Q4 2025 CoStar Group Inc Earnings Call

February 24, 2026

Speaker #1: Good day and thank you for standing by. Welcome to the Q4 and year-end 2025 COSTAR GROUP earnings conference call. At this time, all participants are in a listen-only mode.

Operator: Good day, thank you for standing by. Welcome to the Q4 and Year-End 2025 CoStar Group Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. I would now like to hand the conference over to your speaker today, Rich Simonelli, Head of Investor Relations.

Speaker #1: Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced.

Speaker #1: To withdraw your question, please press star 11 again. I would now like to hand the conference over to your speaker today, Rich Simonelli, Head of Investor Relations.

Speaker #2: Hello, and thank you for joining us to discuss the full year and fourth quarter of 2025 results of COSTAR GROUP. Before I turn the call over to Andy Florence, COSTAR CEO and founder, and Chris Lown, our CFO, I'd like to review our Safe Harbor statement.

Rich Simonelli: Hello, and thank you for joining us to discuss the full year and Q4 2025 results of CoStar Group. Before I turn the call over to Andy Florance, CoStar CEO and Founder, and Chris Lown, our CFO, I'd like to review our safe harbor statement. Certain portions of the discussion today may contain forward-looking statements, including the company's outlook and expectations for Q1, full year of 2026, and beyond. Forward-looking statements involve many risks, uncertainties of assumptions, estimates, and other factors that can cause actual results to differ materially from such statements.

Speaker #2: Certain portions of the discussion today may contain forward-looking statements, including the company's outlook and expectations for the first quarter, full year of 2026, and beyond.

Speaker #2: These statements are based on current beliefs and assumptions, and forward-looking statements involve many risks, uncertainties, assumptions, estimates, and other factors that can cause actual results to differ materially from such statements.

Rich Simonelli: 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 annual report on Form 10-K and quarterly reports on Form 10-Q, included under the heading Risk Factors in these filings, as well as other filings with the SEC available on the SEC's website. 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, except as required by applicable law. Reconciliation is the most directly comparable GAAP measure or of any non-GAAP financial measure discussed on this call, is shown in detail in our press release issued today, along with the definitions of those terms.

Speaker #2: 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 annual report on Form 10-K, and quarterly reports on Form 10-Q, included under the heading risk factors in these filings, as well as other filings with the SEC available on the SEC's website.

Speaker #2: All forward-looking statements are based on the information available to COSTAR on the date of this call. COSTAR assumes a new obligation to update these statements, whether as a result of new information, future events, or otherwise, except as required by applicable law.

Speaker #2: Reconciliation is the most directly comparable gap measure or of any non-gap financial measure discussed on this call as shown in detail in our press release, issued today.

Speaker #2: Along with the definitions of those terms, press release available on our website located at COSTARGROUP.COM under Press Room. Please refer to the press release on how to access the replay of this call.

Rich Simonelli: Press release available on our website, located at costargroup.com, under Press Room. Please refer to the press release on how to access the replay of this call. Remember, it's 1 question during the Q&A session, so make it a good 1. Be good. With that, I'd like to turn the call over to our Founder and CEO, Andy Florance.

Speaker #2: So remember, it's one question during the Q&A session, so make it a good one. Be good. And with that, I'd like to turn the call over to our founder and CEO, Andy Florence.

Speaker #3: I think today we're going to do two questions.

Andy Florance: I think today we're gonna do two questions.

Speaker #2: Nice.

Rich Simonelli: Nice.

Andy Florance: Good afternoon, everybody. Revenue for Q4 rose 27% year-over-year to $900 million. That's an increase of $191 million from $709 million of revenue in Q4 2024. Revenue for 2025 was $3.2 billion, up 19% from $2.7 billion in 2024. This is our 59th consecutive quarter of double-digit revenue growth. Adjusted EBITDA of 2025 was $442 million, up 83% from $241 million in 2024. This result positions us well to achieve our guidance range of $740 million to 800 million full-year adjusted EBITDA in 2026. With the heavy lifting of Homes.com national brand launch behind us, we are entering a phase of significant EBITDA expansion.

Speaker #3: Good afternoon, everybody. Revenue for the fourth quarter rose 27% year over year to $900 million. That's an increase of $191 million from $709 million of revenue in the fourth quarter of '24.

