C. Florance: We intend to go all in on three D digital twins, adding more digital twins to apartments Dot com Loopnet homes Dot Com Costar land Dotcom best buy sell real estate manager STR <unk> on the market and others.

Andrew C. Florance: Our residential network reached a record 156 million monthly unique visitors in March, according to Google Analytics. I believe we have clearly established Homes.com, and our residential network is one of the two most trafficked residential marketplaces in the United States. Yesterday, we announced that we reached a definitive agreement to acquire Matterport, the global leader in immersive 3D digital twins and artificial intelligence for the real estate industry, for $5.50 per share. Founded in 2011, Matterport pioneered the development of the first 3D capture solution to deliver dimensionally accurate photorealistic virtual tours or digital twins for any type of property.

Andrew C. Florance: We intend to add matter ports as one of the benefits of homes Dot Com membership, we believe adding <unk> digital twins for homes Dot Com members will increase the leads we deliver increased customer satisfaction increased renewal rates increased sales and increased site traffic further.

Andrew C. Florance: We are thoroughly researched the many <unk> digital twin solutions out there and have concluded that matter port is the best solution for our clients needs.

Andrew C. Florance: Given the fact that we intend to make a much greater commitment to capturing three D. Digital twins, we decided to capture the value of our increased volumes by acquiring matter port as we make matter ports more ubiquitous we believe others will buy more matter ports, making the company more valuable.

Andrew C. Florance: Matterport's proprietary and patented technology enables anyone to digitize a property using a variety of camera technologies, including cameras found on most smartphones. Matterport's 3D technology is utilized in nearly every sector of real estate, spanning residential, commercial, hospitality, retail, and industrial spaces, among others. Over the years, Matterport has curated what is considered the largest and most precise collection of spatial property data worldwide, with over 12 million spaces captured in 177 countries and representing more than 38 billion square feet of digital commercial property under management.

Andrew C. Florance: We believe that we can accelerate matter port sales to non Costar group advertisers by increasing matter ports investments in sales and marketing.

Andrew C. Florance: While matter Port has been very responsive to us as customers over the past nine years, we see the acquisition is giving us increased ability to influence the product roadmap for matter port to best serve our clients' needs.

I believe we are standing on the verge of a potential exponential acceleration and the technology surrounding <unk> digital twins, which will create transformative value for real estate artificial intelligence machine learning generative AI computational photography nerve smurf and Gaussian splat, all have tremendous potential.

Andrew C. Florance: Hundreds of thousands of new 3D digital twins for properties around the world are being added to this impressive database each month. Matterport makes it possible to experience real estate remotely. People can now select their next home, apartment, office, store, hotel, or warehouse on their mobile device, often without ever visiting the property.

Andrew C. Florance: For real estate matter Port has incredible research and development talent. These are the people who are very passionate about the future of digital twins and literally invented this genre and we believe we are the they are the ones, who will imagine and create the industry's future.

Andrew C. Florance: The pandemic accelerated the remote real estate shopping trend, and we believe it is the new normal. CoStar Group and Matterport have nearly identical mission statements of digitizing the world's real estate. CoStar Group was one of the first adopters of Matterport's technology and currently has almost 300,000 Matterport digital twins available in the CoStar Information product and online property marketplace. In March this year, there were over 7.4 million views of Matterport 3D tours on apartments.com.

Andrew C. Florance: Dave.

Andrew C. Florance: We intend to actively support invest in matter ports special technology research and development efforts.

Andrew C. Florance: Imagine the potential scan your home and move three D. Digital twins of your furniture and art into a virtual moving truck can try laying it out in a potential new home virtually imagine using a three day digital twin to virtually see various potential kitchen renovations in seconds imagine the value of creating a three D twin of an unattractive.

Andrew C. Florance: <unk> Rall office space, and using generative AI to rapidly generate <unk> realistic potential build outs of the office space for a future tenant to see that.

Andrew C. Florance: Visitors who interact with a Matterport on Apartments.com spend 16.6 minutes on the site, which is 134% more than the 7.1 minutes time on site if they do not interact with a Matterport. Additionally, properties with a Matterport generated 74 leads, which is 10 times the seven leads generated for property without a Matterport.

Andrew C. Florance: Adding virtual reality to the matter Port you could take a virtual tour of the property with your virtual agent walk into this space with you.

Andrew C. Florance: The possibilities are certainly exciting to imagine and represent a massive opportunity to propagate new technologies to our global information and marketplace businesses.

Andrew C. Florance: I believe Costar group faces two major challenges in our effort to make homes dot com, the leading U S. Real estate portal first we need to build massive site traffic and second we need to successfully monetize our new your listing your lead model.

Andrew C. Florance: Currently, 50 to 60% of consumers looking for an apartment say they're comfortable selecting their next apartment without visiting the property at all. As we listen to corporate real estate executives who use LootNet discuss their challenges of buying and leasing properties around the world, they tell us 3D digital twins are invaluable in facilitating technology for them. In residential focus groups, homebuyers are clearly telling us that they prefer listings that offer 3D digital twins so they can best understand the property.

Andrew C. Florance: As we report our first quarter results I believe we are showing for the first time clear proof that we are very successfully delivering against those two important challenges.

Andrew C. Florance: With almost $40 million and homes in net new bookings and 156 million monthly unique visitors achieved in the quarter regarding revenue and traffic faster than any other product launch in the history of the company.

Andrew C. Florance: We believe that our substantial empirical data and our market research clearly shows that consumers and advertisers prefer real estate portals with digital twins. We intend to go all in on 3D digital twins, adding more digital twins to Apartments.com, LoopNet, Homes.com, CoStarLand.com, BizBuySell, Real Estate Manager, SDR, Belbex, OnTheMarket, and others. We intend to add Matterports as one of the benefits of Homes.com membership. We believe adding 3D digital twins for Homes.com members will increase the leads we deliver, increase customer satisfaction, increase renewal rates, increase sales, and increase site traffic further. We have thoroughly researched the many 3D digital twin solutions out there and have concluded that Matterport is the best solution for our clients' needs.

Andrew C. Florance: We launched the homes Dot Com brand marketing in February I think it was the 11th during the Super Bowl and the results are outstanding we believe the homes Dot Com marketing program is the largest in the history of real estate delivering almost 9000 commercial placements in the first quarter across broadcast and cable TV streaming audio and video.

Andrew C. Florance: Digital and social media and high profile sponsorships as well.

Andrew C. Florance: In less than two months, our brand campaign generated almost $4 5 billion consumer impressions.

Andrew C. Florance: Our marketing and media advertising and featuring Dan Levy highly Gartner as.

As well as.

Andrew C. Florance: Supporting roles from Jeff Goldblum, Lil Wayne is proving effective with consumers.

Andrew C. Florance: Given the fact that we intend to make a much greater commitment to capturing 3D digital twins, we decided to capture the value of our increased volumes by acquiring Matterport. As we make Matterports more ubiquitous, we believe others will buy more Matterports, making the company more valuable. We believe that we can accelerate Matterport sales to non-CoStar Group advertisers by increasing Matterport's investments in sales and marketing. Additionally, while Matterport has been very responsive to us as customers over the past nine years, we see the acquisition as giving us an increased ability to influence the product roadmap for Matterport to best serve our clients' needs.

Andrew C. Florance: The supporting role from yours truly a difference is proving effective as consumers as evidenced by our unaided brand awareness, which increased from 4% in January.

Andrew C. Florance: 24% in March of this year with unaided awareness approaching 25% in just one quarter, we're halfway to our goal of 50% on a consumer brand awareness for <unk> Dot com.

Andrew C. Florance: And we'll obviously work to go beyond the 50%, 50% is a very important number.

Andrew C. Florance: The consumer traffic response to our marketing efforts has been equally impressive in March the homes Dot Com site attracted 110 million monthly unique visitors. According to Google analytics in increase of 386% over the same period last year.

Andrew C. Florance: I believe we're standing on the verge of a potential exponential acceleration in the technology surrounding 3D digital twins, which will create transformative value for real estate. AI, machine learning, generative AI, computational photography, nerf smurf, and Gaussian splat all have tremendous potential for real estate. Matterport has incredible research and development talent. These are the people who are very passionate about the future of digital twins and literally invented the genre. And we believe they are the ones who will imagine and create the industry's future. Right, Dave?

Andrew C. Florance: In March monthly unique visitors to our overall residential network reached $156 million that is pretty much U S apartments and.

Andrew C. Florance: Homes, which is basically an apples and apples comparison to our competitors.

Andrew C. Florance: We believe homes dot com and our residential network continue to be the fastest growing residential marketplace in the U S in terms of consumer traffic.

Andrew C. Florance: We are also seeing quality improvements and our traffic metrics with direct traffic to homes dot com, increasing a 115% since the first quarter of last year.

Andrew C. Florance: We intend to actively support and invest in Matterport's spatial technology research and development efforts. Imagine the potential to scan your home and move 3D digital twins of your furniture and art into a virtual moving truck and try laying them out in a potential new home virtually. Imagine using a 3D digital twin to virtually see various potential kitchen renovations in seconds. Imagine the value of creating a 3D twin of an unattractive raw office space and using generative AI to rapidly generate 3D realistic potential build outs of the office space for a future tenant to see. Adding virtual reality to the Matterport, you could take a virtual tour of the property with your virtual agent walking through the space with you.

Andrew C. Florance: Sales of homes Dot com memberships are off to a fantastic start.

Andrew C. Florance: In the first quarter, our sales team sold almost 8000 homes dotcom membership subscriptions, making homes dot com product launch easily the fastest growing new product in the company history for context, we launched apartments Dot com in early 2015, and it took seven years to achieve our first quarter.

Andrew C. Florance: With $40 million annualized bookings homes Dot com reached the $40 million annualized bookings in the first quarter, we launched and it wasn't even a full quarter. It was less than two months of selling so it was a really fast start.

Andrew C. Florance: The possibilities are certainly exciting to imagine and represent a massive opportunity to propagate new technologies into our global information and marketplace business. I believe CoStar Group faces two major challenges in our effort to make Homes.com the leading U.S. real estate portal. First, we need to build massive site traffic, and second, we need to successfully monetize our new You're Listing, You're Lead model. As we report our first quarter results, I believe we are showing for the first time clear proof that we are very successfully delivering against those two important challenges.

We're seeing a strong continuation of sales results and metrics that I mentioned in our last earnings call in February 90% of ancient members are selecting the 12 month contract option with arrest choosing the six months subscription through the end of the first quarter. The average monthly selling price of a membership was in the fourth.

Andrew C. Florance: $75 to 500 per month range, we are signing up agent members of all sizes ranging from single agents with no listings up to large agent groups with hundreds of listings per year. We recently had a regional brokered Indianapolis sign up all 180 agents in their brokerage team.

Andrew C. Florance: With almost $40 million in homes, net new bookings, and 156 million monthly unique visitors achieved in the quarter, we're growing revenue and traffic faster than any other product launch in the history of the company. We launched the Homes.com brand marketing in February, I think it was the 11th, during the Super Bowl, and the results are outstanding. We believe the Homes.com marketing program is the largest in the history of real estate, delivering almost 9,000 commercial placements in the first quarter across broadcast and cable TV, streaming audio and video, digital and social media, and high-profile sponsorships as well.

Andrew C. Florance: They wanted to enhance their marketing strategy and are excited about the homes dotcom average <unk> opportunity to build their brands awareness.

Andrew C. Florance: Agent feedback has been extremely positive and agent from Western Florida said homes Dot Com has truly transformed my business was genuine leads that are directly that directly connects potential buyers to my listings no more confusion or wasted time, just real quality leads that make a difference.

Andrew C. Florance: Clearly the your listing your lead model is resonating.

Andrew C. Florance: Another agent from Westlake village, California said, what impressed me most after I signed up was how homes dot com boosted the number of us have compared with other listing agents in the area.

Andrew C. Florance: In less than two months, our brand campaign generated almost 4.5 billion consumer impressions. Our marketing and media advertising featuring Dan Levy, Heidi Gartner, as well as supporting roles from Jeff Goldblum and Lil Wayne is proving effective with consumers, as evidenced by our unpaid brand awareness, which increased from 4% in January to 24% in March of this year. With unaided awareness approaching 25% in just one quarter, we're halfway to our goal of 50% unaided consumer brand awareness for homes.com. And we'll obviously work to go beyond 50%, but 50% is a very important number.

Andrew C. Florance: Currently on average homes Dot com members listings and profiles are viewed one 8 million times a month.

Andrew C. Florance: Or 200 times more than 9000 views a basic agent receives.

Andrew C. Florance: Our company wide sales team of over 1000 sales representatives is cruising proving very effective in selling homes dot com. It is still early days, but every one of our eight commercial products sales teams from the largest apartments dot com to the smallest costar real estate manager are selling homes dot com memberships.

Andrew C. Florance: In total 85% of our sales representatives have successfully sold at least one homes dot com membership.

Andrew C. Florance: We are selling memberships all over the country in major cities.

Andrew C. Florance: The consumer traffic response to our marketing efforts has been equally impressive. In March, the Homes.com site attracted 110 million monthly unique visitors, according to Google Analytics, an increase of 386% over the same period last year. In March, monthly unique visitors to our overall residential network reached 156 million.

Andrew C. Florance: And Mark is smaller communities in rural areas through last week around 40% of our memberships were sold to agents outside the top metro areas.

Andrew C. Florance: Looking at the roughly 70 major markets, where we have a field sales presence every market has contributed dozens of new memberships with Dallas, leading the way in terms of total memberships and net bookings relative.

Andrew C. Florance: That is pretty much U.S. apartments and homes, which is basically an apples to apples comparison to our competitor. We believe Homes.com and our residential network continue to be the fastest growing residential marketplace in the U.S. in terms of consumer traffic. We are also seeing quality improvements in our traffic metrics, with direct traffic to homes.com increasing 115% since the first quarter of last year. And sales of Homes.com memberships are off to a fantastic start.

Andrew C. Florance: Relative to city sized Las Vegas, and Columbus are the champion sales teams overall, each producing the highest net new bookings per person.

Andrew C. Florance: What is really exciting is that our early success sales success measured against our 500000 plus agent prospect list is still only 1% penetration.

Andrew C. Florance: This implies a total market opportunity of over $3 billion of revenue for our basic membership product.

Andrew C. Florance: While the broader sales force of songs homes Dot Com. In addition to the original product responsibility, we do expect a substitution effect and slightly lower sales for these non <unk> products.

Andrew C. Florance: In the first quarter, our sales team sold almost 8,000 Homes.com membership subscriptions, making the Homes.com product launch easily the fastest growing new product launch in the company's history. For context, we launched apartments.com in early 2015, and it took seven years to achieve our first quarter with 40 million annualized bookings. Homes.com reached 40 million annualized bookings in the first quarter we launched, and it wasn't even a full quarter. It was less than two months of selling.

Andrew C. Florance: As we build up a dedicated homes sales team the non home sales teams will return more of their time to their original products.

Our new VP of home sales Andy started is focused on building out our homes dotcom dedicated sales force in Richmond, Virginia with a goal of having over 300 sellers in place by the end of the year. The first 80 or so members of this team are proving very effective turning in more homes dotcom net bookings per person in the company.

Andrew C. Florance: So it was a really fast start. We're seeing a strong continuation of the sales results and metrics that I mentioned in our last earnings call in February. 90% of agent members are selecting the 12 month contract option, with the rest choosing the six month subscription. Through the end of the first quarter, the average monthly selling price of a membership was in the $475 to $500 per month range.

Andrew C. Florance: <unk> wide average.

Andrew C. Florance: After only 30 to 60 days with the company.

Andrew C. Florance: Overall, I'm very pleased with our results and momentum from the first 60 days since the launch of homes Dot com marketing and sales efforts.

Andrew C. Florance: I wanted to comment on our perception of the impact of recent class action lawsuits in the real estate industry.

Andrew C. Florance: We are not experts, we're not involved but.

Andrew C. Florance: We are signing up agent members of all sizes, ranging from single agents with no listings up to large agent groups with hundreds of listings per year. We recently had a regional broker in Indianapolis sign up all 180 agents on their brokerage team. They want to enhance their marketing strategy and are excited about the Homes.com advertising opportunity to build their brand awareness. Agent feedback has been extremely positive.

Clearly, it's going to have some impacts in the industry, while homes Dot com relies on a list. Your listing your lead model that focuses on selling the home is the highest priority.

Andrew C. Florance: Our competitors use a lead diversion model that focuses on generating buyer agency leads is their highest priority.

Andrew C. Florance: We are not aware of any other portal in the world that uses such a lead diversion model the way our U S competitors do.

Andrew C. Florance: An agent from Weston, Florida, said homes.com has truly transformed my business with genuine leads that directly connect potential buyers to my listings. No more confusion or wasted time, just real quality leads that make a difference. Clearly, the You're Listing Your Lead model is responding.

Andrew C. Florance: Our competitors present agents listings with the contact agent pattern that diverged leads away from that agent is listing it is to one of their competitors is listing it's not.

We believe that the lead diversion model is very unpopular with home sellers agents buyers and brokers, which may be why it has not been very profitable.

Andrew C. Florance: Another agent from Westlake Village, California said, "What impressed me most after I signed up was how Homes.com boosted the number of views I got compared with other listing agents in the area." Currently, on average, Homes.com members' listings and profiles are viewed 1.8 million times a month, or 200 times more than the 9,000 views a basic agent receives. Our company-wide sales team of over 1000 sales representatives is proving very effective in selling homes.com.

Andrew C. Florance: With recent seismic legal settlements in the real estate industry. We believe the portals that rely on the lead diversion miles could become stressed legacy portals rely on MLS data feeds that provide them with information on offers to.

Andrew C. Florance: Compensation to buyer brokers said these portals can take a significant portion of the buyer broker Commission from the Devry leads going forward under the terms of the settlement those feeds can no longer include buyer broker compensation fields. In addition by our agents will need to get buyers to enter into a written agreement written by our agency agreement.

Andrew C. Florance: It's still early days, but every one of our eight commercial product sales teams, from the largest apartments.com to the smallest CoStar real estate manager, is selling homes.com memberships. In total, 85% of our sales representatives have successfully sold at least one homes.com membership. We are selling memberships all over the country in major cities and markets, smaller communities, and rural areas. Last week, around 40% of our memberships were sold to agents outside the top metro areas.

Andrew C. Florance: Before they even show the buyers a house for sale.

Andrew C. Florance: It may be difficult for the diversion model agents to get home buyers to sign a written commitment to the agent just to see one house currently only 30% of buyer agent's ever get a written agreement at any point in the transaction process.

Andrew C. Florance: In contrast homes Dot com connects homebuyers with directly the listing agent. So they can arrange to see the house with no paperwork or commitments.

Andrew C. Florance: We are increasingly confident in our ability to build out the number one residential marketplace in terms of traffic revenue and profitability in the years ahead.

Andrew C. Florance: Looking at the roughly 70 major markets where we have a field sales presence, every market has contributed dozens of new memberships, with Dallas leading the way in terms of total memberships and net bookings. Relative to city size, Las Vegas and Columbus are the champion sales teams overall, each producing the highest net new bookings per person.

Andrew C. Florance: Our U K property portal on the market is off to a strong start in the first quarter coming into the quarter before we acquired on the market. It was a distant third place in the UK based on traffic, we have made a focused and successful effort to grow on the market traffic.

Andrew C. Florance: What is really exciting is that our early sales success measured against our 500,000 plus agent prospect list is still only 1% penetration. This implies a total market opportunity of over $3 billion of revenue for our basic membership product. While the broader sales force is selling homes.com in addition to their original product responsibility, we do expect a substitution effect and slightly lower sales for these non-homes products.

Andrew C. Florance: In March according to similar web reporting we surpassed zoop and site visits and are now the Uk's number two residential property portal monthly unique visitors were $17 million in March representing a 107% increase over the same period a year ago. According to Google analytics.

Andrew C. Florance: The increase in traffic has translated to nearly 50% more leads for agents in March of 2024 versus the prior year.

Andrew C. Florance: As we build up a dedicated home sales team, the non-home sales teams will return more of their time to their original product. Our new VP of Home Sales, Andy Stearns, is focused on building out our homes.com dedicated sales force in Richmond, Virginia, with the goal of having over 300 sellers in place by the end of the year. The first 80 or so members of this team are proving very effective, turning in more homes.com net bookings per person to the company, a wide average, after only 30 to 60 days with the company.

Andrew C. Florance: The early results tell us we are delivering on our strategy of investing and partnering with agents to generate high intent leads at a fraction of the cost of competing UK portals in response to the strategy more and more agents are choosing to put their listings on the market in March we exceeded 15000 advertisers on the portal.

Andrew C. Florance: <unk> and have grown listings almost 40% year over year.

Andrew C. Florance: Apartments Dot com reached a significant milestone in the first quarter with annual revenue run rate of $1 billion revenue for the first quarter of 2024 was $255 million, representing 21% growth compared to the first quarter of 2023 and above our guidance.

Andrew C. Florance: Overall, I'm very pleased with our results and momentum from the first 60 days since the launch of Homes.com marketing and sales efforts. I want to comment on our perception of the impact of recent class action lawsuits in the real estate industry. We are not experts.

Andrew C. Florance: We're not involved, but it clearly is going to have some impacts in the industry. While Homes.com relies on a list, you're listing your lead model that focuses on selling the home as the highest priority; our competitors use a lead diversion model that focuses on generating buyer agency leads as their highest priority. We are not aware of any other portal in the world that uses such a lead diversion model the way our US competitors do.

Andrew C. Florance: A growth rate of 20%.

This marks the fifth consecutive quarter with apartments dot com growing at or above 20%.

I believe the continuing success story of apartments Dot Com is a tribute to the quality of the product the effectiveness of our brand marketing and our ability to build the largest and most effective sales force in the industry.

Andrew C. Florance: Three weeks ago on April 1st we celebrated the 10 year anniversary of Costars acquisition of apartments Dot Com and what an amazing 10 years, it's been.

Andrew C. Florance: We transformed the way consumers find their next rental home growing our revenue from $75 million in 2014 to over $1 billion today.

Andrew C. Florance: Our competitors present agents' listings with a contact agent button that diverts the leads away from that agent who's listing it to one of their competitors who's not. We believe that the lead diversion model is very unpopular with home sellers, agents, buyers, and brokers, which may be why it has not been very profitable.

Our sales team is five times larger delivering 3225% more sales than when we started we went from fourth or fifth place in the industry in terms of traffic to the number one traffic position with the brand most recognized by consumers.

Andrew C. Florance: With recent seismic legal settlements in the real estate industry, we believe the portals that rely on the LEED diversion models could become stressed. Legacy portals rely on MLS data feeds that provide them with information on offers to compensate buyer brokers so that these portals can take a significant portion of the buyer broker commission from the diverted leads. Going forward, under the terms of the settlement, those feeds can no longer include buyer broker compensation fields. In addition, buyer agents will need to get buyers to enter into a written agreement, written agent agreement before they leave and show the buyers a house for sale.

Speaker Change: I would like to personally congratulate Fred page, Jerry and the entire apartment stock can't Com team for this outstanding success and Im looking forward to the next 10 years, providing the best possible rental experience for consumers and our advertising.

Speaker Change: Customers.

Speaker Change: And Fred I'm looking for another tenfold increase plus in revenue I think it's 12 fold increase so good luck.

Speaker Change: Our 2020 for marketing campaign is off to a great start we kicked off with a fantastic Super Bowl AD during the most viewed Super Bowl game in history.

Andrew C. Florance: It may be difficult for the diversion model agents to get homebuyers to sign a written commitment to the agent just to see one house. Currently, only 30% of buyer agents ever get a written agreement at any point in the transaction process. In contrast, Homes.com connects homebuyers directly to the listing agent so they can arrange to see the house with no paperwork or commitments. We are increasingly confident in our ability to build out the number one residential marketplace in terms of traffic, revenue, and profitability in the years ahead.

Speaker Change: Campaign generated over $2 3 billion media impressions in the first quarter of 2024, which is three times the number of impressions delivered in the first quarter of last year, we launched five new television commercials, featuring Brad Bellflower inventor of the part you mentioned net known to many of you as Jeff Goldblum we.

Speaker Change: This year's campaign to deliver our highest number of impressions ever over for over $12 billion, while reaching 90% of renters across the U S.

Speaker Change: Our brand marketing strategy continues to pay dividends in our first quarter unaided brand awareness was 51%, which has outperformed zyla unaided brand awareness for four quarters in a row.

Andrew C. Florance: Our UK property portal on the market is off to a strong start in the first quarter. Coming into the quarter before we acquired it, it was a distant third place in the UK based on traffic.

Speaker Change: Apartments Dot com continues to be the most highly trafficked rental web site in the U S. Attracting over 43 million monthly unique visitors on average in the first quarter According to Google analytics.

Andrew C. Florance: We have made a focused and successful effort to grow on the market. In March, according to similar web reporting, we surpassed Zoopla in site visits and are now the UK's number two residential property portal. Monthly unique visitors were 17 million in March, representing a 107 percent increase over the same period a year ago, according to Google Analytics.

Speaker Change: According to Comscore unique visitors in the first quarter of 2024 were relatively flat over the same period last year.

Speaker Change: Which is quite the opposite of our competitors with zillow, decreasing 13% and rent period down 21%.

Speaker Change: In addition, as homes dot com traffic grows apartments dot com benefits from consumers that want to explore rental options monthly unique visitors sourced through homes Dot com grew 21% in March year over year. According to Comscore.

Andrew C. Florance: The increase in traffic translates to nearly 50% more leads for agents in March of 2024 versus the prior year. The early results tell us we are delivering on our strategy of investing and partnering with agents to generate high-intent leads at a fraction of the cost of competing UK portals. In response to this strategy, more and more agents are choosing to put their listings on the market.

With both apartments and homes products to sell the sales team conducted a 189000 quality meetings in the first quarter and.

Speaker Change: An increase of 38% over the first quarter of last year. These.

Andrew C. Florance: In March, we exceeded 15,000 advertisers on the portal and have grown listings almost 40% year over year. Apartments.com reached a significant milestone in the first quarter with an annual revenue run rate of $1 billion. Revenue for the first quarter of 2024 was $255 million, representing 21% growth compared to the first quarter of 2023 and above our guidance growth rate of 20%. This marks the fifth consecutive quarter with Apartments.com growing at or above 20%.

Speaker Change: These efforts are clearly producing results as properties advertising on our platform reached an all time high of 73000 at the end of the quarter.

While the number of under 50 unit properties advertising increased 31% over the prior period, it's important to keep in mind that despite such strong growth in advertisers and revenue we remain below 12% penetration in the apartments dot com market opportunity, which we estimate to be worth nine.

Speaker Change: <unk> billion dollars.

Speaker Change: Overall economic conditions remain favorable for rental property advertising vacancy levels continue to set record highs for three four and five star properties, increasing 10 basis points above the fourth quarter of 2023 to reach nine 1% New unit deliveries remain at elevated levels with 495.

Andrew C. Florance: I believe the continuing success story of Apartments.com is a tribute to the quality of the product, the effectiveness of our brand marketing, and our ability to build the largest and most effective sales force in the industry. Three weeks ago, on April 1st, we celebrated the 10-year anniversary of CoStar's acquisition of Aparvis.com, and what an amazing 10 years it's been.

Speaker Change: <unk> units expected to be delivered in 2024 coming off the peak of 583000 units that were delivered in 2023.

Andrew C. Florance: We transformed the way consumers find their next rental home, growing our revenue from $75 million in 2014 to over $1 billion today. Our sales team is five times larger, delivering 3,225% more sales than when we started. We went from fourth or fifth place in the industry in terms of traffic to the number one traffic position with a brand most recognized by consumers. I would like to personally congratulate Fred, Paige, Jerry, and the entire Apartments.com team for this outstanding success. And I'm looking forward to the next 10 years providing the best possible rental experience for consumers and our advertising customers.

Costar revenue was $250 million for the quarter, an increase of 11% over the same quarter a year ago, our flagship information product reached a significant milestone in the first quarter.

Speaker Change: Just like apartments Dot com did but apartments, Scott Cott Com got there a month earlier.

Speaker Change: Costar group reached an annual revenue run rate of a $1 billion. So just to be keeping track thats two of our products Cross the $1 billion revenue run rate in the quarter.

Speaker Change: Another way of saying, both Costar and apartments crossed $1 billion revenue run rate in the quarter.

Andrew C. Florance: And Fred, I'm looking for another tenfold increase plus in revenue. I think it's a 12-fold increase, so good luck. Our 2024 marketing campaign is off to a great start. We kicked off with a fantastic Super Bowl ad during the most-viewed Super Bowl game in history. The campaign generated over 2.3 billion media impressions in the first quarter of 2024, which is three times the number of impressions delivered in the first quarter of last year. We launched five new television commercials featuring Brad Bellflower, the inventor of the apartment net, known to many of you as Jeff Goldblum.

Lender product delivered revenue growth of 57% in the first quarter year over year, the number of banks in lending institutions on our lender platform is now 285, an increase of 71% year over year.

We're still in the early stages of what we believe to be a $300 million plus revenue opportunity for our lender product.

Speaker Change: The Costar hospitality product STR has experienced some of the fastest sales growth in the company increasing 44% in the first quarter revenue from our benchmarking and Costar subscriptions to hospitality clients increased 15% in the first quarter.

Andrew C. Florance: We expect this year's campaign to deliver our highest number of impressions ever, over 12 billion, while reaching 90% of renters across the U.S. Our brand marketing strategy continues to pay dividends, and our first quarter unaided brand awareness was 51%, which has outperformed Zillow's unaided brand awareness for four quarters in a row. Apartments.com continues to be the most highly trafficked rental website in the U.S., attracting over 43 million monthly unique visitors on average in the first quarter, according to Google Analytics.

Speaker Change: Our Costar sales force team, our Costar sales team for us.

Delivered the strongest sales of homes dot com in the quarter and our highest level of total net new bookings output since 2002.

Speaker Change: Costar renewal rates remain above 90% and our NPS scores continue to grow we now have 221000 subscribers in the Costar platform and they logged in $5 2 million times in the first quarter with $24 million property searches conducted and a 17%.

Andrew C. Florance: According to ComScore, unique visitors in the first quarter of 2024 were relatively flat over the same period last year, which is quite the opposite of our competitors, Zillow decreasing 13% and RentPath down 21%. In addition, as Homes.com traffic grows, Apartments.com benefits from consumers that want to explore rental options. Monthly unique visitors sourced through Homes.com grew 21% in March year-over-year, according to ComScore.

<unk> increase compared to the prior year, So Costar group is robust healthy and growing.

Speaker Change: Loopnet revenue was $69 million in the first quarter of 2024 up 9% over the first quarter of last year. The international revenue in the first quarter was up 29% compared to the first quarter of last year.

Speaker Change: Loopnet continues to be the leading commercial marketplace in the U S with over 13 million monthly average unique visitors. According to Google analytics are direct in organic traffic represents over 70% of average monthly unique visitors, which is a testament to our brand as we continue to generate quality leads for.

Andrew C. Florance: With both apartments and homes products to sell, the sales team conducted 189,000 quality meetings in the first quarter, an increase of 38% over the first quarter of last year. These efforts are clearly producing results as properties advertising on our platform reach an all-time high of $73,000 at the end of the quarter, while the number of under 50 unit properties advertising increased 31% over the prior period. It's important to keep in mind that despite such strong growth in advertisers and revenue, we remain below 12% penetration in the apartments.com market opportunity, which we estimate to be worth $9 billion. Overall, economic conditions remain favorable for rental property advertising. Vacancy levels continue to set record highs for three, four, and five-star properties, increasing 10 basis points above the fourth quarter of 2023 to reach 9.1%.

Speaker Change: Tumors with.

Speaker Change: We continue to enhance our sales capabilities and are seeing positive sales trends coming out of first quarter net new bookings increased 147% sequentially compared to the fourth quarter of 2023, the net sales per sales representatives, including homes Dotcom sales was the highest of any period since we launched the dedicated sales force almost.

Speaker Change: 18 months ago, the quality level of interactions with customers is also improving with a loopnet sales team net promoter score increasing 70% from the same period a year ago.

Speaker Change: We welcome to Ben drew to the President of Loopnet Roll. This past week, then brings over two decades of digital marketplace and leadership experience. Most recently been served as president of Viator, the leading marketplace for travel experiences prior to Viator Bev held roles of increasing levels of responsibility at Tripadvisor.

Andrew C. Florance: New unit deliveries remain at elevated levels with 495,000 units expected to be delivered in 2024, coming off the peak of 583,000 units that were delivered in 2023. CoStar revenue was $250 million for the quarter, an increase of 11% over the same quarter a year ago. The flagship information product reached a significant milestone in the first quarter, just like Apartments.com did, but Apartments.com got there a month earlier.

Speaker Change: The parent company of <unk>.

Speaker Change: Even though commercial real estate trends commercial.

Speaker Change: Commercial real estate sales transactions volumes dropped 17% in the first quarter to the lowest level since beginning of the pandemic tenex outperformed the market with an 8% increase in assets brought to the platform in the first quarter. The tax trade rate increased from 48% in the fourth quarter of 23 to <unk> 56 person.

Speaker Change: In the first quarter 2000 and for the.

Speaker Change: The average number of bidders per auction was three two this quarter, which was the highest number in a year at above the fourth quarter average of $2 three per auction bidders for option are.

Andrew C. Florance: CoStar Group reached an annual revenue run rate of a billion. So just to be keeping track, that's two of our products crossed the one billion revenue run rate in the quarter. Another way of saying that both CoStar and Apartments crossed a $1 billion revenue run rate in the quarter. Regardless of economic cycles, we continue to see strong revenue growth in CoStar. The 20-year compound annual growth rate for CoStar is an impressive 12%, which we expect to continue for years to come. Our lender product delivered revenue growth of 57% in the first quarter compared to the same period last year. The number of banks and lending institutions on our lender platform is now 285, an increase of 71% year over year.

Speaker Change: Our approval rates of allowing proposed assets trade in the platform increased as well in the first quarter up 50% from the prior quarter.

Speaker Change: A good sign of improvement.

Speaker Change: Looking at the real estate economy office sector vacancy is now set at 13, 8% and I have risen 19 consecutive quarters office attendance has shown a positive trend up 2% to 3% over the past year, but thats that is currently counterbalanced by declining overall office using job.

Growth, but the truth silver lining as construction levels with the current supply pipeline at the lowest level. It's been in 10 years and construction starts this quarter the lowest ever this will likely translate into a shortage of premium office space and associated price premiums in the coming years.

Andrew C. Florance: We're still in the early stages of what we believe to be a $300 million plus revenue opportunity for our lender product. CoStar Hospitality's STR product has experienced some of the fastest sales growth in the company, increasing 44% in the first quarter. Revenue from our benchmarking and CoStar subscriptions to hospitality clients increased 15% in the first quarter; our CoStar sales force team, our CoStar sales team for delivered the strongest sales of Homes.com in the quarter and their highest level of total net new bookings output since 22. CoStar renewal rates remain above 90%, and our NPS scores continue to grow.

Speaker Change: Be good time to buy an office building.

Speaker Change: The industrial sector saw a 90% drop in demand in the first quarter compared to the average of the past three years deliveries in the quarter pushed vacancies up 50 basis points to six 2% the highest level since 2015.

Speaker Change: Retail vacancies remained largely unchanged in the first quarter near the all time low of 4%.

Speaker Change: In the residential sector mortgage rates are still high enough to keep most Americans from listing their homes for sale, which is propping up home prices and impacting affordability.

Andrew C. Florance: We now have 221,000 subscribers on the CoStar platform, and they logged in 5.2 million times in the first quarter, with 24 million property searches conducted and a 17% increase compared to the prior year. So CoStar Group is robust, healthy, and growing. LubeNet revenue was $69 million in the first quarter of 2024, up 9% over the first quarter of last year. LubeNet's international revenue in the first quarter was up 29% compared to the first quarter of last year.

The recent decline in mortgage rates created positive momentum in sales, increasing affordability and increasing existing home sales to 500000 homes a month.

Speaker Change: If rates continue to drop we could see a significant increase of activity in the residential sector.

Speaker Change: So we've had a lot of good news to share with this quarter, but I think the most important news is that the early indications that the homes dot com investments working we're proving out our ability to generate traffic on homes Dot com clearly we're building the brand and we're monetizing the site, we believe that before too long homes Dot com will be all.

Andrew C. Florance: LubeNet continues to be the leading commercial marketplace in the U.S., with over 13 million monthly average unique visitors, according to Google Analytics. Our direct and organic traffic represents over 70% of average monthly unique visitors, which is a testament to our brand as we continue to generate quality leads for customers. We continue to enhance our sales capabilities and are seeing positive sales trends coming out of the first quarter. Net new bookings increased 147% sequentially compared to the fourth quarter of 2023.

Speaker Change: Our largest revenue business in the portfolio.

Speaker Change: At this point I'm going to turn the call over to our Chief Financial Officer, who seems to be sort of fading away.

Speaker Change: Yes.

Speaker Change: Go ahead, Scott Thank you Andy.

Try to remain present for the next 10 or 20 minutes.

Scott Wheeler: Well that was a great start to the year wish we could have a quarter like that every year.

Andrew C. Florance: The net sales per sales representative, including Homes.com sales, was the highest of any period since we launched a dedicated sales force almost 18 months ago. The quality level of interactions with customers is also improving, with the LoopNet sales team net promoter score increasing 70% from the same period a year ago. We welcomed Ben Drew to the president of LoopNet role this past week. Ben brings over two decades of digital marketplace and leadership experience. Most recently, Ben served as president of Viator, the leading marketplace for travel experiences. Prior to Viator, Ben held roles with increasing levels of responsibility at TripAdvisor, the parent company of Viator.

Scott Wheeler: Pretty amazing highlight reel that you've shared for the company with the <unk>.

<unk> groundbreaking acquisition and $1 billion businesses.

Scott Wheeler: The best product launch ever with homes record sales the Super Bowl marketing launch.

Scott Wheeler: Even manage the wiggling the word Gaussian splat into year.

Scott Wheeler: Your script, which.

Speaker Change: It's a real word people that wasn't a joke you can look it up.

Speaker Change: So how are we going to top that in the second quarter I don't know, but we better get going because we've got a lot to do.

So our streak of double digit revenue growth continued in the first quarter at 12% overall for the company.

Speaker Change: And you know what I think the best news is here.

Andrew C. Florance: Even though commercial real estate sales transaction volumes dropped 17% in the first quarter to the lowest level since the beginning of the pandemic, 10X outperformed the market with an 8% increase in assets brought to the platform in the first quarter. The 10X trade rate increased from 48% in the fourth quarter of 23 to 56% in the first quarter of 24. The average number of bidders per auction was 3.2 this quarter, which was the highest number in a year and above the fourth quarter average of 2.3 bidders per auction. Our approval rates for allowing proposed assets to trade on the platform increased as well in the first quarter, up 50% from the prior quarter. A good sign of improvement.

Speaker Change: Our residential business is now, making a solid positive contribution to growth.

Speaker Change: After two years, we have endured the sort of painful revenue decline from the legacy residential products like this quarterly drip.

Speaker Change: Drip of revenue erosion like water torture.

Speaker Change: Well, we are finally on the upswing with the launch of homes Dot Com modernization.

Speaker Change: Our residential revenue came in at $19 million in the first quarter, which was up 90% sequentially from the fourth quarter of 2003 and up 42% year over year, thanks to our homes Dot com launch and a full quarter of on the market results first.

Speaker Change: First quarter residential revenue was above our $15 million guidance estimate primarily due to the fast start for the sales of homes Dot com.

Speaker Change: So we're going to raise our revenue forecast for residential revenues by $15 million at the midpoint to reflect faster growth of homes Dot com.

Speaker Change: Our new estimates have revenue improving almost $10 million sequentially each quarter with revenue growing to almost $50 million by the fourth quarter of 2024.

Speaker Change: Year over year revenue growth is expected to be 180% in total and around 105% organic in 2024.

Speaker Change: We now expect the exit run rate for homes dot com to be in the $130 million to $140 million range.

Andrew C. Florance: This will likely translate into a shortage of premium office space and associated price premiums in the coming years, so it will be a good time to buy an office building. The industrial sector saw a 90% drop in demand in the first quarter compared to the average of the past three years.

Speaker Change: Which is up from the $100 million exit run rate I provided back in February.

Speaker Change: Revenue in our commercial businesses for the first quarter came in at $638 million, which was up 12% year over year and above expectations.

Speaker Change: We saw sales we saw sales substitution effect as Andy mentioned in the first quarter as we launched homes Dot com.

Scott Wheeler: Deliveries in the quarter pushed vacancies up 50 basis points to 6.2%, the highest level since 2015. However, retail vacancies remained largely unchanged in the first quarter near an all-time low of 4%. In the residential sector, mortgage rates are still high enough to keep most Americans from listing their homes for sale, which is propping up home prices and impacting affordability. However, the recent decline in mortgage rates has created positive momentum in sales, increasing affordability, and increasing existing home sales to 500,000 homes a month.

Speaker Change: I expect we will shift our revenue mix a bit more towards residential than what we had assumed in our full year revenue outlook, we shared in February.

Speaker Change: Now my original revenue forecast model, which quite frankly wasn't much more than the educated guess at the time, given we had not launched homes dot com assume that the full year sales split would be 70% commercial and around 30% residential.

Speaker Change: While the actual sales split in the first quarter was around 60% commercial and 40% residential.

Which translates to around $10 million revenue shift for the full year commercial to residential.

Scott Wheeler: If rates continue to drop, we could see a significant increase in activity in the residential sector. So we've had a lot of good news to share with you this quarter, but I think the most important news is that there are early indications that the homes.com investments are working. We're proving out our ability to generate traffic on homes.com clearly, we're building the brand, and we're monetizing the site. We believe that before too long, homes.com will be our largest revenue business in the portfolio.

Well, it's not really a whole lot in the Grand scheme of things, it's only about 4% of revenue, but I thought it was at least worth noting.

Speaker Change: And Youll hear some of those effects as I talked through the rest of the product groups.

Speaker Change: Apartments Dot Com grew revenue, 21% during the first quarter ahead of our guidance of 20% revenue growth.

Crossing $1 billion in annualized revenue and celebrating 10 years from the acquisition, it's remarkable to see five straight quarters, thus far on a 20% plus growth.

Scott Wheeler: At this point, I'm going to turn the call over to our Chief Financial Officer, who seems to be sort of fading away. Go ahead, Scott. Thank you, Andy. I'll try to remain present for the next 10 or 20 minutes.

Speaker Change: <unk> in the stage of this business has become like.

Speaker Change: Like whoever puts a 20% growth rate 10 years out and your acquisition model.

Speaker Change: Well I guess, Fred did because he's done a great job and the team delivered it.

Speaker Change: What's encouraging is that apartments dot com revenue reflects only 12% penetration of the multifamily revenue opportunity and Thats just in the United States.

Scott Wheeler: Well, that was a great start to the year. I wish we could have a quarter like that every year. That's a pretty amazing highlight reel that you shared for the company with the 3D groundbreaking acquisition and billion dollar businesses, the best product launch ever with Holmes, record sales, and the Super Bowl marketing launch. You even managed to wiggle the word gousy and splat into your script, which is a real word, people. That wasn't a joke.

Speaker Change: With a strong start to the year and considering a modest sales substitution effect, we're maintaining our revenue forecast for apartments dot com of around 17% revenue growth for the full year of 2024.

Speaker Change: Costar revenue grew 11% in the first quarter in line with our guidance expectations. We continue to see strong growth within our hospitality lender and owner customers, while working through this downturn and the effects of continued high interest rates on commercial real estate.

Scott Wheeler: You can look it up. So how are we going to top that in the second quarter? I don't know, but we better get going because we have a lot to do. So our streak of double-digit revenue growth continued in the first quarter at 12% overall for the company. And you know what I think the best news is here? Our residential business is now making a solid, positive contribution to growth.

Speaker Change: In the first quarter, our Costar sales team sold more homes dot com memberships than any of our other sales teams.

Speaker Change: Recognizing the slight shift in sales mix here, we're adjusting our revenue forecast and expected costar revenue growth of around 10% for the second quarter and for the full year of 2024.

Speaker Change: Loopnet revenue grew 9% in the first quarter at the high end of our guidance range, demonstrating the ongoing productivity improvements within our dedicated sales team.

Scott Wheeler: After two years, we've endured this sort of painful revenue decline from the legacy residential products, like this quarterly drip, drip, drip of revenue erosion like water torture. Well, we're finally on the upswing with the launch of homes.com modernization. Our residential revenue came in at $19 million in the first quarter, which is up 90% sequentially from the fourth quarter of 23 and up 42% year over year, thanks to our homes.com launch and a full quarter of on the market results. First quarter residential revenue was above our $15 million guidance estimate, primarily due to the fast start for the sales of Homes.com.

Speaker Change: Welcome to the team been looking forward to seeing what you can do in the quarters ahead.

Speaker Change: We expect 5% to 6% revenue growth for Loopnet in the second quarter of 2024 with full year revenue growth in the mid single digits broadly in line and unchanged from our previous Loopnet revenue outlook.

Speaker Change: Revenue from information services was $33 million in the first quarter consistent with expectations.

Speaker Change: We expect revenue for the full year to be in the range of $130 million to $135 million in line with the revenue growth guidance range. We provided in February.

Speaker Change: Other marketplaces revenue was $31 million for the quarter slightly ahead of guidance.

Scott Wheeler: So we're gonna raise our revenue forecast for residential revenues by $15 million at the midpoint to reflect faster growth of homes.com. Our new estimates have revenue improving by almost $10 million sequentially each quarter, with revenue growing to almost $50 million by the fourth quarter of 2024. Year over year revenue growth is expected to be 180% in total and around 105% organic in 2020. We now expect the exit run rate for Homes.com to be in the $130 to $140 million range, which is up from the $100 million exit run rate I provided back in February. Revenue in our commercial businesses for the first quarter came in at $638 million, which was up 12% year over year and above expectations.

Speaker Change: <unk> trade rates and deal closings improved in the first quarter, providing extra revenue versus our forecast.

Speaker Change: Revenue for the second quarter is forecast to be in line with the first quarter's results and we confirm our previous guidance for the full year 2020 for revenue to be relatively flat to the full year 2023 revenue.

Speaker Change: Adjusted EBITDA was $12 million in the first quarter.

Speaker Change: $27 million above the midpoint of our guidance range.

Speaker Change: The outperformance was primarily attributable to our strong revenue performance and lower than anticipated personnel costs with some of the favorability coming from spend timing of spend that we now expect to occur in the back half of the year.

Speaker Change: We remain on track with similar investment levels of homes Dot com as we plan for the year and that we discussed last quarter.

Speaker Change: As well as the expected adjusted EBITDA margins in our commercial product businesses unchanged from what we said at the beginning of the year.

Scott Wheeler: We saw a sales substitution effect, as Andy mentioned, in the first quarter as we launched Homes.com, which I expect will shift our revenue mix a bit more towards residential than what we had assumed in our full-year revenue outlook we shared in February. And my original revenue forecast model, which, quite frankly, wasn't much more than an educated guess at the time, given we had not launched Homes.com, assumed that the full year sales split would be 70% commercial and around 30% residential.

The size of our sales force is about the same at the end of the first quarter as it was at the end of 2023 1200 sales members as we grow our homes Dot Com sales force, we expect to have a total of around 500 sales team members by the end of this year.