Speaker #3: Revenue for '25 was $3.2 billion up 19% from $2.7 billion in 2024. This is our 59th consecutive quarter of double-digit revenue growth. Adjusted EBIT of 2025 was $442 million up 83% from $241 million in 2024.

Speaker #3: This result positions us well to achieve our guidance range of $740 million to $800 million full-year adjusted EBIT in 2026. With a heavy lifting of home stock comp national brand launch behind us, we are entering a phase of significant EBIT expansion.

Speaker #3: We delivered our strongest year ever for annualized net new sales bookings in 2025, reaching $308 million up 23% from 2024. Fourth quarter net new bookings were up 42% year over year.

Andy Florance: We delivered our strongest year ever for annualized net new sales bookings in 2025, reaching $308 million, up 23% from 2024. Q4 net new bookings were up 42% year-over-year. We consider CoStar, LoopNet, Real Estate Manager, Ten-X, BizBuySell, and elements of Matterport as commercial real estate-related businesses, and their operations are connected and related. These commercial businesses, as a group, grew 20% year-over-year and generated $471 million of revenue in Q4 2025. For the full year, the commercial business grew 18% to reach $1.79 billion for the full year of 2025. The US commercial real estate market is showing good recovery from the extraordinary headwinds it experienced in the COVID years.

Speaker #3: We consider COSTAR loop net real estate manager 10x bids by sell and elements of Matterport as commercial real estate related businesses and their operations are connected and related.

Speaker #3: These commercial businesses, as a group, grew 20% year over year and generated $471 million of revenue in the fourth quarter of '25. For the full year, the commercial business grew 18% to reach $1.79 billion for the full year of 2025.

Speaker #3: The US commercial real estate market is showing good recovery from the extraordinary headwinds it experienced in the COVID years. After years of massive negative absorption of office space, it is now turned positive, and the past two quarters and it's been positive for the past two quarters and vacancies are clearly dropping.

Andy Florance: After years of massive negative absorption of office space, it has now turned positive in the past two quarters, and it's been positive for the past two quarters, and vacancies are clearly dropping. After the ultra-low COVID vacancy rates, industrial vacancy rates are normalizing. With the leasing fundamentals stabilizing, commercial sales volumes have climbed 30% year-over-year, in fact, now are above long-term averages. The CRE economy is shifting from headwind to tailwind. Our disclosures moving forward, we have combined CoStar with what we've previously referred to as information services. Any reference to CoStar now includes our information services products. As the CRE economy improves and we continue to expand the product offering, CoStar has generated 7 consecutive quarters of accelerating growth. Net new bookings in Q4 2025 were up 54% year-over-year.

Speaker #3: After the ultra-low COVID vacancy rates industrial vacancy rates are normalizing. With the leasing fundamentals stabilizing, commercial sales volumes have climbed 30% year over year and, in fact, now are above long-term averages.

Speaker #3: The CRE economy is shifting from headwind to tailwind. For our disclosures moving forward, we have combined COSTAR with what we've previously referred to as information services.

Speaker #3: Any reference to COSTAR now includes our information services products. As the CRE economy improves and we continue to expand the product offering, COSTAR GROUP has COSTAR has generated seven consecutive quarters of accelerating growth.

Speaker #3: Net new bookings in Q4 '25 were up 54% year over year. COSTAR revenues grew 10% year over year, generating $325 million in the fourth quarter of '25.

Andy Florance: CoStar revenues grew 10% year-over-year, generating $325 million in Q4 2025. We have grown the CoStar sales team 20% year-over-year to 492 reps, and believe that will support further revenue acceleration. We ended 2025 with our NPS at an all-time high of 70, and our quarterly renewal rate rose to 94%. CoStar now has more than 300,000 subscribers, up 26% year-over-year in Q4. Total searches in CoStar climbed 14% year-over-year to 422 million. CoStar Canada is solidly profitable and revenues grew 21% year-over-year. Canadian CoStar is French, English, bilingual. CoStar UK is solidly profitable, enjoying a 92% renewal rate, and has gained significant competitive share in 2025.