Speaker Change: Our contract renewal rate was 90% for the first quarter of 2024, while the renewal rate for customers who've been subscribers for five years or longer remained strong at 94%.

Scott Wheeler: Well, the actual sales split in the first quarter was around 60 percent commercial and 40 percent residential, which translates to around a 10 million dollar revenue shift for the full year from commercial to residential. But it's not really a whole lot in the grand scheme of things.

Speaker Change: Subscription revenue on annual contracts was 81% for the first quarter of 2024 consistent with the prior quarter.

Scott Wheeler: It's only about 0.4% of revenue, but I thought it was at least worth noting. And you'll hear some of those effects as I talk through the rest of the product group. Apartments.com grew revenue 21% during the first quarter, ahead of our guidance of 20% revenue growth. Crossing $1 billion in annualized revenue and celebrating 10 years from the acquisition, it's remarkable to see five straight quarters this far of 20% plus growth given the size and the stage of this business has become. Like whoever puts a 20% growth rate 10 years out in your acquisition model. Well, I guess Fred did because he did a great job and the team delivered it.

Speaker Change: With a strong start to the year, we're increasing our revenue guidance to a range of $2 76 zero billion to $2 70 701 billion net.

Speaker Change: Net midpoint guidance is up around $5 million with residential revenue up $15 million in commercial revenue commercial business revenue lower by $10 million from the fine tuning of our sales mix based on the first quarter sales split.

Speaker Change: Second quarter 2024 revenue is expected to range from 674 million to $679 million, representing revenue growth rate of 11% to 12% for the quarter.

Speaker Change: Our full year revenue outlook includes revenue growth of 12% in the first half of the year.

Scott Wheeler: What's encouraging is that Apartments.com revenue reflects only 12% of the multifamily revenue opportunity, and that's just in the United States. With a strong start to the year and considering a modest sales substitution effect, we're maintaining our revenue forecast for Apartments.com of around 17% revenue growth for the full year of 2024. CoStar revenue grew 11% in the first quarter, in line with our guidance expectations.

Speaker Change: Accelerating to 14% in the second half of 2024.

Speaker Change: Isn't it great to accelerate revenue growth and a really bad property market.

Speaker Change: This business is pretty amazing.

Speaker Change: We're also increasing our adjusted EBITDA guidance and raising the midpoint of our guidance range. The new adjusted EBITDA forecast range for the full year is now $185 million to $205 million up $15 million at the midpoint and indicating a margin of around 7% at the midpoint of the range.

Scott Wheeler: We continue to see strong growth within our hospitality, lender, and owner customers while working through this downturn and the effects of continued high interest rates on commercial real estate. In the first quarter, our CoStar sales team sold more homes.com memberships than any of our other sales teams. Recognizing the slight shift in sales mix here, we're adjusting our revenue forecast and expected CoStar revenue growth of around 10% for the second quarter and for the full year of 2024. LoopNet revenue grew 9% in the first quarter at the high end of our guidance range, demonstrating the ongoing productivity improvements within our dedicated LoopNet sales. Welcome to the team, Ben.

Speaker Change: Second quarter adjusted EBIT margin includes the highest marketing seasonal spend for the year and are expected to be in the range of $5 million to $10 million or approximately 1%.

Speaker Change: Margins are expected to increase sequentially in the second half and exit the year in the range of 15% to 16%.

Speaker Change: Our outlook for interest capital and taxes remains unchanged for what we communicated back in February.

So I'll wrap up with a few financial comments on the pending acquisition of matter part that was announced yesterday.

Speaker Change: Financially matter Port operates a very attractive financial model very similar to costar, but at a smaller scale.

Scott Wheeler: I look forward to seeing what you can do in the quarters ahead. We expect 5% to 6% revenue growth for LoopNet in the second quarter of 2024 with full-year revenue growth in the mid-single digits, broadly in line and unchanged from our previous LoopNet revenue outlook. Revenue from information services was $33 million in the first quarter, consistent with expectations.

Speaker Change: <unk> has a history of strong revenue growth with a five year compound annual growth rate of 31%.

Speaker Change: They are subscription business represents 60% of the overall revenue and is growing over 20% per year has a very high renewal rates similar to costar.

Speaker Change: We love this kind of business.

Scott Wheeler: We expect revenue for the full year to be in the range of $130 million to $135 million, in line with the revenue growth guidance range we provided in February. Other marketplace revenue was $31 million for the quarter, slightly ahead of guidance. 10X trade rates and deal closings improved in the first quarter, providing the extra revenue versus our forecast. Revenue for the second quarter is forecast to be in line with the first quarter's results, and we confirm our previous guidance for the full year 2024 revenue to be relatively flat to the full year 2023 revenue. Adjusted EBITDA was $12 million in the first quarter.

Speaker Change: The matter of Port subscriber customer base is highly diverse operating across a variety of vertical markets with no single customer over 3% of revenue.

Speaker Change: Approximately 30% of their new <unk> models, along with around 30% of revenue are generated outside of the United States.

Speaker Change: This customer and vertical market diversity creates a resilient financial growth profile just like Costar.

Speaker Change: Matter part enjoy significant operating leverage on incremental subscription revenue with gross margins of around 70%.

Speaker Change: This is scalable for high profit margins and cash generation.

Speaker Change: That report has a strong and conservative balance sheet with over $400 million of cash and zero debt.

Scott Wheeler: 20 million above the midpoint of our guidance range. The outperformance was primarily attributable to our strong revenue performance and lower-than-anticipated personnel costs, with some of the favorability coming from the timing of spend that we now expect to occur in the back half of the year. We remain on track with similar investment levels for homes.com as we planned for the year and that we discussed last quarter, as well as the expected adjusted EBITDA margins in our commercial product businesses unchanged from what we said at the beginning of the year.

Speaker Change: Im familiar.

Speaker Change: The total purchase price of approximately $2 billion.

Speaker Change: It comes with around $400 million of cash and investments.

Speaker Change: Currently on the matter port balance sheet, yielding an enterprise value of roughly $1 6 billion.

Speaker Change: The purchase consideration will be paid 50% from our available cash balances and 50% with Costar stock.

Speaker Change: On a net basis after closing, we expect to use around $550 to $600 million of our cash to complete the acquisition.

Matt report expects quarterly cash flow from operations to breakeven in the second half of 2024 and turned positive in 2025.

Scott Wheeler: The size of our sales force is about the same at the end of the first quarter as it was at the end of 2023, with 1200 sales members. As we grow our homes.com sales force, we expect to have a total of around 1500 sales team members by the end of this year. Our contract renewal rate was 90% for the first quarter of 2024, while the renewal rate for customers who've been subscribers for five years or longer remains strong at 94%.

The breakeven point is somewhat in line with what we might see as you expected time to close the transaction.

Speaker Change: With matter part cash flow turning positive in 2025 and modest synergy assumptions, we expect the standalone acquisition to be neutral to slightly accretive to non-GAAP earnings per share in the first year post closing.

Scott Wheeler: Subscription revenue on annual contracts was 81% for the first quarter of 2024, consistent with the prior quarter. With a strong start to the year, we're increasing our revenue guidance to a range of $2.760 billion to $2.770 billion. Net midpoint guidance is up around $5 million, with residential revenue up $15 million and commercial business revenue lower by $10 million from the fine tuning of our sales mix based on the first quarter sales.

Speaker Change: Now, it's far too early to estimate financial guidance outcomes for the acquisition and.

Speaker Change: And we expect the post integration benefits from this acquisition to be highly value accretive for many of the reasons that Andy described.

Speaker Change: We have a strong track record of successfully acquiring integrating and growing great companies, which I believe will continue with the combination of matter Port technology, and costars marketplace scale research capabilities and project product development expertise.

Speaker Change: We're in a very strong financial position as we head into the second quarter.

Scott Wheeler: Second quarter 2024 revenue is expected to range from $674 million to $679 million, representing revenue growth of 11% to 12% for the quarter. Our full year revenue outlook includes revenue growth of 12% in the first half of the year, accelerating to 14% in the second half of 2024. Isn't it great to accelerate revenue growth in a really bad property market? This business is pretty amazing. We're also increasing our Adjusted EBITDA guidance and raising the midpoint of our guidance range.

Speaker Change: Our growth and profit plans already exceeding our expectations for the year.

We're focused on and committed to accomplishing our stated long term revenue and profit goals and.

Speaker Change: And we've taken a big step closer to achieving those with the fast launch of homes Dot com and the potential acquisition of matter port.

Speaker Change: I certainly believe there'll be many more exciting growth years ahead for the company.

Speaker Change: Well that's about wraps it up for me I guess, you could say for the last time on the Costar earnings call Airwave.

Scott Wheeler: The new Adjusted EBITDA forecast range for the full year is now $185 to $205 million, up $15 million at the midpoint and indicating a margin of around 7% at the midpoint of the range. Second Quarter Adjusted EBITDA Margin includes the highest marketing seasonal spend for the year and is expected to be in the range of $5 to $10 million, or approximately 1%. Margin is expected to increase sequentially in the second half and exit the year in the range of 15% to 16%. Our outlook for interest, capital, and taxes remains unchanged from what we communicated back in February.

Speaker Change: I'd like to say, thank you Andy for taking me along and what I. So affectionately call. Mr. Toad's Wild ride at Costar for the past eight years, that's truly been I must say the best and without question. The most entertaining time in my professional career.

Speaker Change: Well I will without doubt Miss all of you as I climbed the many peaks on my list.

Speaker Change: Recover in the hot tub.

Speaker Change: And experiment with the enlist combinations of whiskies available to me in crafting the ultimate Manhattan.

Speaker Change: If you stop him some time, Andy or Cindy will be certainly happy to mix went up for you.

Speaker Change: Well with that I will turn the call back over to operator for a bit of Q&A.

Scott Wheeler: So I'll wrap up with a few financial comments on the pending acquisition of Matterport that was announced yesterday. Financially, Matterport operates a very attractive financial model, very similar to CoStar, but at a smaller scale. Matterport has a history of strong revenue growth with a five-year compound annual growth rate of 31 percent. Their subscription business represents 60% of the overall revenue and is growing over 20% per year, and it has a very high renewal rate, similar to CoStar.

Okay.

Speaker Change: Thank you.

Yes.

Speaker Change: Im sorry, Brian Radecki, Brian Radecki is.

Operator: Ryan just texted me, our former shift.

Operator: Yes.

Operator: So that was a little harsh.

Operator: Hey, Brian.

Speaker Change: I know I hate to say it please have a good martini on this point.

Scott Wheeler: We love this kind of business. The Matterport subscriber customer base is highly diverse, operating across a variety of vertical markets with no single customer over 3% of revenue. Additionally, approximately 30% of their new 3D models, along with around 30% of revenue, are generated outside of the United States. This customer and vertical market diversity creates a resilient financial growth profile, just like CoStar. Matterport enjoys significant operating leverage on incremental subscription revenue with gross margins of around 70 percent. This is scalable for high profit margins and cash generation. Matterport has a strong and conservative balance sheet with over $400 million in cash and zero debt. Do you think this sounds familiar?

Speaker Change: Okay. So.

Speaker Change: Before we jump into Q&A I apologize the operator, but.

Speaker Change: This is my 103rd earnings call Scott relative rookie with only 32 earnings calls with us.

Certainly very grateful everything Scott has accomplished was eight years with Costar group.

Speaker Change: So I thought we could all do is performance review here together.

He's the numbers Guy So let's review his performance with the stats boy.

Speaker Change: As Scott's first earnings call, we had a cash balance of $422 million, we now have.

Speaker Change: 585 billion.

In the first earnings call that Scott held where it is.

Speaker Change: Stock price was at $18 and it's now grown to 85 that's.

Scott Wheeler: The total purchase price of approximately $2 billion comes with around $400 million of cash and investments currently on the Matterport balance sheet, yielding an enterprise value of roughly $1.6 billion. The purchase consideration will be paid 50% from our available cash balances and 50% with CoStar stocks. On a net basis after closing, we expect to use around 550 to 600 million dollars of our cash to complete the acquisition. Matterport expects quarterly cash flow from operations to break even in the second half of 2024 and turn positive in 2025.

Speaker Change: That's a 21% CAGR on the stock price annually.

Through his tenure.

Speaker Change: Now, we're going to have to compare that to the last CFO that you just discussed Brian radecki.

He achieved a 23% compound annual growth rate.

Speaker Change: And his predecessors CFO Frank Cart Kenny.

Speaker Change: <unk> turned in a 25% compound growth rate, okay, however, but in fairness the rule of small numbers with cars.

Speaker Change: And with <unk>, because our cap rate was only $75 million. When they began you begin at $5 billion. So you're the hands down winner on.

Scott Wheeler: The break-even point is somewhat in line with what we might see as the expected time to close the transaction. With Matterport cash flow turning positive in 2025 and modest synergy assumptions, we expect the standalone acquisition to be neutral to slightly accretive to non-gap earnings per share in the first year post-closing. Now, it's far too early to estimate financial guidance outcomes for the acquisition.

Speaker Change: On market cap, so earmark our market cap. When you started with $6 billion is now 35 billion. So you are just the Victor so well well done Scott and then you go into the Costar CFO Hall of Fame and now you have successfully.

Speaker Change: Some of the Costar Mountain.

Scott Wheeler: We expect the post-integration benefits from this acquisition to be highly value-accretive for many of the reasons that Andy described. We have a strong track record of successfully acquiring, integrating, and growing great companies, which I believe will continue with the combination of Matterport technology and CoStar's marketplace scale, research capabilities, and product development expertise. We're in a very strong financial position as we head into the second quarter, with our growth and profit plans already exceeding our expectations for the year.

Speaker Change: Godspeed climbing all of the other mountains around the World Your heart desires to clients and I will take you up on the Manhattan, Manhattan, Guy, but I would look forward to a quality mix so with that.

Speaker Change: Sort of unprofessional and dribble that I will turn it over to Q&A with our operator.

Speaker Change: Thank you.

Speaker Change: As a reminder to ask a question you will need to press star one on your telephone analysts who may ask a question were notified in advance and may enter the queue now one moment for questions.

Scott Wheeler: We're focused on and committed to accomplishing our stated long-term revenue and profit goals, and we've taken a big step closer to achieving those with the fast launch of homes.com and the potential acquisition of Matterport. I certainly believe there'll be many more exciting growth years ahead for the company. Well, that's about wraps it up for me.

Speaker Change: Our first question comes from Peter Christiansen with Citi. You May proceed.

Thank you good evening really nice trends great execution here.

Congrats Scott.

Scott Wheeler: I guess you could say this is my last time on the CoStar Earnings Call Airwaves. I'd like to say thank you, Andy, for taking me along on what I shall affectionately call Mr. Toad's Wild Ride at CoStar for the past eight years. It's truly been, I must say, the best and, without question, the most entertaining time in my professional career. Well, I will without doubt miss all of you as I climb the many peaks on my list.

Rod: It's kind of fun rod Thank you Pete.

Rod: Yeah.

Peter Corwin Christiansen: Andy I was just wondering if you could just put a little bit more color on the homes Dot com production.

Peter Corwin Christiansen: This last quarter win loss rates inbound versus outbound decision cycle in any of that color I think would be helpful. Thank you.

Andrew C. Florance: Sure so.

Andrew C. Florance: And obviously.

Speaker Change: <unk> exceeded expectations.

Speaker Change: I would say that it is mostly outbound there was strong inbound interest.

Scott Wheeler: I recover in the Hot Tub, and experiment with the endless combinations of whiskeys available to me in crafting the ultimate Manhattan. If you stop in sometime, Andy or Cyndi, I will be happy to mix one up for you.

Speaker Change: There was.

Speaker Change: A lot of convention sales. So there are a number of industry events out there and <unk>.

Scott Wheeler: Well, with that, I'll turn the call back over to our operator for a bit of Q&A, and many more. Thank you! I'm sorry, Brian Radecki, you know Brian Radecki is on. Brian just texted me, our former chef. That was a little harsh, but Ryan and Wheeler taught me everything I know. I hate to say it, but he's having a martini on his plane

People were buying a lot at various.

Speaker Change: Brokerage firms specific events.

Speaker Change: The close cycle is extremely fast it typically is demo close simultaneously.

Speaker Change: There isn't a win loss really because no one.

Speaker Change: <unk> is providing a similar service the United States, our offering is unique.

Speaker Change: They are anecdotally.

Speaker Change: There we have heard some.

Speaker Change: Substitution effect with some of the lead diversion model legacy providers.

Andrew C. Florance: Before we jump over to Q&A, I apologize to the operator, but that was my 103rd earnings call. Scott's a relative rookie with only 32 earnings calls with us. Uh, certainly very grateful for everything Scott has accomplished in his eight years with CoStar Group. And, uh, so I thought we could all do his performance review here together. Um, he's a numbers guy, so let's review his performance with his stats.

Speaker Change: But.

Speaker Change: By and large it's.

Speaker Change: It is.

Speaker Change: Short sales cycle pretty straightforward, where some individual agents are typically paying with a credit card, but at the end of the demo and again. The fact that 90% are going for an annual agreement is pretty positive.

Speaker Change: It would appear that.

Andrew C. Florance: At Scott's first earnings call, we had a cash balance of $422 million. We now have... $5.85 billion. On the first earnings call that Scott held, our stock price was at $18, and it's now grown to $85. That's a 21% kegger on the stock price annually through his tenure. Now we're going to have to compare that to the last CFO you just dissed, Brian Radecki.

Speaker Change: Priority for US going forward is just scaling the homes dot com sales team because while it's great to have overall salesforce doing it.

Speaker Change: Do you eventually want to get everyone back to their core products and build enough big enough sales team to manage the 500 to 600000 prospects. We've got for this product.

Speaker Change: Thank you congrats again, thank you.

Andrew C. Florance: He achieved a 23% compound annual growth rate, and his predecessor CFO, Frank Karketti, turned in a 25% compound annual growth rate. However, in fairness, the rule of small numbers with Karketti and with Radecki, because our cap rate was only 75 million when they began, you began at 5 billion. So you're the hands-down winner on market cap. So our market cap when you started was $6 billion. It's now $35 billion. So you're just the victor.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

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

One moment for questions.

Heather: Our next question comes from George Tong with Goldman Sachs. You May proceed.

Keen Fai Tong: Alright, Thanks, good afternoon, and I also want to extend Scott My Congrats to you on your retirement.

Well deserved dessert.

Andrew C. Florance: So well done, Scott. And you go into the CoStar CFO Hall of Fame. And now you've successfully summited CoStar Mountain. Godspeed on climbing all the other mountains around the world your heart desires to climb. And I will take you up on the Manhattan. I'm not a big Manhattan guy, but I would look forward to a quality mix. So with that sort of unprofessional drivel, we'll turn it over to Q&A with our operator. Thank you. As a reminder, to ask a question, you will need to press star 1 1 on your telephone.

Keen Fai Tong: So wanted to follow up on the homes Dot com progress with what the sales you mentioned selling 8000 memberships in the first quarter average price of $4 75 to 500 per month.

I guess do you see the average price changing.

Keen Fai Tong: The growth trajectory matures.

Keen Fai Tong: Or is it pretty much steady state and primarily going to be driven by volumes and how are those volumes performed exiting the quarter. So how did the run rates look like.

Keen Fai Tong: Exiting <unk> and how do you overall think about the addressable market.

Operator: Analysts who may ask a question were notified in advance and may enter the queue now. One moment for questions. Our first question comes from Peter Christiansen with Citi. You may proceed. Thank you. Good evening.

Keen Fai Tong: Total number of memberships that are available out there that you can tackle.

Speaker Change: Sure so.

Speaker Change: So that's correct, where we are.

Peter Corwin Christiansen: Really nice trends, great execution here, and congratulations, Scott. Thank you, Pete. Andy, I was just wondering if you could just put a little bit more color on the Homes.com production this last quarter, wind loss rates, inbounds versus outbounds, decision cycle, and any of that color that you think would be helpful. Thank you.

Speaker Change: Around 8000 members and 475% to 500, I do not think that price really changes through time there is no.

Speaker Change: Cherry picking bigger accounts or smaller potential accounts, that's been pretty much even movement across the board.

Speaker Change: So I would anticipate that same price point, we're very happy with that price point, it's both.

Speaker Change: Both.

Speaker Change: Priced way below.

What other competitors are charging for their relative services.

Andrew C. Florance: So, um, it obviously exceeded expectations. Um, I would say that it is mostly outbound. There was strong inbound interest. There was... A lot of convention sales. There are a number of industry events out there, and people were buying a lot at various brokerage firms' specific events. The close cycle is extremely fast. It typically is demo closed simultaneously.

Speaker Change: And yet, it's a pretty a pretty solid price point per person.

Speaker Change: For Costar group overall.

Speaker Change: There was a surge of buying activity with a couple of big conferences early in mid February.

Speaker Change: And a little bit of some salespeople moving back to selling apartments dot com in Loopnet and some return, but we're simultaneously accelerating the growth of the homes team pretty aggressively so.

Speaker Change: The numbers remain solid as we leave the quarter.

Andrew C. Florance: There isn't a win-loss situation, really, because no one is providing a similar service in the United States. Our offering is unique. Anecdotally, we have heard some substitution effect with some of the lead diversion model legacy providers. By and large, it's, It is a short sales cycle, pretty straightforward. We're selling to individual agents. They're typically, you know, paying with a credit card but at the end of the demo.

Speaker Change: When you look at the overall potential there is I mean, I would love to get that number up to 100000 members sooner rather than later, but you absolutely have the potential to reach.

Speaker Change: Hundreds of thousands of members.

Speaker Change: And by comparison, if you say look at.

Speaker Change: Another real estate marketplace, we've got like Loopnet.

Speaker Change: See like say in Florida, California, you see.

Speaker Change: 60, 70, 80% of properties marketed on that platform. So under our model. Unlike some of the other with models, we can achieve super high penetration rates.

Andrew C. Florance: And again, the fact that 90% are going for an annual agreement is pretty positive. It would appear that, you know, a priority for us going forward is just scaling the homes.com sales team because while it's great to have the overall sales force doing it, you eventually want to get everyone back to their core products and build a big enough sales team to manage the 500 to 600,000 prospects we've got for this product. Thank you. Congratulations again.

Speaker Change: And so we want to balance price and volume.

Speaker Change: So that so that the broader market guests to participate and you create goodwill across a bigger section of residential real estate.

Speaker Change: But alright.

<unk> has been great.

Thanks very much.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

Speaker Change: Our next question comes from Alexia <unk> with Jpmorgan you May proceed.

Alexia: Hi, everyone.

Alexia: I had a question about EBITDA margin of your nonresidential business Scott could you.

Peter Corwin Christiansen: Thank you. Thank you. One moment for questions. Our next question comes from Heather Balsky with Bank of America. You may proceed.

Alexia: It's a bit more what was the level of EBITDA margin in the first quarter.

Alexia: And whether or not you're still on track to reach the full year target of roughly 42%.

Scott Wheeler: Yes, Hi, Alexia.

Scott Wheeler: We are definitely still on target with what we expected for the year.

Heather Balsky: One moment for questions. Our next question comes from George Strong with Goldman Sachs. He may proceed.

George Strong: Hi. Thanks. Good afternoon. And I also want to extend, Scott, my congratulations to you on your retirement. Well-deserved. Well-deserved.

Scott Wheeler: 42%.

Scott Wheeler: Margin.

Scott Wheeler: And in the first quarter.

Speaker Change: Hold on a minute, let me find that for you.

George Strong: Thank you. So I wanted to follow up on the progress with the sales. You mentioned selling 8,000 memberships in the first quarter at an average price of $475 to $500 per month. I guess, do you see the average price changing as the growth trajectory matures, or is it pretty much steady state and primarily going to be driven by volumes? And how have those volumes performed exiting the quarter? So what do the run rates look like exiting 1Q? And how do you think about the addressable market, like the total number of memberships that are available out there that you can tackle? Sure. So, um...

Speaker Change: First quarter adjusted EBITDA margins were about 39% to start the year.

Speaker Change: Understood.

Speaker Change: Considering that you're also looking for positive EBITDA.

Speaker Change: For homes Dot com business.

Speaker Change: Or rather for the overall business for the second quarter does that imply that.

Speaker Change: You may have already peak.

Speaker Change: <unk> spent in the first quarter and that that will be rough.

Speaker Change: Roughly similar but not higher into Q.

Speaker Change: When you look at the when you look at the residential forecast, we typically see.

Speaker Change: In the second quarter higher marketing expenses in this case there'll be slightly lower in the second quarter, because we had the fast launch.

Andrew C. Florance: So that's correct; we have around 8,000 members and 475 to 500. I do not think that price really changes over time. There's no cherry picking bigger accounts or smaller potential accounts. It's been pretty much an even movement across the board. So I'd anticipate that same price point. We're very happy with that price point, priced way below what other competitors are charging for their respective services, and yet it's a pretty solid price point per person for CoStar Group overall.

Speaker Change: In Q1.

Speaker Change: So.

Speaker Change: Quarter expenses will be roughly the same in the second quarter is the first and then will decline throughout the year and our residential outlook and our total expected spending in residential remains unchanged to what we communicated back in February I hope that helps.

Speaker Change: It does Scott. Thank you very much and I appreciate all the help over the years.

Speaker Change: Youre welcome.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

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

Speaker Change: Okay.

Ryan Tomasello: Hi, everyone. Thanks for taking the questions Andy just to elaborate on the pricing at homes Dot Com. When you say youre satisfied with where pricing is is that just based on the basic tier currently.

Andrew C. Florance: There was a surge of buying activity with a couple of big conferences early in or mid-February, and a little bit of some salespeople moving back to sellingapartments.com and LoopNet and some returns, but we're simultaneously accelerating the growth of the homes team pretty aggressively, so the numbers remain solid as we leave the quarter. When you look at the overall potential, there is, I mean, I would love to get that number up to 100,000 members sooner rather than later, but you absolutely have the potential to reach hundreds of thousands of members, and by comparison, if you say look at... another real estate marketplace we've got like LoopNet. You see, like say in Florida or California, you see, you know, 60, 70, 80% of properties marketed on that platform. So under our model, unlike some of the other models, we can achieve super high penetration rates.

Ryan Tomasello: And what are your plans for adding additional premium tiers.

Ryan Tomasello: As time passes that could potentially increase the average.

Speaker Change: Right over time thanks.

Speaker Change: So.

Speaker Change: I really am happy with the pricing model, we went to market with we blended.

Speaker Change: Yes.

Speaker Change: We obviously have to have an element that is price per listing because each listing.

Speaker Change: Up valuable real estate as it sorts higher in the order.

Speaker Change: You also have to acknowledge that someone might be selling properties in a market that the average home sale is 125, and so it might be selling properties with average home sale is $3 million. So.

Speaker Change: Our pricing scheme is somewhat bespoke to the particular agent.

Speaker Change: And the reaction to the pricing.

Speaker Change: We're putting out there is super positive and.

George Strong: And so we want to balance price and volume so that the broader market gets to participate, and you create goodwill across a bigger section of residential real estate. But the numbers have been great. Thanks very much.

Speaker Change: That is not a lot of pushback on it so.

Speaker Change: There was one person that the formula price them out at 500000, a month and we didn't get the reaction we were looking for with them, but everyone else is doing pretty good.

Speaker Change: We are super early stages here with just 8000 members, where I anticipate we will have hundreds of thousands of members. We're super early stage, it's super important in my view or a marketplace to go for <unk>.

Alexei Mihaylovich Gogolev: Thank you. One moment for questions. Our next question comes from Alexei Gogolev with J.P. Morgan. You may proceed. Hi everyone.

Alexei Mihaylovich Gogolev: I have a question about the EBITDA margin of your non-residential business. Scott, could you elaborate a bit more on what the level of the EBITDA margin was in the first quarter? And whether or not you're still on track to reach the full year target of rough. Yeah, hi Alexei, we were definitely still on target with what we expected for the year for the 42% margin. And in the first quarter.

Speaker Change: Mass adoption participation of agents is our highest priority.

Speaker Change: And it's.

We won't look at doing premium tiers.

Speaker Change: Sure.

Speaker Change: Period of time until our penetration rates are in the teens and 20%.

Speaker Change: We just want to focus on what is really important which is getting that first level of membership in there.

Speaker Change: I can tell you anecdotally from our sales force.

Speaker Change: There is demand for premium tiers.

Speaker Change: Our clients, particularly in residential real estate would appear to be highly competitive with one another.

Scott Wheeler: Hold on a minute, let me find that for you. First quarter adjusted EBITDA margins were about 39% to start the year, understood, and considering that you're also looking for positives at the for homes.com, or rather for the overall, may have already peaked, read these first quarter and. Roughly similar, but not higher. When you look at the, when you look at the residential forecast, we typically see higher marketing expenses in the second quarter.

Speaker Change: And.

Agents, who listings are now up on page one instead of page 30 are now.

Speaker Change: Hi.

Speaker Change: Complaining that they would like to buy number one on the page I don't want to be number five on that page. So there's clearly demand for premium.

Speaker Change: But in other countries are where people have you lose senior lead model like we do often it's the home seller, who is paying for the premium.

Speaker Change: Going up to the gold Diamond.

Speaker Change: Platinum levels, but.

Speaker Change: But I think there is certainly demand for gold level at the agent level.

Speaker Change: Great. Thanks for that color and congratulations Scott on the retirement enjoy those manhattans.

Scott Wheeler: In this case, it'll be slightly lower in the second quarter because we had the fast launch in Q1. So quarter expenses will be roughly the same in the second quarter as in the first, and then they'll decline throughout the year in our residential outlook. And our total expected spending in residential remains unchanged from what we communicated back in February.

Scott Wheeler: Thanks Ryan.

Scott Wheeler: By it at all with you went up.

Scott Wheeler: Yes.

Speaker Change: Thank you.

Speaker Change: Sure.

Speaker Change: One moment for questions.

Speaker Change: Our next question comes from Stephen Sheldon with William Blair You May proceed.

Stephen Hardy Sheldon: Hey, Thanks, and I'll Echo my Congrats Scott.

Stephen Hardy Sheldon: Given given the traction that you've seen with <unk> dot com.

Alexei Mihaylovich Gogolev: I hope that helps. It does, Scott. Thank you very much, and I appreciate all the help.

Stephen Hardy Sheldon: <unk>, what you're wanting to see before you shift incentives back in your existing sales force to focus exclusively on their own core businesses, the sweet Loopnet and apartments Dot com et cetera. Do you have do you have a rough timeline of guests in mind for when that might happen.

Ryan Tomasello: You're welcome. Thank you. One moment for questions. Our next question comes from Ryan Tomasello with KBW. You may proceed. Hi, everyone.

Ryan Tomasello: Thanks for taking the questions. Andy, just to elaborate on the pricing at homes.com. When you say you're satisfied with where pricing is, is that just based on the basic tier currently? And you know, what are your plans for adding additional, you know, premium tiers? As time passes, that could potentially increase the average rate over time. Thanks.

Speaker Change: We're really happy with the traction we've got we want to keep that going I would.

Speaker Change: I wanted to be able to.

Speaker Change: Sure.

Speaker Change: Report good solid numbers for 24 on the homes Dot Com launch I want to give time to Andy Stern's to build up.

Andrew C. Florance: So I really am happy with the pricing model we went to market with. We blended, You know, we obviously have to have an element that is price per listing because each listing takes up valuable real estate as it sorts higher in the order. You also have to acknowledge that someone might be selling properties in a market where the average home sale is 125, and someone might be selling properties where the average home sale is, you know, 3 million.

The 300 400 person sales force and then the other factor honestly is the.

Speaker Change: The apartments Dot com Loopnet Costar salespeople want to have an opportunity to sell homes dot com. So we're sort of responding to the salesforce wanted to participate in the exciting event.

Speaker Change: There are some number of people who are good at selling their their core product and maybe they havent been as successful selling the homes product those folks have already returned to focusing on their core product maybe 200. Some people I think we will be using the broader effort.

Andrew C. Florance: So, our pricing scheme is somewhat bespoke to the particular agent. And the reaction to the pricing that we're putting out there is super positive, and I mean they didn't have a lot of pushback on it. So there was one person who priced them out at 500,000 a month, and we didn't get the reaction we were looking for with them, but everyone else was doing pretty good. We are in the super early stages here, with just 8,000 members where I anticipate we'll have hundreds of thousands of members. At this stage, it's super important, in my view, for a marketplace to go for mass adoption participation of agents as our highest priority.

Speaker Change: Through the end of the year and then in 'twenty five.

Speaker Change: We will begin to focus more on a dedicated sales team. The good news is that.

Speaker Change: The centralized team enrichment is successfully selling at effectively the exact same pace of anyone out in the market next door to our real estate agents, so happy with that.

Speaker Change: Question of scaling the dedicated homes team.

Speaker Change: Very helpful. Thanks.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

Speaker Change: Our next question comes from Surinder <unk> with Jefferies. You May proceed.

Surinder: Thank you just switching topics here to apartments dot com.

Andrew C. Florance: And it's, we won't look at doing premium tiers for a period of time until our penetration rates are in the teens and 20%, um, we just want to focus on what was really important, which is getting that first level membership in there.

Surinder: Can you maybe talk about the outlook for unit deliveries this year it looks like that.

Surinder: That might peak.

Surinder: And then potentially what that means on a go forward basis as we looking to towards the end of the year and into 2020 fit for growth rates.

Ryan Tomasello: I can tell you anecdotally from our sales force that there's demand for premium tiers. Our clients, particularly in residential real estate, would appear to be highly competitive with one another. And agents who, now, have listings on page one instead of page 30, are now complaining that they would like to buy number one on the page. I don't want to be number five on the page.

Surinder: So yes, so the <unk>.

Surinder: Unit deliveries are coming down slightly they are still very high by historical standards.

And we're up nine 1% where that is and.

Surinder: But 191% that is very high for the apartment industry and we're up at the point at which you are a little uncomfortable.

Surinder: With.

Surinder: Refinancings and liquidity for some of the owners of the apartment buildings it.

Surinder: Actually be nice to see a little more stability in the market and have that vacancy rate come down next year, but I think we have two to three years at least of elevated vacancy which is.

Stephen Hardy Sheldon: So there's clearly a demand for premium cars. But in other countries or where people have, you're listing your lead model like we do, often it's the home seller who's paying for the premium, going up to the gold, diamond, platinum levels. But I think there's certainly demand for a gold level at the agent level. Great Thanks for that, Keller. And congratulations, Scott, on your retirement. Enjoy those, Manhattan. Thanks, Ryan. Like I said, stop by, and I'll whip you one up.

Surinder: Which is sort of the goldilocks environment for selling apartments dot com. So.

Surinder: Again, each of our products is going to go through.

Different.

Surinder: Environmental cycles.

Surinder: So we'll have to worry about that Pat perhaps in two or three years, maybe we won't have to worry about in two or three years.

Speaker Change: Got it.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

Speaker Change: Our next question comes from John Campbell with Stephens You May proceed.

Andrew C. Florance: Thank you. One moment for questions. Our next question comes from Stephen Sheldon with William Blair. You may proceed. Hey, thanks, and I'll echo my congrats, Scott. Given the traction that you've seen with Homes.com, curious what you're wanting to see before you shift incentives back to your existing sales force to focus exclusively on their own core businesses, so Suite, LoopNet, Partners.com, etc. Do you have a rough timeline, I guess, in mind for when that might happen?

Hi, guys and Scott I'll keep it going here congrats to you and best wishes on next journey. Thank you John just stay on for sure.

John Campbell: <unk> Dot com, Andy I think last quarter, you talked to only demoing the product 2% of all U S agents.

John Campbell: I guess, just with your hiring plans and the rate you've run thus far just how long you thought it will take to kind of reach your target market.

Andy: Yeah, I wish I had the precise number there for you.

Speaker Change: So when we spoke last time it was with <unk>, 2%.

Stephen Hardy Sheldon: you know, we're really happy with the traction we've got. We want to keep that going. I would, I want to be able to... report good solid numbers for 24 on the Homes.com launch. I want to give time to Andy Stearns to build up the 300, 400 person sales force. And then the other factor, honestly, is that TheApartments.com, LoopNet, CoStar, and salespeople want to have an opportunity to sell Homes.com. So, we're sort of responding to the sales force wanting to participate in an exciting event.

Speaker Change: I'm actually really pleased with the conversion rate so when we get a demo to close.

Speaker Change: Hi.

Speaker Change: A solid double digit number I think in the twenties thirties.

Speaker Change: From where we when we get them out to the close rate.

Speaker Change: So the bigger challenges, having enough people and getting enough demos.

Speaker Change: But that's great. We'll eventually get them OS with everyone eventually saves coupon, bringing different marketing messages out there to folks you keep trying to reconnect for people.

And various environments in context and that we'll get there. So we are still.

Stephen Hardy Sheldon: There are some number of people who are good at selling their core product, and maybe they haven't been as successful selling the Homes product. Those folks have already returned to focusing on their core product, maybe 200 people.

At the as we pass through the $40 million Mark we have.

Speaker Change: 70% <unk>, 7%.

Speaker Change: The prospects for 500000, some prospects up to this point, we've done what about 7%. So there is 540000 core prospects, we've defined and we've done about 7% now.

Andrew C. Florance: I think we will be using the broader effort through the end of the year, and then in 2025, we'll begin to focus more on a dedicated sales team. The good news is that the centralized team in Richmond is successfully selling at the exact same pace as anyone out in the market next door to a real estate agent. So, I'm happy with that. It's just a question of scaling the dedicated Homes team. Very helpful.

Speaker Change: We have sold a lot of product to folks who have no listings.

Speaker Change: So the 540 is probably the wrong denominator.

Speaker Change: The denominator could be a $1 billion plus.

Speaker Change: Given the fact that so many people with no listings have subscribed.

Speaker Change: Okay. That's helpful and maybe one quick follow up.

Speaker Change: Sure sure.

Speaker Change: Those who are subscribing without listings, what do you typically see as the key draw for them.

Surinder Singh Thind: Thanks. Thank you. One moment for questions. Our next question comes from Surinder Thind, with Jeffrey's permission, you may proceed.

Speaker Change: Well you have you always have a large number of folks who are trying to break into residential real estate, who have not to date been.

Surinder Singh Thind: Thank you. I'm just switching topics here to apartments.com. Can you maybe talk about the outlook for unit deliveries this year? It looks like that might peak, and then potentially what that means on a go forward basis as we look toward the end of the year and into 2025 for growth rates. So yes, so the unit deliveries are coming down slowly. They're still very high by historical standards.

Speaker Change: As successful as they would like over 97% of agents are really do both buyer agency on seller agency.

Speaker Change: Some instances where established agent at the moment doesn't have a listing but they've got listings.

Last year.

Speaker Change: But.

Speaker Change: If you.

Andrew C. Florance: And we're up, what, 9.1% or something like that. We're at 9.1%. That is very high for the apartment industry, and we're up at the point where you're a little uncomfortable with refinancing and liquidity for some of the owners of apartment buildings. It would actually be nice to see a little more stability in the market and have that vacancy rate come down next year. But I think we have two to three years at least of elevated vacancy, which is sort of the Goldilocks environment for sellingapartments.com.

Speaker Change: Have done some transactions at the last three years and you can get your name up on neighborhoods as being an expert if you can sort to the top of the agent directory for an area. If you can.

Speaker Change: Re target people come to the site and looking for properties that are relevant to your experience level. Even if you have no listing we.

Speaker Change: We do give you.

Speaker Change: Hundreds of thousands of exposures and both on the site and off the site with re targeting so there is value there I do think that.

Speaker Change: Realistically with the changes with the lawsuits and any future changes coming down the road with an adjusted department activity that.

Andrew C. Florance: You know, again, each of our products is going to go through different environmental cycles. So, you know, we'll have to worry about that perhaps in two, three years; maybe we won't have to worry about it in two or three. Okay.

Speaker Change: Residential real estate will be a little bit more of a support of people with listings will get more listings, but.

Speaker Change: Happy to help people without the listings are people with a lot of listings.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

Surinder Singh Thind: One moment for questions. Our next question comes from John Campbell with Stevens. You may proceed. Hey, guys, and Scott, I'll keep it going here. Congratulations on your achievements and best wishes on the next journey. Thank you, John. Just stay on, for sure.

Our next question comes from Heather <unk> with Bank of America.

Heather: You May proceed.

Heather: Hi, Thank you for letting me back in I guess I got carried away by the baby crying that'd be yeah.

John Campbell: Stay on Hunts.com. Andy, I think last quarter you talked to only 2% of all US agents about the product. I guess just with your hiring plans and the rate you've run this far, just how long do you feel it will take to kind of reach your target market? Yeah, I wish I had the precise number there for you.

Heather: Heather if you're if you're confused I think many people in the listening audience today are confused.

Heather: Yeah.

Heather: There was a.

Our last CFO, who has an outstanding CFO and is listening right now.

Heather: Got a little vary claimed that the emotional overload of leaving Costar.

Heather: And we haven't let them live it down.

Andrew C. Florance: So when we spoke last time, it was that we demoed 2%. I'm actually really pleased with the conversion rate. So when we get a demo to a close, that's a solid double-digit number. I think in the 20s to 30s from where we are when we get a demo to a close rate. So the bigger challenge is having enough people and getting enough demos. But that's great.

Heather: And another 10 years, we will stop talking about it.

Heather: Okay.

Heather: Kristine I appreciate you've got to play it again.

Heather: So.

Heather: And matter of poor I'm, just curious a little bit to hear how you're thinking about that business being part of costar going forward theres been some headlines around homes dot com, but.

Heather: Curious about the.

Heather: Broader business strategy.

Heather: And its existing sort of standalone business like how are you going to integrate it.

John Campbell: We'll eventually get demos with everyone eventually. So just keep on bringing different marketing messages out there to folks. You keep trying to reconnect with people in various environments and contexts, and we'll get there.

Heather: Do you plan to use it more and.

Heather: And do you think you can do something to kind of jumpstart existing tariff revenue growth strategy.

Andrew C. Florance: So we are still, you know, at. As we pass through the 40 million mark, we have, So we've demoed 7% of the prospects, the 500,000 or so prospects up to this point. We've demoed about 7%. So there are 540,000 core prospects we've defined, and we've demoed 7%. Now, we have sold a lot of product to folks who have no listings. So 540 is probably the wrong denominator.

Speaker Change: Yes so.

Speaker Change: In terms of let's start with the existing growth strategy.

Speaker Change: I am highly confident.

Through pulling levers on pricing on switch.

Speaker Change: Switching between upfront purchase equipment subscription models.

Speaker Change: Relying more heavily on.

Speaker Change: Capture networks.

Speaker Change: I feel and then also by the virtue of the fact that we aggressively adopt the digital twins more broadly.

John Campbell: The denominator could be a million plus, given the fact that so many people with no listings have subscribed. Okay, so maybe one quick follow-up related to that answer. Those who are subscribing without listings, what do you typically see as the key draw? Well, you always have a large number of folks who are trying to break into residential real estate who have not, to date, been as successful as they'd like. Over 97% of agents really do both buyer agency and seller agency. There are some instances where an established agent at the moment doesn't have a listing, but they've had listings last year.

Speaker Change: That all of those things together will allow us to significantly accelerate.

Speaker Change: The sales of revenue of matter port outside of it being used inside of anything in Costar.

Speaker Change: In other words outside of being used as part of homes Dot com apartments dot com loopnet, so on and so forth but.

Speaker Change: And I think matter import penetration was some slight different numbers on that I'm confident sub 5% in the United States some confidence sub 1% in Europe.

Speaker Change: And at that at those levels.

Speaker Change: I am a big believer in the value of a matter of port when youre trying to sell a $500000 or a $1 million property and then I think those adoption rates will ultimately.

Andrew C. Florance: But if you have done some transactions in the last three years, and you can get your name up on neighborhoods as being an expert if you can sort to the top of the agent directory for an area if you can retarget people who come to the site looking for properties that are relevant to your experience level, even if you have no listings. We do give you hundreds of thousands of exposures both on the site and off the site with retargeting.

Speaker Change: Go up.

Speaker Change: The 50% or more for digital twins with people moving real estate there was a time when.

Speaker Change: Only 5% of the real estate listings had a photo.

So the digital twins is going to be.

Speaker Change: And there there are a number of different players out there and our goal will be to try to capture.

Andrew C. Florance: So there is value there. I do think that realistically, with the changes with the lawsuits and any future changes coming down the road with any Justice Department activity, that residential real estate will be a little bit more of a sport where people with listings will get more listings, but I'm happy to help people without any listings or people with a lot of listings. Thanks for having me.

Speaker Change: Our leading share of the digital twin so there are different solutions have different quality levels and when.

Speaker Change: You look at how we integrate it into our product.

We're going to first of all we believe its just the overall goal of what we're doing is helping people lease and sell their real estate.

Speaker Change: Or to analyze real estate.

Speaker Change: Three dimensional <unk> III spatial twins.

Speaker Change: Our transformative really important tools and we're going to make them ubiquitous across our sites. So we've adopted we've been an aggressive adopter of date, we're going to grow dramatically and virtually everything we're doing so even think about something like.

John Campbell: Thank you. One moment for questions. Our next question comes from Heather Balsky with Bank of America. You may proceed. Hi. Thank you for letting me back in. I guess I got scared away by the baby crying.

Speaker Change: Costar real estate manager.

Speaker Change: A significant percentage of the fortune 500 use costar real estate manager too.

Heather Balsky: Yeah. Heather, if you're confused, I think many people in the listening audience today are confused. There was a, our last CFO, who was an outstanding CFO and is listening right now, got a little verklempt at the emotional overload of leaving CoStar. And we haven't let him live it down. In another 10 years, we'll stop talking about it. Christian, I appreciate you getting to play it again.

Speaker Change: Manage their lease is critical dates their facility strategies.

Speaker Change: Given their real estate people the ability to look at a three D representation and walk through one of their facilities is super valuable even if it's something is.

Speaker Change: Small is a.

Speaker Change: Of the equipment room on a on a cellular antenna being able to go into that matter port and seeing what the rack configuration is and see how much room. There is a room for more racks that kind of stuff the stuff is ubiquitous.

Andrew C. Florance: So on Matterport, I'm just curious a little bit to hear how you're thinking about that business being part of CoStar going forward. There have been some headlines around Homes.com, but curious about the broader business strategy and its existing sort of standalone business. Like how are you going to integrate it?

Speaker Change: And supervalu, well, so being aggressively adopting it we think will fuel growth and differentiate us from other folks.

But the other thing is I think.

Speaker Change: Enormous amount of data here. So if you think of the failure of Avm's automated valuation milestone will deliver real value. My belief is that one of the big failures of Avm's to date has been.

Heather Balsky: You know, how do you plan to use it more? And do you think you can do something to kind of jumpstart the existing revenue growth strategy? You know, so, in terms of pulling levers on pricing, on switching between upfront purchase of equipment, subscription models, relying more heavily on capture networks, and then also by the virtue of the fact that we aggressively adopt the digital twins more broadly, that all those things together will allow us to significantly accelerate the sales or revenue of Matterport outside of it being used inside of anything in CoStar.

Speaker Change: The fact that they're taking.

Speaker Change: Tabular data.

Speaker Change: Handful of tabular data fields around a point on a map.

Speaker Change: Is really fails to capture the real characteristic of the real estate asset when you have a matter port you're able to recognize instantly more information about the space here and you can determine quality you can determine build at <unk>.

Just things like sensing, the fact that theres, lutron switches or wolf stove or that.

Speaker Change: There's a the.