Speaker #3: We have grown the CoStar sales team 20% year over year to 492 reps and believe that we'll support further revenue acceleration. We ended 2025 with our NPS at an all-time high of 70, and our quarterly renewal rate rose to 94%.

Speaker #3: COSTAR now has more than 300,000 subscribers, up 26% year over year in Q4. Total searches in COSTAR climbed 14% year over year to 422 million.

Speaker #3: COSTAR Canada is solidly profitable, and revenues grew 21% year over year. Canadian COSTAR is French-English bilingual. COSTAR UK is solidly profitable, is enjoying a 92% renewal rate, and has gained significant competitive share in 2025.

Speaker #3: A primary UK competitor, e.g., RADIUS shut down their operations in December 2025. We have onboarded 166 of their reported 150 clients, so I think we got most of them, with 75% of them on three-year deals.

Andy Florance: A primary UK competitor, EG Radius, shut down their operations in December 2025. We have onboarded 166 of their reported 150 clients, so I think we got most of them, with 75% of them on three-year deals. EG Radius has passed between various ownership groups through time, but it descends from Estates Gazette, which was the clear major market leader in the UK when we entered that market 21 years ago. We have built out the software and datasets for CoStar France, and expect to release in Q2, and expect to have similar successes there.... We are now well underway in staffing our CoStar research and photography capabilities in Australia, with over 50 people already in place. These teams are instrumental in generating a depth of proprietary data and visual assets that's not currently available in Australia.

Speaker #3: E.G. RADIUS has passed between various ownership groups through time, but it descends from estates gazette, which was the clear major market leader in the UK when we entered that market 21 years ago.

Speaker #3: We have built out the software and data sets for COSTAR France, and expect to release in the second quarter and expect to have similar successes there.

Speaker #3: We are now well underway in staffing our COSTAR research and photography capabilities in Australia with over 50 people already in place. These teams are instrumental in generating a depth of proprietary data and visual assets that's not currently available in Australia.

Speaker #3: In just over six weeks, we've added thousands of listings, and we expect to release CoStar for Australia in late 2026. In a typical year, there are about 1 million new single-family homes and condos built in the US, with a combined value of just under half a trillion dollars.

Andy Florance: In just over 6 weeks, we've added thousands of listings, we expect to release CoStar for Australia in late 2026. In a typical year, there are about 1 million new single-family homes and condos built in the US, with a combined value of just under half a trillion dollars. The developers and lenders behind these projects need reliable information on supply, absorption, prices, land comps, and model mixes. Because 300+ developers are feeding us data to market their new homes for sale on Homes.com, we can release a new homes information module in CoStar in Q3 2026. With the wealth of residential land valuation analytic information already in CoStar, we can build a very competitive offering. We expect demand for new homes information is a $200 to 300 million revenue opportunity for CoStar.

Speaker #3: The developers and lenders behind these projects need reliable information on supply, absorption, prices, land comps, and model mixes. Because 300-plus developers are feeding a state-of-the-market their new homes for sale in homes.com, we can release a new homes information module in COSTAR in the third quarter of '26.

Speaker #3: With the wealth of residential land valuation analytic information already in COSTAR, we can build a very competitive offering. We expect demand for new homes information is a 200 to 300 million dollar revenue opportunity for COSTAR.

Speaker #3: In December, we launched our coverage of nearly 4,000 data centers worldwide. For each property, we have data on capacity, redundancy, and resilience attributes, and how well it fits in the broader build-out of the power grid infrastructure.

Andy Florance: In December, we launched our coverage of nearly 4,000 data centers worldwide. For each property, we have data on capacity, redundancy, and resilience attributes, and how well it fits in the broader build-out of the power grid infrastructure. The product also provides visibility into substation locations, transmission lines, their peak capacity, and retail utility providers. Our dataset includes over 1,600 individual center, with sales value exceeding $43 billion and over 29 gigawatts of power capacity. In an increasingly AI-centric global economy, our rapidly growing dataset will prove an invaluable day-to-day tool for center developers, operators, and owners. As discussed on previous earnings calls, we're developing a rent benchmark product, which we expect to deliver in Q2.