Speaker Change: The nature of the lay out looking at the views out the windows that you're looking at another building five feet away or do you have a view of the Hudson River, which one is it. So I think this will also the enormous data advantage here.

Speaker Change: You can use to inform.

Speaker Change: Automated valuation models and understand market statistics, better and Thats certainly true width.

Heather Balsky: In other words, outside of being used as part of Homes.com, Apartments.com, LoopNet, so on and so forth. And I think Matterport penetration, and we'll have some slightly different numbers on that, I'm confident sub 5% in the United States. I'm confident sub 1% in Europe.

Speaker Change: Certainly residential but also commercial real estate, so if I'm trying to understand where lease rates are and I can.

Speaker Change: Ascertain that this space was raw, which machine vision can do.

Speaker Change: Artificial intelligence.

Speaker Change: Germany was unfinished space versus Polish space, that's going to impact how you calculate the economics of what the lease deal was.

Andrew C. Florance: And at those levels, I am a big believer in the value of a Matterport when you're trying to sell a $500,000 or $1 million property. And then I think those adoption rates will ultimately go up to 50% or more for digital twins with people moving real estate. There was a time when only 5% of the real estate listings had a photo. So the digital twins are going to be, I think, and there are a number of different players out there. And our goal will be to try to capture a leading share of digital twins. So there are different solutions at different quality levels.

Speaker Change: And then.

Speaker Change: With right.

Speaker Change: Right now <unk> really beautiful at being able to move through a space in the SME natural.

Speaker Change: Semi natural format, but with the work that Apple the commitment that Apple has in meta has two building headsets I believe that you will in the next three years or so have.

Speaker Change: Smooth walk walk through capabilities through these digital twins, which will be super powerful.

The ability to.

Speaker Change: Also take the twin outside of the.

The structure and actually capture the exterior of the structure and possibly.

Andrew C. Florance: And when you look at how we integrate it into our product. And we're going to, first of all, believe it's just, you know, if the overall goal of what we're doing is helping people lease and sell their real estate or analyze real estate, these three-dimensional, these 3D, three-spatial twins are, you know, transformative, really important tools, and we're going to make them ubiquitous across our site. So if we've been an aggressive adopter to date, we're going to grow it dramatically in virtually everything we do.

Speaker Change: Moving the capture equipment to a drone as well so in my spare time I have been.

Putting expensive matter ports on top of expensive drowns and trying to capture externally, but it's hard to do that whether we can research pratchett surely be professionals to do that leading to extensive write offs of expensive drove no.

Speaker Change: That'd be crashes, but.

Speaker Change: It looks from the neighbors.

Speaker Change: But the.

Speaker Change: So I think the technology is going to be is going to go through a real exponential acceleration I think the data Super valuable I think it's it's.

Andrew C. Florance: CoStar Real Estate Manager, you know, a significant percentage of the Fortune 500 use CoStar Real Estate Manager to manage their leases, critical dates, and facility strategies. Giving their real estate people the ability to look at a 3D representation and walk through one of their facilities is super valuable, even if it's something as small as the equipment room on a cellular antenna, being able to go into that Matterport and seeing what the rack configuration is and see how much room there is for more racks, that kind of stuff.

Speaker Change: That's table stakes going forward for marketing space I think.

Most of the Atms and I think as the rest of the world figures out.

Speaker Change: It really silly.

Speaker Change: To me today to market, an office building or.

Warehouse building or a hotel event space or a home without a digital twin is.

Speaker Change: <unk>.

It's sort of inadequate.

Speaker Change: I sound passionate about that.

Speaker Change: Yes.

Speaker Change: I appreciate the answer thank you very much.

Speaker Change: Thank you I would now like to turn the conference back to Andy for any closing remarks.

Andrew C. Florance: This stuff is ubiquitous and super valuable. So aggressively adopting it, we think it will fuel growth and differentiate us from other folks. But the other thing is, I think there's an enormous amount of data here. So if you think of the failure of AVMs, automated valuation milestones, to deliver real value, my belief is that one of the big failures of AVMs to date has been the fact that they are taking, you know, tabular data, a handful of tabular data fields around a point on a map really fails to capture the real characteristics of the real estate asset.

Well I'd like to thank you all for joining US again for our first quarter 2024 earnings call I'm glad we were able to report good results initial results on the homes Dot com monetization.

Speaker Change: And.

Andy: Again, thank you Scott for all of the outstanding work, you've done and Brian I apologize for Scott poke the bear on the last CFO.

Speaker Change: Goodbye, everyone Goodbye everyone.

Speaker Change: Thank you. This concludes today's conference call. Thank you for your practice.

Speaker Change: Participating you may now disconnect.

Andrew C. Florance: When you have a Matterport, you're able to recognize infinitely more information about the space you're in, you can determine quality, you can determine build out, you can determine, you know, just things like sensing the fact that there's Lutron switches or a Wolf stove or that there's a, the nature of the layout, looking at the views out the windows, you're looking at another building five feet away, or do you have a view of the Hudson River, which one is it?

Okay.

Speaker Change: [music].

Okay.

Speaker Change: Yes.

Speaker Change: [music].

Andrew C. Florance: So, if I'm trying to understand where lease rates are and I can ascertain that this space was raw, which machine vision can do, and artificial intelligence can determine it was unfinished space versus polished space, that's going to impact how you calculate the economics of what the lease deal was. And, you know, right now, Matterport's really beautiful at being able to move through a space in a semi-natural, semi-natural format, but with the work that Apple and Meta have done with building headsets, I believe that you will, in the next three years or so, have smooth walkthrough capabilities through these digital twins, which will be super powerful.

Speaker Change: Yes.

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Speaker Change: Yes.

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Andrew C. Florance: The ability to also take the twin outside of the structure and actually capture the exterior of the structure and possibly move the capture equipment to a drone as well. So, in my spare time, I have been putting expensive Matterports on top of expensive drones and trying to capture it externally, but it's hard to do that with a weekend research project.

Andrew C. Florance: You really need professionals to do that, leading to expensive write-offs of expensive drones. No, no big crashes yet. No big crashes, but odd looks from the neighbors.

Andrew C. Florance: So I think the technology is going to go through a real exponential acceleration. I think data is super valuable. I think it's at the table stakes going forward for marketing space. I think it moves the AVMs, and I think as the rest of the world figures out that it's really silly. I mean, to me today, to market an office building or a warehouse building or a hotel event space or a home without a digital twin is thoughtless. It's sort of inadequate. Do I sound passionate about that? Yes, you do. You do?

Heather Balsky: I appreciate the answer. Thank you very much. Thank you. I would now like to turn the conference back to Andy for any closing remarks. Well, I'd like to thank you all for joining us again for our first quarter 2024 earnings call. I'm glad we were able to report good results, initial results on the Homes.com monetization. And again, thank you, Scott, for all the outstanding work you've done. And Brian, I apologize for Scott poking the bear on the last CFO. Goodbye, everyone. Goodbye, everyone.

Speaker Change: [music].

Operator: Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect. © The Ultimate Parody Site! ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? ?? Good day and thank you for standing by.

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Speaker Change: Please be advised that today's conference is being recorded I would now like turn the conference over to Cindy Aching head of Investor Relations, who will read the safe Harbor statement Cindy you may begin.

Thank you Josh good evening and thank you all for joining us to discuss the first quarter 2024 results of the Costar group before I turn the call over to Andy Florance, Costar, Costar, CEO and founder and Scott Wheeler, Our CFO I would like to review our Safe Harbor statement.

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

Speaker Change: 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.

Speaker Change: Looking statements are based on 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 reconciliation to the most directly comparable GAAP measure of any non-GAAP financial measures discussed on this call are shown in the detail.

Speaker Change: In our press release issued today, along with definitions for those terms the press release.

Speaker Change: <unk> is available on our web site 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 and with that I would like to turn the call over to our founder and CEO.

Andy Florance.

Andrew C. Florance: Good evening, good evening, everyone and thank you for joining us for Costar group's first quarter 2024 earnings call first quarter 'twenty 'twenty four revenue was 656 million% to 12% increase over first quarter of 'twenty three coming in above the high end of our guidance range and.

Andrew C. Florance: Above consensus estimates.

Andrew C. Florance: <unk> apartments, dot com and Costar surpassed the $1 billion revenue Mark.

In the first quarter, a tremendous milestone for the company congratulations to both teams.

Company wide net new bookings achieved an all time high in the first quarter of $86 million fueled by a very strong launch of our homes Dot com membership product.

Andrew C. Florance: In the first quarter, 60% of our net new bookings were from sales of our commercial products and 40% were from net new bookings from our new homes dotcom memberships and residential products.

Andrew C. Florance: Overall traffic to our global websites reached a record 170 million average monthly unique visitors in the first quarter According to Google analytics.

Andrew C. Florance: 93% above the first quarter of last year, and an impressive 34% above our previous all time high.

Andrew C. Florance: <unk> group has now reached 90% of the 194 million unique visitors. It was reported in the last earnings call. Our residential network reached a record 156 million monthly unique visitors in March According to Google analytics I believe we have clearly established homes dot com and our residential network is one of the two moist.

Operator: Welcome to the CoStar Group first quarter 2024 earnings call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star one one on your telephone.

Andrew C. Florance: Traffic residential marketplaces in the United States.

Andrew C. Florance: Founded in 2011 matter Port pioneered the development of the first <unk> capture solution to deliver dementia accurate photo realistic virtual tours or digital twins.

Cyndi Eakin: Why Thank you, Josh. Good evening, and thank you all for joining us to discuss the first quarter 2024 results of the 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 statement. Certain portions of this discussion today may contain forward-looking statements, including the company's outlook and expectations for the second quarter and the full year 2024.

Andrew C. Florance: Any type of property.

Cyndi Eakin: 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 such statements. 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. 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.

Andrew C. Florance: <unk> proprietary and patented technology enables anyone to digitize a property using a variety of camera technologies, including cameras found on most smartphones.

Andrew C. Florance: <unk> <unk> technology is utilized in nearly every sector of real estate spanning residential commercial hospitality retail and industrial spaces among others.

Andrew C. Florance: Over the years matter Port has curated what is considered the largest and most precise collection of spatial property data worldwide with over 12 million space is captured in a 177 countries and representing more than 38 billion square feet of digital commercial property under management.

Andrew C. Florance: <unk> is a thousands of new <unk> digital twins for properties around the world are being added to this impressive database each month.

Andrew C. Florance: The pandemic accelerated the moat remote real estate shopping trend and we believe it is the new normal.

Andrew C. Florance: Costar group and matter Port have nearly identical mission statements of digitizing the world's real estate.

Costar group was one of the first adapters adopters of matter of <unk> technology, and currently has almost 300000 matter port digital twins available in the Costar information product and online property marketplaces in March this year, there were over seven 4 million views of matter Boart <unk> tours on apartments.

Andrew C. Florance: And with that, I would like to turn the call over to our founder and CEO, Andy Florence. Good evening, everyone, and thank you for joining us for CoStar Group's first quarter 2024 earnings call. First quarter 2024 revenue was $656 million, a 12% increase over the first quarter of 2023, coming in above the high end of our guidance range and above consensus estimates. Both Apartments.com and CoStar surpassed the $1 billion revenue mark in the first quarter, a tremendous milestone for the company. Congratulations to both teams.

Andrew C. Florance: Dot com.

Andrew C. Florance: Visitors, who interact with the matter port on apartments Dot Com spend 16 six minutes on the site, which is 134% more than the seven one minutes time onsite if they do not interact with a matter port.

Andrew C. Florance: Properties with a matter port generated 74 leads which is 10 times. The seven leads generated for property without matter Port currently 50% to 60% of consumers looking for an apartment say theyre comfortable selecting their next apartment without visiting the property at all.

Andrew C. Florance: Company-wide net new bookings achieved an all-time high of $86 million in the first quarter, fueled by a very strong launch of our Homes.com membership product. In the first quarter, 60% of our net new bookings were from sales of our commercial products, and 40% were from net new bookings from our new Homes.com memberships and residential products. Overall, traffic to our global websites reached a record 170 million average monthly unique visitors in the first quarter, according to Google Analytics, which is 93% above the first quarter of last year and an impressive 34% above our previous all-time high. CoStar Group has now reached 90% of the 194 million unique visitors they'll report in their last earnings call.

Andrew C. Florance: In residential focus groups homebuyers are clearly telling us that they prefer listings that offer <unk> digital twins. So they can best understand the property.

Andrew C. Florance: We believe that our substantial empirical data and our market research clearly shows that consumers and advertisers prefer real estate portals with digital twins.

Andrew C. Florance: We intend to go all in on three D digital twins, adding more digital twins to apartments Dot com Loopnet homes Dot Com Costar land Dot com best buy sell real estate manager STR <unk> on the market and others.

Andrew C. Florance: Our residential network reached a record 156 million monthly unique visitors in March, according to Google Analytics. I believe we have clearly established homes.com, and our residential network is one of the two most trafficked residential marketplaces in the United States. Yesterday, we announced that we reached a definitive agreement to acquire Matterport, the global leader in immersive 3D digital twins and artificial intelligence for the real estate industry, for $5.50 per share. Founded in 2011, Matterport pioneered the development of the first 3D capture solution to deliver dimensionally accurate photorealistic virtual tours or digital twins for any type of property.

We intend to add matter ports as one of the benefits of homes Dot Com membership, we believe adding <unk> digital twins for homes Dot Com members will increase the leads we deliver increased customer satisfaction increased renewal rates increased sales and increased site traffic further.

Andrew C. Florance: We are thoroughly researched the many <unk> digital twin solutions out there and if we conclude that matter port is the best solution for our clients needs.

Given the fact that we intend to make a much greater commitment to capturing <unk> digital twins, we decided to capture the value of our increased volumes by acquiring matter port as we make matter ports more ubiquitous we believe others will buy more matter ports, making the company more valuable.

Andrew C. Florance: We believe that we can accelerate matter port sales to non Costar group advertisers by increasing matter ports investments in sales and marketing.

Andrew C. Florance: I believe we are standing on the verge of a potential exponential acceleration in that technology surrounding <unk> digital twins, which will create transformative value for real estate artificial intelligence machine learning generative AI computational photography nerve smurf and Gaussian splat, all have tremendous potential.

Andrew C. Florance: Dave.

We intend to actively support invest a matter ports special technology research and development efforts.

Active role office space, and using generative AI to rapidly generate <unk> realistic potential build outs of the office space for a future tenant to see that.

Andrew C. Florance: Adding virtual reality to the matter Port you could take a virtual tour of the property with your virtual agent walk into this space with you.

Andrew C. Florance: The possibilities are certainly exciting to imagine and represent a massive opportunity to propagate new technologies to our global information and marketplace businesses.

Andrew C. Florance: As we report our first quarter results I believe we are showing for the first time clear proof that we are very successfully delivering against those two important challenges.

Andrew C. Florance: With almost $40 million in homes, net new bookings and 156 million monthly unique visitors achieved in the quarter, we're growing revenue and traffic faster than any other product launch in the history of the company.

Andrew C. Florance: We believe that our substantial empirical data and our market research clearly shows that consumers and advertisers prefer real estate portals with digital twins. We intend to go all in on 3D digital twins, adding more digital twins to apartments.com, loopnet, homes.com, CoStarLand.com, BizBuySell, Real Estate Manager, SDR, Belbex, OnTheMarket, and others. We intend to add Matterports as one of the benefits of Homes.com membership. We believe adding 3D digital twins for Homes.com members will increase the leads we deliver, increase customer satisfaction, increase renewal rates, increase sales, and increase site traffic further. We have thoroughly researched the many 3D digital twin solutions out there and have concluded that Matterport is the best solution for our clients' needs.

Andrew C. Florance: Digital and social media and high profile sponsorships as well.

Andrew C. Florance: In less than two months, our brand campaign generated almost $4 5 billion consumer impressions.

Andrew C. Florance: Our marketing and media advertising and featuring Dan Levy highly Gartner as.

Andrew C. Florance: As well as.

Supporting roles from Jeff Goldblum, Lil Wayne is proving effective with consumers.

Andrew C. Florance: The supporting role from yours truly a difference is proving effective as consumers as evidenced by our unaided brand awareness, which increased from 4% in January.

Andrew C. Florance: 24% in March of this year with unaided awareness approaching 25% in just one quarter, we're halfway to our goal of 50% unaided consumer brand awareness for homes Dot com.

Speaker Change: And we will obviously work to go beyond the 50%, but 50% is a very important number.

Speaker Change: The consumer traffic response to our marketing efforts has been equally impressive in March the homes Dotcom site attracted 110 million monthly unique visitors. According to Google analytics in increase of 386% over the same period last year.

Andrew C. Florance: I believe we're standing on the verge of potential exponential acceleration in the technology surrounding 3D digital twins, which will create transformative value for real estate. AI, machine learning, generative AI, computational photography, Nerf Smurf, and Gaussian Splat all have tremendous potential for real estate. Matterport has incredible research and development talent. These are the people who are very passionate about the future of digital twins and literally invented the genre. And we believe we're the ones who will imagine and create the industry's future. Right, Dave?

Speaker Change: In March monthly unique visitors to our overall residential network reached $156 million that is pretty much U S apartments and.

Homes, which is basically an apples and apples comparison to our competitors.

Speaker Change: We believe homes dot com and our residential network continue to be the fastest growing residential marketplace in the U S in terms of consumer traffic.

Speaker Change: We are also seeing quality improvements and our traffic metrics with direct traffic to homes dotcom, increasing 115% since the first quarter of last year.

Speaker Change: Sales of homes Dot com memberships are off to a fantastic start.

Speaker Change: In the first quarter, our sales team sold almost 8000 homes dot com membership subscriptions, making homes dot com product launch easily the fastest growing new product in the company history.

Speaker Change: For context, we launched apartments dot com in early 2015, and it took seven years to achieve our first quarter with $40 million annualized bookings homes Dot com reached the $40 million annualized bookings in the first quarter, we launched and it wasn't even a full quarter. It was less than two months of selling so is it.

Speaker Change: A really fast start.

Speaker Change: We're seeing a strong continuation of sales results and metrics that I mentioned in our last earnings call in February 90% of agent members are selecting the 12 month contract option with the rest choosing the six months subscription through the end of the first quarter. The average monthly selling price of a membership was in the fourth.

Speaker Change: $75 to 500 per month range, we are signing up agent members of all sizes ranging from single agents with no listings up to large agent groups with hundreds of listings per year. We recently had a regional broker at Indianapolis sign up all 180 agents on their brokerage team.

Andrew C. Florance: With almost $40 million in homes, net new bookings, and 156 million monthly unique visitors achieved in the quarter, we're growing revenue and traffic faster than any other product launch in the history of the company. We launched Homes.com Brand Marketing in February, I think it was the 11th, during the Super Bowl, and the results are outstanding. We believe the Homes.com Marketing Program is the largest in the history of real estate, delivering almost 9,000 commercial placements in the first quarter across broadcast and cable TV, streaming audio and video, digital and social media, and high-profile sponsorships as well.

Speaker Change: They wanted to enhance their marketing strategy and are excited about the homes dotcom adverse timing opportunity to build their brands awareness.

Speaker Change: Agent feedback has been extremely positive and agent from Western Florida said homes Dot Com has truly transformed my business was genuine leads that are directly that directly connects potential buyers to my listings no more confusion or wasted time, just real quality leads that make a difference.

Speaker Change: Clearly the your listing your lead model is resonating another agent from Westlake village, California said, what impressed me most after I signed up was how homes dotcom boosted the number of us have compared with other listing agents in the area currently.

Currently on average homes Dot com members listings and profiles are viewed one 8 million times, a month or 200 times more than 9000 views a basic agent receives.

Speaker Change: Our companywide sales team of over 1000 sales representatives is cruising proving very effective in selling homes dot com.

Speaker Change: It's still early days, but every one of our eight commercial products sales teams from the largest apartments dot com to the smallest costar real estate manager are selling homes dotcom memberships in total 85% of our sales representatives have successfully sold at least one homes dot com membership.

Andrew C. Florance: And we'll obviously work to go beyond 50%, but 50% is a very important number. The consumer traffic response to our marketing efforts has been equally impressive. In March, the Homes.com site attracted 110 million monthly unique visitors, according to Google Analytics, an increase of 386% over the same period last year. In March, monthly unique visitors to our overall residential network reached 156 million.

Speaker Change: We are selling memberships all over the country in major cities.

Speaker Change: And Mark is smaller communities in rural areas through last week around 40% of our memberships were sold to agents outside the top metro areas looking at the roughly 70 major markets, where we have a field sales presence every market has contributed dozens of new memberships with.

Dallas, leading the way in terms of total memberships and net bookings relative.

Andrew C. Florance: That is pretty much U.S. apartments and homes, which is basically an apples to apples comparison to our competitor. We believe Homes.com and our residential network continue to be the fastest growing residential marketplace in the U.S. in terms of consumer traffic. We are also seeing quality improvements in our traffic metrics, with direct traffic to homes.com increasing 115% since the first quarter of last year. And sales of homes.com memberships are off to a fantastic start.

Speaker Change: Relative to city sized Las Vegas, and Columbus are the champion sales teams overall, each producing the highest net new bookings per person.

Speaker Change: What's really exciting is that our early success sales success measured against our 500000 plus agent prospect list is still only 1% penetration.

Speaker Change: This implies a total market opportunity of over $3 billion of revenue for our basic membership product.

Speaker Change: While the broader sales force of songs homes Dot Com. In addition to the original product responsibility, we do expect a substitution effect and slightly lower sales for these non <unk> products.

Andrew C. Florance: In the first quarter, our sales team sold almost 8,000 homes.com membership subscriptions, making the homes.com product launch easily the fastest growing new product launch in the company's history. For context, we launched apartments.com in early 2015, and it took seven years to achieve our first quarter with 40 million annualized bookings. Homes.com reached 40 million annualized bookings in the first quarter we launched, and it wasn't even a full quarter. It was less than two months of selling.

Speaker Change: As we build up a dedicated homes sales team the non home sales teams will return more of their time to their original products.

Speaker Change: Our new VP of home sales Andy started is focused on building out our homes dotcom dedicated sales force in Richmond, Virginia with a goal of having over 300 sellers in place by the end of the year. The first 80 or so members of this team are proving very effective turning in more homes dotcom net bookings per person in the company.

Speaker Change: <unk> wide average after only 30 to 60 days with the company.

Speaker Change: Overall, I'm very pleased with our results and momentum from the first 60 days since the launch of homes Dot com marketing and sales efforts.

Speaker Change: I wanted to comment on our perception of the impact of recent class action lawsuits in the real estate industry.

Experts, we're not involved but.

Andrew C. Florance: We are signing up agent members of all sizes, ranging from single agents with no listings up to large agent groups with hundreds of listings per year. We recently had a regional broker in Indianapolis sign up all 180 agents on their brokerage team. They wanted to enhance their marketing strategy and are excited about the Homes.com advertising opportunity to build their brand's awareness. Agent feedback has been extremely positive. An agent from Weston, Florida, said, homes.com has truly transformed my business with genuine leads that directly connect potential buyers to my listings. No more confusion or wasted time.

Speaker Change: It clearly is going to have some impacts in the industry.

Speaker Change: While homes Dot com relies on a list your listing your lead model that focuses on selling the home is the highest priority our competitors use a lead diversion model that focuses on generating buyer agency leads is their highest priority.

We are not aware of any other portal in the world that uses such a lead diversion model.

Speaker Change: Our U S competitors do or.

Our competitors present agents listings with the contact agent button that diverged leads away from that agent is listing it is to one of their competitors is listing it's not.

Speaker Change: We believe that the lead diversion model is very unpopular with home sellers agents buyers and brokers, which may be why it has not been very profitable.

Andrew C. Florance: Just real quality leads that make a difference. Clearly, the You're Listing Your Lead model is responding. Another agent from Westlake Village, California said, "What impressed me most after I signed up was how Homes.com boosted the number of views I got compared with other listing agents in the area." Currently, on average, Homes.com members' listings and profiles are viewed 1.8 million times a month, or 200 times more than the 9,000 views a basic agent receives.

Speaker Change: With recent seismic legal settlements in the real estate industry. We believe the portals that rely on our lead diversion miles could become stressed legacy portals rely on MLS data feeds that provide them with information on offers to.

Speaker Change: Compensation to buyer brokers said these portals can take a significant portion of the buyer broker commission from the diverted leads going forward under the terms of settlement. Those feeds can no longer include buyer broker compensation fields. In addition by our agents will need to get buyers to enter into a written agreement written by our agency agreement.

Andrew C. Florance: Our company-wide sales team of over 1000 sales representatives is proving very effective in selling homes.com. It's still early days, but every one of our eight commercial product sales teams, from the largest Apartments.com to the smallest CoStar real estate manager, is selling homes.com memberships. In total, 85% of our sales representatives have successfully sold at least one homes.com membership. We are selling memberships all over the country, in major cities and markets, smaller communities, and rural areas.

Speaker Change: Before they even show the buyers a house for sale.

Speaker Change: It may be difficult for the diversion model agents to get home buyers to sign a written commitment to the agent just to see one house currently only 30% of buyer agent's ever get a written agreement at any point in the transaction process.

Speaker Change: In contrast homes dotcom connects home buyers.

Speaker Change: With directly the listing agent so they can arrange to see the house with no paperwork or commitments.

Andrew C. Florance: Through last week, around 40% of our memberships were sold to agents outside the top metro areas. Looking at the roughly 70 major markets where we have a field sales presence, every market has contributed dozens of new memberships, with Dallas leading the way in terms of total memberships and net bookings. Relative to city size, Las Vegas and Columbus are the champion sales teams overall, each producing the highest net new bookings per person.

Speaker Change: We are increasingly confident in our ability to build out the number one residential marketplace in terms of traffic revenue and profitability in the years ahead.

Speaker Change: Our U K property portal on the market is off to a strong start in the first quarter coming into the quarter before we acquired on the market. It was a distant third place in the U K based on traffic, we have made a focused and successful effort to grow on the market traffic.

Andrew C. Florance: What is really exciting is that our early sales success measured against our 500,000 plus agent prospect list is still only 1% penetration. This implies a total market opportunity of over $3 billion of revenue for our basic membership product. While the broader sales force is selling Homes.com in addition to their original product responsibility, we do expect a substitution effect and slightly lower sales for these non-Homes products.

Speaker Change: In March according to similar web reporting we surpassed zuppa in site visits and are now the UK is number two residential property portal monthly unique visitors were $17 million in March representing a 107% increase over the same period a year ago. According to Google analytics.

Speaker Change: The increase in traffic has translated to nearly 50% more leads for agents in March of 2024 versus the prior year.

Speaker Change: The early results tell us we are delivering on our strategy of investing and partnering with agents to generate high intent leads at a fraction of the cost of competing UK portals in response to the strategy more and more agents are choosing to put their listings on on the market in March we exceeded 15000 advertisers on the portal.

Speaker Change: <unk> and have grown listings almost 40% year over year.

Speaker Change: Apartments Dot com reached a significant milestone in the first quarter with annual revenue run rate of $1 billion revenue for the first quarter of 2024 was 255 million, representing 21% growth compared to the first quarter of 2023 and above our guidance.

Speaker Change: Growth rate of 20%.

Speaker Change: This marks the fifth consecutive quarter with apartments dot com growing at or above 20%.

Speaker Change: I believe the continuing success story of apartments Dot Com is a tribute to the quality of the product the effectiveness of our brand marketing and our ability to build the largest and most effective sales force in the industry.

Speaker Change: Three weeks ago on April one we celebrated the 10 year anniversary of costars acquisition of apartments Dot Com and what an amazing 10 years, it's been.

Speaker Change: We transformed the way consumers find their next rental home growing our revenue from $75 million in 2014 to over $1 billion today.

Speaker Change: Our sales team is five times larger delivering 3225% more sales than when we started we went from fourth or fifth place in that industry in terms of traffic to the number one traffic position with the brand most recognized by consumers.

Andrew C. Florance: With recent seismic legal settlements in the real estate industry, we believe the portals that rely on the LEED diversion models could become stressed. Legacy portals rely on MLS data feeds that provide them with information on offers to compensate buyer brokers so that these portals can take a significant portion of the buyer-broker commission from the diverted leads. Going forward, under the terms of the settlement, those feeds can no longer include buyer-broker compensation fields. In addition, buyer agents will need to get buyers to enter into a written buyer agent agreement before they even show a house for sale.

Speaker Change: I would like to personally congratulate Fred page, Jerry and the entire apartment stock can't Com team for this outstanding success and I'm looking forward to the next 10 years, providing the best possible rental experience for consumers and our advertising.

Speaker Change: Customers.

Speaker Change: And Fred I'm looking for another tenfold increase plus in revenue I think it's 12 fold increase so good luck.

Speaker Change: Our 'twenty 'twenty four marketing campaign is off to a great start we kicked off with a fantastic Super Bowl AD during the most viewed Super Bowl game in history.

Andrew C. Florance: It may be difficult for the diversion model agents to get homebuyers to sign a written commitment to the agent just to see one house. Currently, only 30% of buyer agents ever get a written agreement at any point in the transaction process. In contrast, Homes.com connects homebuyers directly with the listing agent so they can arrange to see the house with no paperwork or commitments.

Speaker Change: Campaign generated over $2 3 billion media impressions in the first quarter 2024, which is three times the number of impressions delivered in the first quarter of last year, we launched five new television commercials, featuring Brad Bellflower inventor of the part to mentioned net known to many of you as Jeff Goldblum, we expect.

Speaker Change: This year's campaign to deliver our highest number of impressions ever over for over $12 billion, while reaching 90% of renters across the U S.

Andrew C. Florance: We are increasingly confident in our ability to build out the number one residential marketplace in terms of traffic, revenue, and profitability in the years ahead. Our UK property portal on the market is off to a strong start in the first quarter. Coming into the quarter before we acquired it on the market, it was a distant third place in the UK based on traffic.

Andrew C. Florance: We have made a focused and successful effort to grow on the market. In March, according to similar web reporting, we surpassed Zoopla in site visits and are now the UK's number two residential property portal. Monthly unique visitors were 17 million in March, representing a 107% increase over the same period a year ago, according to Google Analytics.

Speaker Change: According to Comscore unique visitors in the first quarter of 2024 were relatively flat over the same period last year.

Speaker Change: Which is quite the opposite of our competitors with zillow, decreasing 13% and rent period down 21%.

Speaker Change: With both apartments and homes products to sell the sales team conducted a 189000 quality meetings in the first quarter.

Speaker Change: An increase of 38% over the first quarter of last year. These.

Speaker Change: These efforts are clearly producing results as properties advertising on our platform reached an all time high of 73000 at the end of the quarter.

<unk> billion dollars.

Speaker Change: <unk> units expected to be delivered in 2024 coming off the peak of 583000 units that were delivered in 2023.

Costar revenue was 250 million for the quarter, an increase of 11% over the same quarter a year ago, our flagship information product reached a significant milestone in the first quarter.

Just like apartments Dot com did but apartment Scott Cott Com got there a month earlier.

Speaker Change: Costar group reached an annual revenue run rate of a $1 billion. So just to be keeping track thats two of our products Cross the $1 billion revenue run rate in the quarter.

Speaker Change: Another way of saying, both Costar and apartments crossed $1 billion revenue run rate in the quarter.

Speaker Change: Regardless of economic cycles, we continue to see strong revenue growth in Costar. The 20 year compound annual growth rate for Costar is an impressive 12%, which we expect to continue for years to come our lender product delivered revenue growth of 57% in the first quarter year over year, the number of banks and <unk>.

Andrew C. Florance: And Fred, I'm looking for another tenfold increase plus in revenue. I think it's a 12-fold increase, so good luck. Our 2024 marketing campaign is off to a great start. We kicked off with a fantastic Super Bowl ad during the most-viewed Super Bowl game in history. The campaign generated over $2.3 billion in media impressions in the first quarter of 2024, which is three times the number of impressions delivered in the first quarter of last year. We launched five new television commercials featuring Brad Bellflower, the inventor of the apartment net, known to many of you as Jeff Goldblum.

Speaker Change: Lending institutions on our lender platform is now 285, an increase of 71% year over year.

Speaker Change: We're still in the early stages of what we believe to be a 300 million plus revenue opportunity for a lender product.

Andrew C. Florance: We expect this year's campaign to deliver our highest number of impressions ever, over $12 billion, while reaching 90% of renters across the U.S. Our brand marketing strategy continues to pay dividends, and our first quarter unaided brand awareness was 51%, which has outperformed Zillow's unaided brand awareness for four quarters in a row. Apartments.com continues to be the most highly trafficked rental website in the U.S., attracting over 43 million monthly unique visitors on average in the first quarter, according to Google Analytics.

Speaker Change: Our Costar sales force team, our Costar sales team for us.

Speaker Change: Delivered the strongest sales of homes dot com in the quarter and our highest level of total net new bookings output since 2002.

Costar renewal rates remain above 90% and our NPS scores continue to grow we now have 221000 subscribers in the Costar platform and they logged in $5 2 million times in the first quarter with $24 million property searches conducted and a 17%.

Speaker Change: Increase compared to the prior year, So Costar group is robust healthy and growing.

Speaker Change: <unk> continues to be the leading commercial marketplace in the U S with over 13 million monthly average unique visitors. According to Google analytics are direct in organic traffic represents over 70% of average monthly unique visitors, which is a testament to our brand as we continue to generate quality leads for.

Speaker Change: <unk>.

We continue to enhance our sales capabilities and are seeing positive sales trends coming out of first quarter net new bookings increased 147% sequentially compared to the fourth quarter of 2023, the net sales per sales representatives, including home Satcom sales was the highest of any period since we launched the dedicated sales for Soma.

Andrew C. Florance: It's important to keep in mind that despite such strong growth in advertisers and revenue, we remain below 12% penetration in the apartments.com market opportunity, which we estimate to be worth $9 billion. Overall, economic conditions remain favorable for rental property advertising. Vacancy levels continue to set record highs for three, four, and five-star properties, increasing 10 basis points above the fourth quarter of 2023 to reach 9.1%.

Speaker Change: 18 months ago, the quality level of interactions with customers is also improving with a loopnet sales team net promoter score increasing 70% from the same period a year ago.

Speaker Change: We welcome to men drew to the President of Loopnet roll. This past week, then brings over two decades of digital marketplace and leadership experience. Most recently been served as president of <unk>, the leading marketplace for travel experiences prior to Viator Bev held roles of increasing levels of responsibility at Tripadvisor.

Speaker Change: The parent company of <unk>.

Speaker Change: Even though commercial real estate trends commercial.

Speaker Change: In the first quarter of 'twenty for the.

Speaker Change: The average number of bidders per auction was three two this quarter, which was the highest number in a year at above the fourth quarter average of two three per auction bidders per auction are.

Our approval rates are allowing proposed assets trade in the platform increased as well in the first quarter up 50% from the prior quarter.

Speaker Change: A good sign of improvement.

Speaker Change: Looking at the real estate economy office sector Vacancies now stood at 13, 8% and I have risen 19 consecutive quarters office attendance has shown a positive trend up 2% to 3% over the past year, but thats that is currently counterbalanced by declining overall office using job.

Speaker Change: Growth.

Speaker Change: But the truth silver lining as construction levels with the current supply of pipeline at the lowest level. It's been in 10 years and construction starts this quarter the lowest ever this will likely translate into a shortage of premium office space and associated price premiums in the coming years.

Speaker Change: Be good time to buy an office building.

Speaker Change: Retail vacancies remained largely unchanged in the first quarter near the all time low of 4%.

Andrew C. Florance: CoStar renewal rates remain above 90%, and our NPS scores continue to grow. We now have 221,000 subscribers on the CoStar platform, and they logged in 5.2 million times in the first quarter, with 24 million property searches conducted and a 17% increase compared to the prior year. So CoStar Group is robust, healthy, and growing. LubeNet revenue was $69 million in the first quarter of 2024, up 9% over the first quarter of last year. The international revenue in the first quarter was up 29% compared to the first quarter of last year.

Speaker Change: The recent decline in mortgage rates created positive momentum in sales, increasing affordability and increasing existing home sales of 500000 homes a month.

Speaker Change: If rates continue to drop we could see a significant increase of activity in the residential sector.

Andrew C. Florance: Ludeneck continues to be the leading commercial marketplace in the U.S., with over 13 million monthly average unique visitors, according to Google Analytics. Our direct and organic traffic represents over 70% of average monthly visitors, which is a testament to our brand as we continue to generate quality leads for customers. We continue to enhance our sales capabilities and are seeing positive sales trends coming out of the first quarter. Net new bookings increased 147% sequentially compared to the fourth quarter of 2023.

Speaker Change: Our largest revenue business in the portfolio.

Speaker Change: At this point I'm going to turn the call over to our Chief Financial Officer, who seems to be sort of fading away.

Andrew C. Florance: The net sales per sales representative, including Homes.com sales, was the highest of any period since we launched the dedicated sales force almost 18 months ago. The quality level of interactions with customers is also improving, with the LoopNet sales team net promoter score increasing 70% from the same period a year ago. We welcomed Ben Drew to the president of LoopNet role this past week. Ben brings over two decades of digital marketplace and leadership experience. Most recently, Ben served as president of Viator, the leading marketplace for travel experiences. Prior to Viator, Ben held roles with increasing levels of responsibility at TripAdvisor, the parent company of Viator.

Speaker Change: Go ahead, Scott Thank you Andy.

Try to remain present for the next 10 or 20 minutes.

Scott Wheeler: Well that was a great start to the year wish we could have a quarter like that every year.

Speaker Change: Pretty amazing highlight reel that you've shared for the company with the.

Scott Wheeler: <unk> groundbreaking acquisition and $1 billion businesses.

The best product launch ever with homes record sales the Super Bowl marketing launch.

Scott Wheeler: We even managed to wiggle in the word Gaussian splat in the year.

Scott Wheeler: Your script, which.

Speaker Change: It's a real word people that wasn't a joke you can look it up.

Speaker Change: So how are we going to top that in the second quarter I don't know, but we better get going because we got a lot to do.

Speaker Change: So our streak of double digit revenue growth continued in the first quarter at 12% overall for the company.

Speaker Change: And you know what I think the best news this year that's.

Andrew C. Florance: Even though commercial real estate sales transaction volumes dropped 17% in the first quarter to the lowest level since the beginning of the pandemic, 10x outperformed the market with an 8% increase in assets brought to the platform in the first quarter. The 10x trade rate increased from 48% in the fourth quarter of 23 to 56% in the first quarter of 24. The average number of bidders per auction was 3.2 this quarter, which was the highest number in a year and above the fourth quarter average of 2.3 bidders per auction. Our approval rates for allowing proposed assets to trade on the platform increased as well in the first quarter, up 50% from the prior quarter. A good sign of improvement.

Speaker Change: Our residential business is now, making a solid positive contribution to growth.

Speaker Change: After two years, we have endured this sort of painful revenue decline from the legacy residential products like this quarterly drip drip.

Speaker Change: Drew.

Speaker Change: Revenue erosion like water torture, well were finally on the upswing with the launch of homes Dot com monetization.

Speaker Change: First quarter residential revenue was above our $15 million guidance estimate primarily due to the fast start for the sales of homes Dot com.

So we're going to raise our revenue forecast for residential revenues by $15 million at the midpoint to reflect faster growth of homes Dot com.

Andrew C. Florance: Looking at the real estate economy, office sector vacancies now sit at 13.8% and have risen 19 consecutive quarters. Office attendance has shown a positive trend of 2-3% over the past year, but that is currently counterbalanced by declining overall office-using job growth. But the true silver lining is construction levels, with the current supply pipeline at the lowest level it's been in 10 years, and construction starts this quarter at the lowest ever. This will likely translate into a shortage of premium office space and associated price premiums in the coming years. It would be a good time to buy an office building. The industrial sector saw a 90 percent drop in demand in the first quarter compared to the average of the past three years.

Speaker Change: Our new estimates have revenue improving almost $10 million sequentially each quarter with revenue growing to almost $50 million by the fourth quarter of 2024.

Speaker Change: Year over year revenue growth is expected to be 180% in total and around 105% organic in 2024.

Speaker Change: We now expect the exit run rate for homes dot com to be in the $130 million to $140 million range.

Which is up from the $100 million exit run rate I provided back in February.

Speaker Change: Revenue in our commercial businesses for the first quarter came in at $638 million, which was up 12% year over year and above expectations.

Speaker Change: We saw sales we saw sales substitution effect as Andy mentioned in the first quarter as we launched homes Dot com, which I expect we will shift our revenue mix a bit more towards residential than what we had assumed in our full year revenue outlook, we shared in February.

Andrew C. Florance: Deliveries in the quarter pushed vacancies up 50 basis points to 6.2 percent, the highest level since 2015. However, retail vacancies remained largely unchanged in the first quarter near an all-time low of 4%. In the residential sector, mortgage rates are still high enough to keep most Americans from listing their homes for sale, which is propping up home prices and impacting affordability. However, the recent decline in mortgage rates has created positive momentum in sales, increasing affordability, and increasing existing home sales to 500,000 homes a month.

Speaker Change: Now my original revenue forecast model, which quite frankly wasn't much more than a educated guess at the time, given we had not launched homes dot com is.

Assume that the full year sales split would be 70% commercial and around 30% residential.

Speaker Change: While the actual sales split in the first quarter was around 60% commercial and 40% residential.

Speaker Change: Which translates to around $10 million revenue shift for the full year commercial to residential.

Andrew C. Florance: If rates continue to drop, we could see a significant increase in activity in the residential sector. So we've had a lot of good news to share with you this quarter, but I think the most important news is that there are early indications that the homes.com investments are working. We're proving out our ability to generate traffic on homes.com clearly, we're building the brand, and we're monetizing the site. We believe that before too long, homes.com will be our largest revenue business in the portfolio.

Speaker Change: Well, it's not really a whole lot in the Grand scheme of things, it's only about 4% of revenue, but I thought it was at least worth noting.

Speaker Change: And Youll hear some of those effects as I talk through the rest of the product groups.

Speaker Change: Apartments Dot Com grew revenue, 21% during the first quarter ahead of our guidance of 20% revenue growth.

Speaker Change: Crossing $1 billion in annualized revenue and celebrating 10 years from the acquisition, it's remarkable to see five straight quarters, thus far on a 20% plus growth.

Andrew C. Florance: At this point, I'm going to turn the call over to our Chief Financial Officer, who seems to be sort of fading away. Go ahead, Scott. Thank you, Andy. I'll try to remain present for the next 10 or 20 minutes. Well, that was a great start to the year. I wish we could have a quarter like that every year. That's a pretty amazing highlight reel that you shared for the company with the 3D groundbreaking acquisition and billion dollar businesses, the best product launch ever with Holmes, record sales, and the Super Bowl marketing launch. You even managed to wiggle the word Gaussian splat into your script, which is a real word, people. That wasn't a joke.

And the stage of this business has become like.

Speaker Change: Like whoever puts a 20% growth rate 10 years out and your acquisition model.

Speaker Change: Well I guess, Fred did because he's done a great job and the team delivered it.

What's encouraging is that apartments dot com revenue reflects only 12% penetration of the multifamily revenue opportunity and Thats just in the United States.

Scott Wheeler: You can look it up. So how are we going to top that in the second quarter? I don't know, but we better get going because we've got a lot to do. So our streak of double-digit revenue growth continued in the first quarter at 12% overall for the company. And you know what I think the best news is here? Our residential business is now making a solid, positive contribution to growth.

Speaker Change: In the first quarter, our Costar sales team sold more homes dot com memberships than any of our other sales teams.

Speaker Change: Recognizing the slight shift in sales mix year, we're adjusting our revenue forecast and expected costar revenue growth of around 10% for the second quarter and for the full year of 2024.

Speaker Change: Loopnet revenue grew 9% in the first quarter at the high end of our guidance range, demonstrating the ongoing productivity improvements within our dedicated sales team.

Scott Wheeler: After two years, we've endured this sort of painful revenue decline from the legacy residential products, like this quarterly drip, drip, drip of revenue erosion like water torture. Well, we're finally on the upswing with the launch of homes.com monetization. Our residential revenue came in at $19 million in the first quarter, which was up 90% sequentially from the fourth quarter of 23, and up 42% year over year thanks to our Homes.com launch and a full quarter of on the market results. First quarter residential revenue was above our $15 million guidance estimate, primarily due to the fast start for the sales of homes.com.

Speaker Change: Welcome to the team been looking forward to seeing what you can do in the quarters ahead.

Speaker Change: Revenue from information services was $33 million in the first quarter consistent with expectations.

Speaker Change: We expect revenue for the full year to be in the range of $130 million to $135 million in line with the revenue growth guidance range. We provided in February.

Speaker Change: Other marketplaces revenue was $31 million for the quarter slightly ahead of guidance.

Scott Wheeler: So we're gonna raise our revenue forecast for residential revenues by $15 million at the midpoint to reflect faster growth of homes.com. Our new estimates have revenue improving by almost $10 million sequentially each quarter, with revenue growing to almost $50 million by the fourth quarter of 2024. Year-over-year revenue growth is expected to be 180% in total and around 105% organic in 2024. We now expect the exit run rate for Homes.com to be in the $130 to $140 million range, which is up from the $100 million exit run rate I provided back in February. Revenue in our commercial businesses for the first quarter came in at $638 million, which was up 12% year over year and above expectations.

Speaker Change: <unk> trade rates and deal closings improved in the first quarter, providing the extra revenue versus our forecast.

Revenue for the second quarter is forecast to be in line with the first quarter's results and we confirm our previous guidance for the full year of 2020 for revenue to be relatively flat to the full year 2023 revenue.

Speaker Change: Adjusted EBITDA was $12 million in the first quarter.

Speaker Change: $27 million above the midpoint of our guidance range.

The outperformance was primarily attributable to our strong revenue performance and lower than anticipated personnel costs with some of the favorability coming from spend timing of spend that we now expect to occur in the back half of the year.

Speaker Change: We remain on track with similar investment levels of homes Dot com as we plan for the year and that we discussed last quarter.

As well as the expected adjusted EBITDA margins in our commercial product businesses unchanged from what we said at the beginning of the year.

Speaker Change: Our contract renewal rate was 90% for the first quarter of 2024, while the renewal rate for customers who've been subscribers for five years or longer remained strong at 94%.

Scott Wheeler: Well, the actual sales split in the first quarter was around 60 percent commercial and 40 percent residential, which translates to around a $10 million revenue shift for the full year from commercial to residential. But it's not really a whole lot in the grand scheme of things.

Speaker Change: Subscription revenue on annual contracts was 81% for the first quarter of 2024 consistent with the prior quarter.

Speaker Change: With a strong start to the year, we're increasing our revenue guidance to a range of $2 76 zero billion to $2 77 zero billion net.

Scott Wheeler: Crossing $1 billion in annualized revenue and celebrating 10 years from the acquisition, it's remarkable to see five straight quarters this far of 20% plus growth, the size and the stage that this business has become. Like whoever puts a 20% growth rate 10 years out in your acquisition. Well, I guess Fred did because he did a great job and the team delivered it.

Speaker Change: Second quarter 2024 revenue is expected to range from 674 million to $679 million, representing revenue growth rate of 11% to 12% for the quarter.

Speaker Change: Our full year revenue outlook includes revenue growth of 12% in the first half of the year.

Speaker Change: Accelerating to 14% in the second half of 2024.

Speaker Change: Isn't it great to accelerate revenue growth and a really bad property market.

Speaker Change: This business is pretty amazing.

Speaker Change: We're also increasing our adjusted EBITDA guidance and raising the midpoint of our guidance range. The new adjusted EBITDA forecast range for the full year is now 185% to $205 million up $15 million at the midpoint and indicating a margin of around 7% at the midpoint of the range.

Speaker Change: Margins are expected to increase sequentially in the second half and exit the year in the range of 15% to 16%.

Speaker Change: Our outlook for interest capital and taxes remains unchanged for what we communicated back in February.

Scott Wheeler: LoopNet revenue grew 9% in the first quarter at the high end of our guidance range, demonstrating the ongoing productivity improvements within our dedicated LoopNet sales. Welcome to the team, Ben; I look forward to seeing what you can do in the quarters ahead. We expect 5% to 6% revenue growth for LoopNet in the second quarter of 2024, with full-year revenue growth in the mid-single digits, broadly in line and unchanged from our previous LoopNet revenue outlook. Revenue from information services was $33 million in the first quarter, consistent with expectations.

Speaker Change: So I'll wrap up with a few financial comments on the pending acquisition of matter part that was announced yesterday.

Speaker Change: Financially matter Port operates a very attractive financial model very similar to costar, but at a smaller scale.

Speaker Change: <unk> has a history of strong revenue growth with a five year compound annual growth rate of 31%.

Speaker Change: Our subscription business represents 60% of the overall revenue and is growing over 20% per year has a very high renewal rates similar to costar.

Speaker Change: We love this kind of business.

Speaker Change: The matter of Port subscriber customer base is highly diverse operating across a variety of vertical markets with no single customer over 3% of revenue.

Speaker Change: Approximately 30% of their new <unk> models, along with around 30% of revenue are generated outside of the United States.

Speaker Change: This customer and vertical market diversity creates a resilient financial growth profile just like Costar.

Matter part enjoy significant operating leverage on incremental subscription revenue with gross margins of around 70%.

Speaker Change: This is scalable for high profit margins and cash generation.

Speaker Change: <unk> has a strong and conservative balance sheet with over $400 million of cash and zero debt.

Scott Wheeler: 20 million above the midpoint of our guidance range. The outperformance was primarily attributable to our strong revenue performance and lower than anticipated personnel costs, with some of the favorability coming from the timing of spend that we now expect to occur in the back half of the year. We remain on track with similar investment levels for homes.com as we planned for the year and that we discussed last quarter, as well as the expected adjusted EBITDA margins in our commercial product businesses unchanged from what we said at the beginning of the year.

Speaker Change: I'm familiar.

Speaker Change: The total purchase price of approximately $2 billion.

Speaker Change: It comes with around $400 million of cash and investments.

Speaker Change: Currently on the matter port balance sheet, yielding an enterprise value of roughly $1 6 billion.

Speaker Change: The purchase consideration will be paid 50% from our available cash balances and 50% with Costar stock.

On a net basis after closing, we expect to use around $550 to $600 million of our cash to complete the acquisition.

Speaker Change: Matter Port expects quarterly cash flow from operations to breakeven in the second half of 2024 and turned positive in 2025.

Speaker Change: The breakeven point is somewhat in line with what we might see as you expected time to close the transaction.

Scott Wheeler: Subscription revenue on annual contracts was 81% for the first quarter of 2024, consistent with the prior quarter. With a strong start to the year, we're increasing our revenue guidance to a range of $2.760 billion to $2.770 billion. Net midpoint guidance is up around $5 million with residential revenue up $15 million and commercial revenue, commercial business revenue, lower by $10 million from the fine-tuning of our sales mix based on the first quarter sales. Second quarter 2024 revenue is expected to range from $674 million to $679 million, representing a revenue growth rate of 11% to 12% for the quarter.

Speaker Change: Now, it's far too early to estimate financial guidance outcomes for the acquisition.

Speaker Change: And we expect the post integration benefits from this acquisition to be highly value accretive for many of the reasons that Andy described.

Speaker Change: We're in a very strong financial position as we head into the second quarter.

Speaker Change: Our growth and profit plans already exceeding our expectations for the year.

We're focused on and committed to accomplishing our stated long term revenue and profit goals.

Speaker Change: And we've taken a big step closer to achieving those with the fast launch of homes Dot com and the potential acquisition of matter port.

Scott Wheeler: Our full year revenue outlook includes revenue growth of 12% in the first half of the year, accelerating to 14% in the second half of 2024. Isn't it great to accelerate revenue growth in a really bad property market? This business is pretty amazing. We're also increasing our Adjusted EBITDA guidance and raising the midpoint of our guidance range. The new Adjusted EBITDA forecast range for the full year is now $185 to $205 million, up $15 million at the midpoint and indicating a margin of around 7% at the midpoint of the range.

Speaker Change: I certainly believe there'll be many more exciting growth years ahead for the company.

Speaker Change: Well that's about wraps it up for me I guess, you could say for the last time on the Costar earnings call Airwave.

Scott Wheeler: Second quarter adjusted EBITDA margins include the highest marketing seasonal spend for the year and are expected to be in the range of five to ten million dollars, or approximately one percent. Margins are expected to increase sequentially in the second half and exit the year in the range of 15% to 16%. Our outlook for interest, capital, and taxes remains unchanged from what we communicated back in February.

Speaker Change: Well I will without doubt Miss all of you as I climbed to many peaks on my list recover in the hot tub.

And experiment with the endless combinations of whiskies available to me in crafting the ultimate Manhattan.

If you stop him some time, Andy or Cynthia will be certainly happy to mix went up for you.

Speaker Change: Well with that I will turn the call back over to operator for a bit of Q&A.

Speaker Change: Thank you.

Speaker Change: Yes.

Speaker Change: I'm, sorry, Brian Radecki, Brian Radecki is.

Speaker Change: Brian just texted me, our former shift.

So that was a little harsh.

Brian Radecki: Hey, Brian.

Speaker Change: No I hate to say it please have a good martini on his plane.

So the.

Scott Wheeler: We love this kind of business. The Matterport subscriber customer base is highly diverse, operating across a variety of vertical markets with no single customer over 3% of revenue. Additionally, approximately 30% of their new 3D models, along with around 30% of revenue, are generated outside of the United States. This customer and vertical market diversity creates a resilient financial growth profile, just like CoStar. Matterport enjoys significant operating leverage on incremental subscription revenue with gross margins of around 70 percent. This is scalable for high profit margins and cash generation. Matterport has a strong, conservative balance sheet with over $400 million in cash and zero debt. Do you think this sounds familiar?

Speaker Change: Before we jump into Q&A I apologize the operator, but.

That was this is my 103rd earnings call Scott relative rookie with only 32 earnings calls with us.

Certainly very grateful everything Scott has accomplished was eight years with Costar group and so I thought we could all do is performance review here together.

Speaker Change: He's the numbers Guy So let's review his performance with the stats.

Speaker Change: As Scott's first earnings call, we had a cash balance of $422 million, we now have.

Speaker Change: 585 billion.

Speaker Change: In the first earnings call that Scott held our stock price was at $18 and it's now grown to 85 that's.

Speaker Change: That's a 21% CAGR on the stock price annually.

Speaker Change: Through his tenure.

Now, we're going to have to compare that to the last CFO that you just discussed Brian radecki.

Speaker Change: He achieved a 23% compound annual growth rate.

Speaker Change: And his predecessors CFO Frank Cart Kenny.

Speaker Change: <unk> turned in a 25% compound growth rate, okay, however, but in fairness the rule of small numbers with Kurt.

Speaker Change: And with <unk>, because our cap rate was only $75 million. When they began you began at <unk> 5 billion. So you know the hands down winner on.

Scott Wheeler: The breakeven point is somewhat in line with what we might see as the expected time to close the transaction. With Matterport cash flow turning positive in 2025 and modest synergy assumptions, we expect the standalone acquisition to be neutral to slightly accretive to non-gap earnings per share in the first year post-closing. Now, it's far too early to estimate financial guidance outcomes for the acquisition.

Speaker Change: On market cap, so earmark our market cap. When you started with $6 billion is now 35 billion. So you are just the the Victor so well well done Scott and then you go into the Costar CFO Hall of Fame and now you have successfully.

Some of the Costar Mountain.

Speaker Change: Godspeed climbing all of the other mountains around the World Your heart desires to climb and I will take you up on the Manhattan, Manhattan, Guy, but I would look forward to a quality mix so with that.

Speaker Change: Sort of unprofessional dribble will turn it over to Q&A with our operator.

Speaker Change: Thank you.

Yes.

Speaker Change: Our first question comes from Peter Christiansen with Citi. You May proceed.

Peter Corwin Christiansen: Thank you good evening.

Peter Corwin Christiansen: Nice trends, great execution here and congrats Scott.

Peter Corwin Christiansen: Rod Thank you Pete.

Peter Corwin Christiansen: Yeah.

Peter Corwin Christiansen: Andy I was just wondering if you could just put a little bit more color on the <unk> dot com production.

Rod: Quarter win loss rate inbound versus outbound decision cycle.

Rod: Of that color I think would be helpful. Thank you.

Andy: Sure so.

Andy: And obviously.

Andy: Exceeded expectations.

Andy: I would say that it is mostly outbound there was strong inbound interest.

Andy: There was.

Andy: A lot of convention sales. So there are a number of industry events out there and <unk>.

Scott Wheeler: The cover in the hot tub, and experiment with the endless combinations of whiskeys available to me in crafting the ultimate Manhattan. If you stop in sometime, Andy or Cyndi, I will be happy to mix one up for you.

Andy: People were buying a lot of various.

Andy: Brokerage firms specific events.

Scott Wheeler: Well, with that, I'll turn the call back over to our operator for a bit of Q&A. Thank you! I'm sorry Brian Radecki, you know Brian Radecki is on. Brian just texted me, our former chef. That was a little harsh. I love Ryan. Wheeler taught me everything I know. I hate to say it, but he's having a martini on his plane.

Andy: The close cycle is extremely fast it typically is demo close simultaneously.

There isn't a win loss really because no one.

<unk> is providing a similar servicing that states are offering us is unique.

Andy: They are anecdotally.

There we have heard some.

Andrew C. Florance: Okay, so the before we jump over to Q&A, I apologize to the operator, but that was my 103rd earnings call. Scott's a relative rookie with only 32 earnings calls with us. Uh, certainly very grateful for everything Scott has accomplished in his eight years with CoStar Group. And, uh, so I thought we could all do his performance review here together. Um, he's a numbers guy, so let's review his performance with his stats. At Scott's first earnings call, we had a cash balance of $422 million.

Andy: Substitution effect with some of the lead diversion model legacy providers.

Andy: But.

Andy: By and large it's.

It is.

Andy: Short sales cycle.

Andy: Straightforward, we're selling individual agents are typically paying with a credit card, but at the end of the demo and again. The fact that 90% are going for an annual agreement is pretty positive.

Andy: It would appear that.

Priority for US going forward is just scaling the homes dot com sales team because while it's great to have overall sales force doing it.

Andrew C. Florance: We now have... $5.85 billion. In the first earnings call that Scott held, our stock price was at $18, and it's now grown to $85. That's a 21% increase on the stock price annually through his tenure. Now we're going to have to compare that to the last CFO you just dissed, Brian Radecki.

Andy: Do you eventually want to get everyone back to their core products and build enough big enough sales team to manage the 500 to 600000 prospects. We've got for this product.

Speaker Change: Thank you congrats again, thank you.

Speaker Change: Thank you.

Speaker Change: One moment for questions.

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

Heather: One moment for questions.

Heather: Our next question comes from George Tong with Goldman Sachs. You May proceed.

Keen Fai Tong: Alright, Thanks, good afternoon, and I also want to extend Scott My Congrats to you on your retirement.

Andrew C. Florance: He achieved a 23% compound annual growth rate, and his predecessor CFO Frank Karketty turned in a 25% compound annual growth rate. However, but in fairness, the rule of small numbers with Karketty and with Rudecky, because our cap rate was only 75 million when they began, you began at 5 billion. So you're the hands-down winner, on market cap. So our market cap when you started was $6 billion. It's now $35 billion. So you're just the victor. So well done, Scott. And you go into the CoStar CFO Hall of Fame.

Well deserved dessert.

Keen Fai Tong: So wanted to follow up on the homes Dot com progress with what the sales you mentioned selling 8000 memberships in the first quarter average price of $4 75 to 500 per month.

Andrew C. Florance: And now you've successfully summited CoStar Mountain. Godspeed climbing all the other mountains around the world your heart desires to climb. And I will take you up on the Manhattan. I'm not a big Manhattan guy, but I would look forward to a quality mix.

Keen Fai Tong: I guess do you see the average price changing.

Keen Fai Tong: The growth trajectory matures.

Or is it pretty much steady state and primarily going to be driven by volumes and how are those volumes performed exiting the quarter. So how did the run rates look like.

Andrew C. Florance: So with that sort of unprofessional dribble, we'll turn it over to Q&A with our operator. Thank you. As a reminder, to ask a question, you will need to press star 1 1 on your telephone.

Keen Fai Tong: Exiting <unk> and how do you overall think about the addressable market.

Keen Fai Tong: Total number of memberships that are available out there that you can tackle.

Speaker Change #100: Sure so.

Speaker Change #101: So that's correct.

Speaker Change #101: Around 8000 members and 475% to 500, I do not think that price really changes through time there is no.

Speaker Change #101: Cherry picking bigger accounts or smaller potential accounts has been pretty much even movement across the board.

Andrew C. Florance: I would say that it is mostly outbound. There was strong inbound interest. There was... A lot of convention sales, so there are a number of industry events out there, and people were buying a lot at various brokerage firms' specific events. The close cycle is extremely fast. It typically is demo close simultaneously. There isn't a win-loss, really, because no one is providing a similar service in the United States.

Speaker Change #101: So I would anticipate that same price point, we're very happy with that price point, it's both it's both.

Speaker Change #101: Priced way below.

Speaker Change #101: What other competitors are charging for their relative services.

Speaker Change #101: And yet, it's a pretty pretty solid price point per person.

Speaker Change #101: For Costar group overall.

Speaker Change #101: There was a surge of buying activity with a couple of big conferences early in mid February.

And a little bit of some salespeople moving back to selling apartments dot com in Loopnet and some return, but we're simultaneously accelerating the growth of the homes team pretty aggressively.

Speaker Change #101: So.

Speaker Change #101: The numbers remain solid as we leave the quarter.

Andrew C. Florance: Our offering is unique. [inaudible] By and large, it's a short sales cycle, pretty straightforward. We're selling to individual agents. They're typically paying with a credit card, but at the end of the demo.

Speaker Change #101: When you look at the overall potential there is I mean, I would love to get that number up to 100000 members sooner rather than later, but you absolutely have the potential to reach.

Speaker Change #101: Hundreds of thousands of members.

Speaker Change #101: And by comparison, if you say look at.

Speaker Change #101: Another real estate marketplace, we've got like Loopnet.

Speaker Change #101: See like say in Florida, California, you see.

Speaker Change #101: 60, 70, 80% of properties marketed on that platform. So under our model. Unlike some of the other with models, we can achieve super high penetration rates.

Andrew C. Florance: And again, the fact that 90% are going for an annual agreement is pretty positive. It would appear that a priority for us going forward is just scaling the homes.com sales team because while it's great to have the overall sales force doing it, you eventually want to get everyone back to their core products and build a big enough sales team to manage the 500 to 600,000 prospects we've got for this product. Thank you. Congratulations again.

And so we want to balance price and volume.

Speaker Change #101: So that the broader market guests to participate and you create goodwill across a bigger section of residential real estate.

Speaker Change #102: But alright.

Speaker Change #102: <unk> has been great.

Speaker Change #103: Thank you very much.

Speaker Change #104: Thank you.

Speaker Change #104: One moment for questions.

Speaker Change #104: Our next question comes from Alexia <unk> with Jpmorgan you May proceed.

Alexia: Hi, everyone.

Alexia: I had a question about EBITDA margin of your nonresidential business Scott could you.

Peter Corwin Christiansen: Thank you. Thank you. One moment for questions. Our next question comes from Heather Balsky with Bank of America. You may proceed.

Alexia: Operating a bit more what was the level of EBITDA margin in the first quarter.

Alexia: And whether or not you're still on track to reach the full year target of roughly 42%.

Scott Wheeler: Yes, Hi, Alexia.

Speaker Change #105: We are definitely still on target with what we expected for the year.

Heather Balsky: One moment for questions. Our next question comes from George Strong with Goldman Sachs. He may proceed.

George Strong: Hi. Thanks. Good afternoon. And I also want to extend, Scott, my congratulations to you on your retirement. Well-deserved.

The 42%.

Speaker Change #105: Margin.

And in the first quarter.

Speaker Change #106: Hold on a minute, let me find that for you.

George Strong: Thank you, George. Thank you. So I wanted to follow up on the progress of homes.com with the sales. You mentioned selling 8,000 memberships in the first quarter at an average price of $475 to $500 per month. Do you see the average price changing as the growth trajectory matures? Or is it pretty much steady state and primarily going to be driven by volumes? And how have those volumes performed exiting the quarter? So what do the run rates look like exiting 1Q? And how do you think about the addressable market, like the total number of memberships that are available out there that you can tackle? Sure. So, um...

First quarter adjusted EBITDA margins were about 39% to start the year.

Speaker Change #106: Understood.

Speaker Change #106: Considering that you are also looking for positive EBITDA.

Speaker Change #106: Four homes Dot com business.

Speaker Change #106: Or rather for the overall business for the second quarter does that imply that.

You may have already peaked.

Speaker Change #106: <unk> spent in the first quarter and that that will be.

Speaker Change #106: Roughly similar but not higher into Q.

Speaker Change #106: When you look at the when you look at the residential forecast, we typically see.

Speaker Change #106:

Speaker Change #106: In the second quarter higher marketing expenses in this case there'll be slightly lower in the second quarter, because we had the fast launch.

Andrew C. Florance: So that's correct; we have around 8,000 members and 475 to 500. I do not think that price really changes over time. There's no cherry picking bigger accounts or smaller potential accounts. It's been pretty much an even movement across the board. So I'd anticipate that same price point. We're very happy with that price point. It's both, moving back to sellingapartments.com and LoopNet and some return, but we're simultaneously accelerating the growth of the homes team pretty aggressively, so the numbers remain solid as we leave the quarter.

In Q1.

Speaker Change #107: Got it.

Speaker Change #107: Quarter expenses will be roughly the same in the second quarter is the first and then will decline throughout the year and our residential outlook and our total expected spending in residential remains unchanged to what we communicated back in February I hope that helps.

Speaker Change #108: It does Scott. Thank you very much and I appreciate all the help over the years.

Speaker Change #109: Youre welcome.

Speaker Change #110: Thank you.

Speaker Change #111: One moment for questions.

Speaker Change #111: Our next question comes from Ryan Tomasello with <unk> you May proceed.

Ryan Tomasello: And what are your plans for adding additional premium tiers.

Speaker Change #112: As time passes that could potentially increase the average.

Speaker Change #113: Right over time thanks.

Speaker Change #113: So.

I really am happy with the pricing model, we went to market with we blended.

Andrew C. Florance: When you look at the overall potential, there is, I mean, I would love to get that number up to 100,000 members sooner rather than later, but you absolutely have the potential to reach hundreds of thousands of members. And by comparison, if you say look at another real estate marketplace we've got like LoopNet. You see, say, in Florida, California, you see, 60, 70, 80% of properties marketed on that platform. So under our model, unlike some of the other models, we can achieve super high penetration rates.

Sure.

Speaker Change #113: We obviously have to have an element that is price per listing because each listing.

Speaker Change #113: A valuable real estate as it sorts higher in the order.

Speaker Change #113: You also have to acknowledge that someone who might be selling properties in a market that the average home sale is 125, and so it might be selling properties with average home sale is $3 million. So.

Speaker Change #113: Our pricing scheme is somewhat bespoke to the particular agent.

Speaker Change #113: And the reaction to the pricing.

Speaker Change #113: We're putting out there is super positive and.

Speaker Change #113: It's not a lot of pushback on it so.

Speaker Change #113: There was one person that far.

Speaker Change #113: Formula price them out at 500000, a month and we didn't get the reaction we were looking for with them, but everyone else is doing pretty good.

Speaker Change #113: We are super early stages here with just 8000 members, where I anticipate we will have hundreds of thousands of members. We're super early stage, it's super important in my view.

Alexei Mihaylovich Gogolev: Thank you. One moment for questions. Our next question comes from Alexei Gogolev with J.P. Morgan. You may proceed. Hi everyone.

Speaker Change #113: For a marketplace to go for.

Alexei Mihaylovich Gogolev: I had a question about the EBITDA margin of your non-residential business. Scott, could you elaborate a bit more on what the level of the EBITDA margin was in the first quarter? And whether or not you're still on track to reach the full year target of rough. Yeah, hi Alexei. We're definitely still on target with what we expected for the year for the 42% margin. And in the first quarter...

Speaker Change #113: Mass adoption participation of agents is our highest priority and it's.

Speaker Change #113: We won't look at doing premium tiers.

Speaker Change #113: For a period of time until our penetration rates are in the teens and 20%.

Speaker Change #113: We just want to focus on what is really important which is getting that first level of membership in there.

Speaker Change #113: Can tell you anecdotally from our sales force.

Speaker Change #113: There is demand for premium tiers.

Speaker Change #113: Our clients, particularly in residential real estate would appear to be highly competitive with one another.

Scott Wheeler: Hold on a minute, let me find that for you. First quarter adjusted EBITDA margins were about 39% to start the year. Understandable. And considering that you're also looking for positives, for homes.com, or rather for the overall, may have already peaked, read these, roughly similar but not higher. When you look at the residential forecast, we typically see higher marketing expenses in the second quarter. In this case, they'll be slightly lower in the second quarter because we had a fast launch in Q1.

Speaker Change #113: <unk>.

Speaker Change #113: Agents, who listings are now up on page one instead of page 30 are now.

Speaker Change #113: Hi.

Speaker Change #113: Complaining that they would like to buy number one on the page I don't want to be number five on the page. So there's clearly demand for premium.

Speaker Change #113: But in.

Speaker Change #113: In other countries are where people have your listing your lead model like we do.

Speaker Change #113: Often it's the home seller who's paying for the premium.

Going up to the gold and Diamond.

Speaker Change #113: Platinum levels, but.

Speaker Change #113: But I think there is certainly demand for gold level at the agent level.

Speaker Change #114: Great. Thanks for that color and congratulations Scott on the retirement enjoy those manhattans.

Scott Wheeler: Thanks Ryan.

Buy it all with you went up.

Scott Wheeler: So quarter expenses will be roughly the same in the second quarter as in the first, and then they'll decline throughout the year in our residential outlook. And our total expected spending in residential remains unchanged from what we communicated back in February.

Scott Wheeler: Yes.

Thank you.

Scott Wheeler: Sure.

Speaker Change #115: One moment for questions.

Speaker Change #115: Our next question comes from Stephen Sheldon with William Blair You May proceed.

Stephen Hardy Sheldon: Hey, Thanks, and I'll Echo my Congrats Scott.

Alexei Mihaylovich Gogolev: I hope that helps. It does, Scott. Thank you very much, and I appreciate all the help.

Stephen Hardy Sheldon: Given given the traction that you've seen with <unk> dot com.

Ryan Tomasello: You're welcome. Thank you. One moment for questions. Our next question comes from Ryan Tomasello with KBW. You may proceed. Hi, everyone.

Stephen Hardy Sheldon: Curious, what you're wanting to see before you shift incentives back in your existing sales force to focus exclusively on their own core businesses. The sweet Loopnet apartments Dot com et cetera. Do you have do you have a rough timeline of guests in mind for when that might happen.

Speaker Change #116: We're really happy with the traction we've got we want to keep that going I would.

Speaker Change #116: I wanted to be able to.

Speaker Change #116: Report good solid numbers for 24 on the homes Dot Com launch I want to give time to Andy Stern's to build up the.

Andrew C. Florance: So I really am happy with the pricing model we went to market with. We blended, You know, we obviously have to have an element that is price per listing because each listing takes up valuable real estate as it sorts higher in the order. You also have to acknowledge that someone might be selling properties in a market where the average home sale is $125,000, and someone might be selling properties where the average home sale is $3,000,000. There's not a lot of pushback on that.

Speaker Change #116: The 300 400 person sales force and then the other factor honestly is the.

The apartments Dot com Loopnet Costar salespeople want to have an opportunity to sell homes dot com. So we're sort of responding to the salesforce wanted to participate in the exciting event.

There are some number of people who are good at selling their their core product maybe they havent been as successful selling the homes product those folks have already returned to focusing on their core product maybe 200. Some people I think we will be using the broader effort.

Speaker Change #116: Through the end of the year and then in 'twenty five will begin to focus more on a dedicated sales team. The good news is that.

Andrew C. Florance: There was one person that the formula priced them out at $500,000 a month, and we didn't get the reaction we were looking for with them, but everyone else was doing pretty good. We are in the super early stages here with just 8,000 members, where I anticipate we'll have hundreds of thousands of members. We're in the super early stages.

Speaker Change #116: The centralized team enrichment is successfully selling at effectively the exact same pace of anyone out in the market next door to our real estate agents, so happy with that.

Speaker Change #116: Just a question of scaling the dedicated homes team.

Ryan Tomasello: It's super important, in my view, for a marketplace to go for mass adoption participation of agents as our highest priority. We won't look at doing premium tiers for a period of time until our penetration rates are in the teens and 20%, um, we just want to focus on what was really important, which is getting that first level membership in there. I can tell you anecdotally from our sales force that there's demand for premium tiers.

Speaker Change #117: Very helpful. Thanks.

Speaker Change #118: Thank you.

Speaker Change #119: One moment for questions.

Speaker Change #119: Our next question comes from Surinder <unk> with Jefferies. You May proceed.

Surinder: Thank you just switching topics here to apartments dot com can.

Surinder: Can you maybe talk about the outlook for unit deliveries this year it looks like that.

Surinder: That might peak.

Surinder: And then potentially what that means on a go forward basis as we are looking to towards the end of the year and into 2020 fit for growth rates.

Surinder: So yes, so the unit deliveries are coming down slightly they are still very high by historical standards.

Ryan Tomasello: Our clients, particularly in residential real estate, would appear to be highly competitive with one another. And agents who, now, have listings are now up on page one, instead of page 30, are now complaining that they would like to buy number one on the page. I don't want to be number five on the page.

Surinder: And and.

Surinder: And we're up nine 1%.

Surinder: And.

Surinder: But 191% that is very high for the apartment industry and we're up at the point at which you are a little uncomfortable.

Surinder: <unk>.

Surinder: Refinancings and liquidity for some of the owners of the apartment buildings. It actually would be nice to see a little more stability in the market and have that vacancy rate come down next year, but I think we have two to three years at least of elevated vacancy which is.

Surinder: Which is sort of the goldilocks environment for selling apartments dot com. So.

Surinder: Again, each of our products is going to go through.

Surinder: Different.

Surinder: Environmental cycles.

Surinder: So we'll have to worry about that Pat perhaps in two or three years, maybe we won't have to worry about in two or three years.

Speaker Change #120: Got it.

Speaker Change #121: Thank you.

Thank you.

Speaker Change #122: One moment for questions.

Speaker Change #122: Our next question comes from John Campbell with Stephens You May proceed.

Stephen Hardy Sheldon: Thank you. One moment for questions. Our next question comes from Stephen Sheldon with William Blair. Hey, thanks.

Speaker Change #122: Hey, guys, it's Scott I'll keep going here congrats to you and best wishes on next journey. Thank you John just stay on for sure.

Andrew C. Florance: And I'll echo my congratulations, Scott. Given the traction that you've seen with homes.com, I'm curious what you're wanting to see before you shift incentives back to your existing sales force to focus exclusively on their own core businesses, so Suite, LoopNet, Departments.com, etc. Do you have a rough timeline, I guess, in mind for when that might happen?

<unk> Dot Com Andi think last quarter, you talked to only demoing the product 2% of all U S agents.

John Campbell: I guess just with your hiring plans in the region you've run thus far just how long you thought it will take to kind of reach your target market.

Speaker Change #123: Yeah, I wish I have the precise number there for you.

So when we spoke last time it was with <unk>, 2%.

Stephen Hardy Sheldon: You know, we're really happy with the traction we've got; we want to keep that going. I want to be able to, um..., report good solid numbers for 24 on the Homes.com launch. I want to give time to Andy Stearns to build up the 300-400-person sales force. And then the other factor, honestly, is the... Theapartments.com, LoopNet, CoStar, salespeople want to have an opportunity to sell Homes.com. So, we're sort of responding to the sales force wanting to participate in an exciting event. There are some number of people who are good at selling their core product, and maybe they haven't been as successful selling the homes product.

Speaker Change #124: I'm actually really pleased with the conversion rate so when we get a demo to a close.

Hi.

Speaker Change #124: A solid double digit number I think in the Twenty's to <unk>.

Speaker Change #124: From where we when we get them out to the close rate.

Speaker Change #124: So the bigger challenges, having enough people and getting enough demos.

Speaker Change #124: But that's great. We will eventually get demos with everyone eventually saves coupon, bringing different marketing messages out there to folks you keep trying to reconnect for people.

Speaker Change #124: And various environments in context and that we'll get there. So we are still.

Speaker Change #124: At the as we pass through the $40 million Mark we have.

Surinder Singh Thind: Those folks have already returned to focusing on their core product, maybe 200 people or so. I think we will be using the broader effort through the end of the year, and then in 2025, we'll begin to focus more on a dedicated sales team. The good news is that the centralized team in Richmond is successfully selling at effectively the exact same pace of anyone out in the market next door to a real estate agent. So, I'm happy with that question of scaling the dedicated homes team. Very helpful. Thanks.

Speaker Change #124: 7% Sue them it we've done about 7%.

Speaker Change #124: The prospects for 500000, some prospects up to this point, we've done a lot about 7%. So theres 540000 core prospects, we've defined and we've done about 7% now.

Speaker Change #124: We have sold a lot of product to folks who have no listings.

Speaker Change #124: So the 540 is probably the wrong denominator.

Speaker Change #124: The denominator could be 1 million plus.

Speaker Change #124: Given the fact that so many people with no listings have subscribed.

Speaker Change #125: Okay. That's helpful and maybe one quick follow up related to that.

Speaker Change #125: Those who are subscribing without listings, what do you typically see as the key draw for them.

Surinder Singh Thind: Thank you. One moment for questions. Our next question comes from Surinder Thind, with Jeffrey's permission, you may proceed.

Speaker Change #125: Well you have you always have a large number of folks who are trying to break in the residential real estate, who have not to date been as successful as they would like.

Surinder Singh Thind: Thank you. I'm just switching topics here to apartments.com. Can you maybe talk about the outlook for unit deliveries this year? It looks like that might peak, and then potentially what that means on a go-forward basis as we look toward the end of the year and into 2025 for growth rates. So, yeah, so the unit deliveries are coming down slowly. They're still very high by historical standards.

Over 97% of agents are really do both buyer agency and seller agency.

Speaker Change #125: Some instances where established agent at the moment doesn't have a listing but they've got listings.

Speaker Change #125: Last year.

Speaker Change #125: But.

Speaker Change #125: If you.

Andrew C. Florance: And we're up, what, 9.1% or something like that, whatever that is. And we're at 9.1%. That is very high for the apartment industry. And we're up at the point at which you're a little uncomfortable, you know, with refinancings and liquidity for some of the owners of apartment buildings. It would actually be nice to see a little more stability in the market and have that vacancy rate come down next year. But I think we have two to three years at least of elevated vacancy, which is sort of the Goldilocks environment for sellingapartments.com.

Speaker Change #125: Have done some transactions at the last three years and you can get your name up on neighborhoods as being an expert if you can sort to the top of the agent directory for an area. If you can.

Re target people coming to the site looking for properties that are relevant to your experience level. Even if you have no listing we.

We do give you.

Hundreds of thousands of exposures and both on the site and off the site with re targeting so there is value there I do think that.

Realistically with the changes with the lawsuits and any future changes coming down the road with an adjusted department activity that.

Andrew C. Florance: So, you know, again, each of our products is going to go through different environmental cycles. So, you know, we'll have to worry about that perhaps in two, three years. Maybe we won't have to worry about it in two or three. Okay.

Speaker Change #125: Residential real estate will be a little bit more of a support of people with listings will get more listings, but.

Speaker Change #125: Happy to help people without new listings are people with a lot of listings.

Speaker Change #125: Okay.

Surinder Singh Thind: One moment for questions. Our next question comes from John Campbell with Stevens. You may proceed. Hey guys, and Scott, I'll keep it going here. Congratulations on your achievements and best wishes on the next journey. Thank you, John. Just stay on, for sure. Stay on Hunts.com.

Speaker Change #126: Thank you.

One moment for questions.

Our next question comes from Heather <unk> with Bank of America.

Heather: You May proceed.

Heather: Hi, Thank you for letting me back in I guess I got carried away by the baby crying.

John Campbell: Andy, I think last quarter you talked to only 2% of all US agents about the product. I guess, with your hiring plans and the rate you've run this far, just how long do you feel it will take to kind of reach your target market? Yeah, I wish I had the precise number there for you.

Heather: Heather if youre if youre confused I think many people in the listening audience today are confused.

Heather: Yeah.

Heather: There was a.

Heather: Our last CFO, who has an outstanding CFO and is listening right now.

Heather: Got a little vary claimed at the emotional overload of leaving Costar.

Heather: And we haven't let them live it down.

Andrew C. Florance: So when we spoke last time, it was that we demoed 2%. I'm actually really pleased with the conversion rate. So, when we get a demo to a close, that's a high, that's a solid double-digit number, I think in the 20s to 30s from where we are. The bigger challenge is having enough people and getting enough demos. But that's great.

Heather: And another 10 years, we will stop talking about it.

Okay.

Heather: Kristine I appreciate you've got to play it again.

So.

Speaker Change #127: A matter of poor I'm, just curious a little bit to hear how you're thinking about that business being part of costar going forward theres been some headlines around homes dot com, but.

Speaker Change #127: Curious about the.

Speaker Change #127: Broader business strategy.

Speaker Change #127: And at its existing sort of Standalone business like how are you going to integrate it.

John Campbell: We'll eventually get demos with everyone eventually. So, just keep on bringing different marketing messages out there to folks. You keep trying to reconnect with people in various environments and contexts, and we'll get there.

Speaker Change #127: Do you plan to use it more and do you think you can do something to kind of jumpstart existing sort of revenue growth strategy.

Andrew C. Florance: So, we are still, you know... At the, as we pass through the 40 million mark, we have, So we've done it. We've done about 7%. Of the prospects, the 500,000 or so prospects up to this point, we've done about 7%. So there are 540,000 core prospects we've defined, and we've done about 7%. Now, we have sold a lot of product to folks who have no listings. So 540 is probably the wrong denominator.

Speaker Change #128: Yes so.

Speaker Change #128: In terms of let's start with the.

Speaker Change #128: Existing growth strategy.

Speaker Change #129: I am highly confident.

Speaker Change #130: Through pulling levers on pricing on.

Speaker Change #130: Switching between.

Speaker Change #130: Front purchases of equipment to subscription models.

Speaker Change #130: Relying more heavily on.

Speaker Change #130: Capture networks.

Speaker Change #130: I feel and then also by the virtue. The fact that we aggressively adopt the digital twins more broadly.

John Campbell: The denominator could be a million plus, given the fact that so many people with no listings have subscribed. Okay, so maybe one quick follow-up related to that answer. Those who are subscribing without listings, what do you typically see as the key draw? Well, you always have a large number of folks who are trying to break into residential real estate who have not, to date, been as successful as they'd like. Over, you know, 97% of agents really do both buyer agency and seller agency. There are some instances where an established agent at the moment doesn't have a listing, but they had listings last year.

Speaker Change #130: That all those things together will allow us to significantly accelerate.

Speaker Change #130: The sales of revenue of matter port outside of it being used inside of anything and Costar.

Speaker Change #130: In other words outside of being used as part of homes Dot com apartments dot com loopnet, so on and so forth but.

Speaker Change #130: And I think matter import penetration was some slight over numbers on that I'm confident sub 5% in the United States, some confidence sub 1% in Europe.

Speaker Change #130: And at that at those levels.

Speaker Change #130: I am a big believer in the value of a matter of port when youre trying to sell a $500000 or a $1 million property and then I think those adoption rates will ultimately.

Speaker Change #130: Go up.

Andrew C. Florance: But if you have done some transactions in the last three years, and you can get your name up on neighborhoods as being an expert, if you can sort to the top of the agent directory for an area, if you can retarget people who come to the site looking for properties that are relevant to your experience level, even if you have no listing, we do give you hundreds of thousands of exposures both on the site and off the site with retargeting. So there is value there.

The 50% or more for digital twins with people moving real estate there was a time when.

Speaker Change #130: Only 5% of the real estate listings had a photo.

So the digital twins is going to be.

Speaker Change #130: And there there are a number of different players out there and our goal will be to try to capture.

Speaker Change #130: Our leading share of the digital twin so there are different solutions have different quality levels and when.

Andrew C. Florance: I do think that realistically, with the changes with the lawsuits and any future changes coming down the road with any Justice Department activity, that residential real estate will be a little bit more of a sport where people with listings will get more listings, but I'm happy to help people without new listings or people with a lot of listings. Thanks for having me.

Speaker Change #130: You look at how we integrated into our product.

Speaker Change #130: We're going to first of all we believe its just the overall goal of what we're doing is helping people lease and sell their real estate.

Speaker Change #130: Or to analyze real estate.

Speaker Change #130: Three dimensional lease <unk> spatial twins.

Speaker Change #130: Our transformative really important tools and we're going to make them ubiquitous across our sites. So if we've adopt we've been an aggressive adopter of date, we're going to grow dramatically and ever virtually everything we're doing so even think about something like.

John Campbell: Thank you. One moment for questions. Our next question comes from Heather Balsky with Bank of America. You may proceed. Hi, thank you for letting me back in. I guess I got scared away by the baby crying.

Speaker Change #130: Costar real estate manager.

Speaker Change #130: A significant percentage of the fortune 500 use costar real estate manager too.

Heather Balsky: Heather, if you're confused, I think many people in the listening audience today are confused. There was a, our last CFO, who was an outstanding CFO and is listening right now, got a little very clumped at the emotional overload of leaving CoStar, and we haven't let him live it down. In another 10 years, we'll stop talking about it. Appreciate it. I appreciate you got to play it again.

Speaker Change #130: Manage their lease is critical dates their facility strategies.

Given their real estate people the ability to look at a three D representation and walk through one of their facilities is super valuable even if it's something is.

Speaker Change #130: Small is a.

Speaker Change #130: Of the equipment room on a on a cellular antenna being able to go into that matter port and seeing what the rack configuration is and see how much room. There is a room for more racks that kind of stuff the stuff is ubiquitous.

Andrew C. Florance: So, on Matterport, I'm just curious a little bit to hear how you're thinking about that business being part of CoStar going forward. There have been some headlines around Homes.com, but curious about the broader business strategy and its existing sort of standalone business. Like, how are you going to integrate it?

Speaker Change #130: And Super valuable so being aggressively adopting it we think will fuel growth and differentiate us from other folks.

Speaker Change #130: But the other thing is I think.

Speaker Change #130: Enormous amount of data here. So if you think of the failure of Avm's automated valuation milestone will deliver real value.

Speaker Change #130: I belief is that one of the big failures of Avm's to date has been.

Heather Balsky: You know, how do you plan to use it more? And do you think you can do something to kind of jumpstart the existing revenue growth strategy? Yeah, so.

Speaker Change #130: The fact that they're taking.

Speaker Change #130: Tabular data.

Speaker Change #130: Handful of tabular data fields around a point on a map.

Andrew C. Florance: In terms of, let's start with the existing growth strategy. I am highly confident that pulling levers on pricing, on switching between upfront purchase of equipment, and subscription models, and relying more heavily on capture networks. I feel, and then also by virtue of the fact that we aggressively adopt digital twins more broadly, that all those things together will allow us to significantly accelerate the sales or revenue of Matterport outside of it being used inside of anything in CoStar.

Speaker Change #130: Is really fails to capture the real characteristic of the real estate asset when you have a matter of port you're able to recognize infantry more information about the space here and you can determine quality you can term and build out you can chairman.

Speaker Change #130: Just things like sensing, the fact that theres, lutron switches or wolf stove or that.

Speaker Change #130: There's a the.

The nature of the lay out looking at the views out the windows that you're looking at another building five feet away or do you have a view of the Hudson River, which one is it. So I think this will also the enormous data advantage here.

Speaker Change #130: You can use to inform.

Speaker Change #130: Automated valuation models and understand market statistics, better and Thats certainly true width.

Andrew C. Florance: In other words, outside of being used as part of Homes.com, Apartments.com, LoopNet, so on and so forth, and I think Matterport penetration will have some slightly different numbers on that. I'm confident sub-5% in the United States. I'm confident sub-1% in Europe.

Speaker Change #130: Certainly residential but also commercial real estate, so if I'm trying to understand where lease rates are and I can.

Speaker Change #130: Ascertain that this space was raw, which machine vision can do.

Speaker Change #130: Artificial intelligence.

Speaker Change #130: <unk> was unfinished space versus Polish space, that's going to impact how you calculate the economics of what the lease deal was.

Andrew C. Florance: And at those levels, I am a big believer in the value of a Matterport when you're trying to sell a $500,000 or a $1 million property. And then I think those adoption rates will ultimately go up 50% or more for digital twins with people moving real estate. There was a time when only 5% of real estate listings had a photo.

Speaker Change #130: And then.

Speaker Change #130: With right.

Right now matter ports really beautiful at being able to move through a space in the SME natural.

Speaker Change #130: Semi natural format, but was the work that Apple the commitment that Apple has in meta has two building headsets I believe that you will in the next three years or so have.

Andrew C. Florance: So the digital twins are going to be, I think, and there are a number of different players out there, and our goal will be to try to capture a leading share of the digital twins. So there are different solutions at different quality levels. And when you look at how we integrate it into our product. We're going to, first of all, believe it's just, you know, if the overall goal of what we're doing is helping people lease and sell their real estate or analyze real estate, these three-dimensional, these 3D, three spatial twins are, you know, transformative, really important tools, and we're going to make them ubiquitous across our site.

Speaker Change #130: Smooth walk walk through capabilities through these digital twins, which will be super powerful.

Speaker Change #130: The ability to.

Speaker Change #130: I also take the twin outside of the.

Speaker Change #130: The structure and actually capture the exterior of the structure and possibly.

Speaker Change #130: Moving the capture equipment to a drone as well so in my spare time I have been.

Speaker Change #130: Putting expensive matter ports on top of expensive drowns and trying to capture externally, but it's hard to do that whether we can research pratchett surely the professionals to do that leading to extensive write offs of expensive drove.

Speaker Change #130: That'd be crashes, but.

Speaker Change #130: It looks from the neighbors.

Speaker Change #130: But the.

Speaker Change #130: So I think the technology is going to be is going to go through a real exponential acceleration I think the data Super valuable I think it's it's.

Andrew C. Florance: So if we've been an aggressive adopter to date, we're going to grow it dramatically. And in virtually everything we do. So even think about something like CoStar Real Estate Manager. A significant percentage of the Fortune 500 use CoStar Real Estate Manager to manage their leases, critical dates, and facility strategies.

Speaker Change #130: That's table stakes going forward for marketing space I think.

Speaker Change #130: Most of the Atms and I think as the rest of the world figures out.

Speaker Change #130: It really silly.

Speaker Change #130: To me today to market, an office building or.

Andrew C. Florance: Giving their real estate people the ability to look at a 3D representation and walk through one of their facilities is super valuable. Even if it's something as small as the equipment room on a cellular antenna, being able to go into that Matterport and see what the rack configuration is and see how much room there is, room for more racks, that kind of stuff. This stuff is ubiquitous and super valuable. So aggressively adopting it, we think, will fuel growth and differentiate us from other folks.

Speaker Change #130: Warehouse building or a hotel event space or a home without a digital twin is.

Speaker Change #130: <unk>.

Speaker Change #130: Sort of inadequate.

Speaker Change #131: I sound passionate about that.

Speaker Change #132: Thank you.

I appreciate the answer thank you very much.

Speaker Change #132: Thank you I would now like to turn the conference back to Andy for any closing remarks.

Andy: Well I'd like to thank you all for joining US again for our first quarter 2024 earnings call I'm glad we were able to report good results initial results on the homes Dot com monetization.

Andrew C. Florance: But the other thing is, I think there's an enormous amount of data here. So if you think of the failure of AVMs, automated valuation models, to deliver real value, my belief is that one of the big failures of AVMs to date has been the fact that they are taking tabular data, a handful of tabular data fields around a point on a map really fails to capture the real characteristics of the real estate asset.

And.

Andy: Again, thank you Scott for all of the outstanding work, you've done and Brian I apologize for Scott poke in the bear on the last CFO.

Speaker Change #133: Thanks, Bye everyone Goodbye everyone.

Speaker Change #134: Thank you. This concludes today's conference call. Thank you for your practice.

Speaker Change #134: Participating you may now disconnect.

Andrew C. Florance: When you have a Matterport, you're able to recognize infinitely more information about the space you're in. You can determine quality, you can determine build out, you can determine, you know, just things like sensing the fact that there are Lutron switches or a Wolf stove or that there's a nature of the layout, looking at the views out the windows. Are you looking at another building five feet away, or do you have a view of the Hudson River? Which one is it?

Andrew C. Florance: So, I think this will also, there's an enormous data advantage here that you can use to inform automated valuation models and understand market statistics better. And that's certainly true with residential but also commercial real estate. So, if I'm trying to understand where lease rates are, and I can ascertain that this space was raw, which machine vision can do, and artificial intelligence can determine it was unfinished space versus polished space, that's going to impact how you calculate the economics of what the lease deal was.

Andrew C. Florance: And then, you know, right now, Matterport's really beautiful at being able to move through a space in a semi-natural, semi-natural format. But with the work that Apple and Meta have done to build headsets, I believe that in the next three years or so, you will have smooth walkthrough capabilities through these digital twins, which will be super powerful, the ability to also take the twin outside of the structure and actually capture the exterior of the structure, and possibly move the capture equipment to a drone as well. So in my spare time, I have been putting expensive Matterports on expensive drones and trying to capture it externally, but it's hard to do that with a weekend research project.

Andrew C. Florance: You really need professionals to do this, leading to expensive write-offs and expensive drones. No big crashes yet; no big crashes, but odd looks from the neighbors. So I think the technology is going to go through a real exponential acceleration. I think data is super valuable. I think it's at the table stakes going forward for marketing space. I think it moves the AVMs, and I think as the rest of the world figures out that it's really silly.

Andrew C. Florance: I mean, to me today, to market an office building or a warehouse building or a hotel event space or a home without a digital twin is thoughtless. It's sort of inadequate. Do I sound passionate about that? Yes, you do. You do. I appreciate the answer. Thank you very much. Thank you. I would now like to turn the conference back to Andy for any closing remarks. Well, I'd like to thank you all for joining us again for our first quarter 2024 earnings call.

Andrew C. Florance: I'm glad we were able to report good results, initial results on the Homes.com monetization. And again, thank you, Scott, for all the outstanding work you've done. And Brian, I apologize for Scott poking the bear on the last CFO.

Andrew C. Florance: Thank you. Goodbye, everyone. Goodbye, everyone. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.

Q1 2024 CoStar Group Inc Earnings Call

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