Speaker #3: The product also provides visibility into substation locations, transmission lines, their peak capacity, and retail utility providers. Our data set includes over 1,600 individual center with sales value exceeding $43 billion, and over 29 gigawatts of power capacity.

Speaker #3: In increasingly eccentric global economy, our rapidly growing data set will prove an invaluable day-to-day tool for center developers, operators, and owners. As discussed on previous earning calls, we're developing a rent benchmark product, which we expect to deliver in Q2.

Speaker #3: Built upon the industry's largest collection of lease deals, COSTAR rent benchmark uses AI to extract starting rents, TI allowances, rent concessions, escalations, and more from the actual legal leasing document.

Andy Florance: Built upon the industry's largest collection of lease deals, CoStar Rent Benchmark uses AI to extract starting rents, TI allowances, rent concessions, escalations, and more from the actual legal leasing document. After abstraction, leases are anonymized and aggregated to deliver the industry's only net effective rent product, allowing the user to understand the true cost of occupancy. Corporate occupiers, owners, and brokers alike will reap tremendous value from being able to tap into the largest source of verified lease information to inform their leasing decisions and more effectively manage their real estate portfolios. In January 2026, we added more than 110 million residential parcels into our CoStar information product, providing our users with public record information across every parcel in America. For STR, Q4 capped off a record-breaking 2025, delivering the highest net new revenue in the company's history there.

Speaker #3: After abstraction, leases are anonymized and aggregated to deliver the industry's only net effective rent product. Allowing the user to understand the true cost of occupancy.

Speaker #3: Corporate occupiers, owners, and brokers alike will reap tremendous value from being able to tap into the largest source of verified lease information to inform their leasing decisions and more effectively manage their real estate portfolios.

Speaker #3: In January 2026, we added more than 110 million residential parcels into our COSTAR information product. Providing our users with public record information across every parcel in America.

Speaker #3: For STR Q4 capped off a record-breaking 2025, delivering the highest net new revenue in the company's history there. 25% of that net new revenue came from owner and management companies.

Andy Florance: 25% of that net new revenue came from owner and management companies. Q4 also marked the completion of a major client migration, ultimately bringing 98,000 new users into the CoStar platform, with the STR benchmark feature serving as their entry point. Q4 was equally pivotal from a product development perspective, culminating in a major release this week. Yesterday, STR announced the launch of a profitability benchmarking, giving hotel owners and operators a fully integrated view of top-line and bottom-line performance. With this release, CoStar with STR Benchmark becomes the only hotel benchmarking solution to integrate revenue, expenses, profits, and full property lifecycle insights into one place. We have rebranded our lender product to CoStar Debt Solutions to better reflect the breadth of customers we serve, including banks, credit unions, private lenders, insurers, agency lenders, and debt funds, CMBS investors, and regulators.

Speaker #3: Q4 also marked the completion of a major client migration ultimately bringing 98,000 new users into the COSTAR platform with the STR benchmark feature serving as their entry point.

Speaker #3: Q4 was equally pivotal from a product development perspective, culminating in a major release this week. Yesterday, STR announced the launch of a profitability benchmarking giving hotel owners and operators a fully integrated view of top-line and bottom-line performance.

Speaker #3: With this release, COSTAR, with STR benchmark, becomes the only hotel benchmarking solution to integrate revenue, expenses, profits, and full property life cycle insights into one place.

Speaker #3: We have rebranded our lender product to COSTAR Debt Solutions to better reflect the breadth of customers we serve, including banks, credit unions, private lenders, insurers, agency lenders, and debt funds.

Speaker #3: CMBS investors and regulators. COSTAR Debt Solutions has surpassed 100 million in annual run rate revenue, and we see a clear path to a billion-dollar-plus opportunity as we expand our debt product with benchmarking, loan origination, and residential solutions.

Andy Florance: CoStar Debt Solutions has surpassed $100 million in annual run rate revenue. We see a clear path to a billion-dollar-plus opportunity as we expand our debt product with benchmarking, loan origination, and residential solutions. We expect to launch debt benchmarking in the second half of this year, with loan origination in Q1 2027. Having had a chance to look at some of the features of the debt benchmarking, it's really remarkable, I think it'll be an incredibly strong product. CoStar Real Estate Manager had an exceptionally strong Q4, with net new bookings in the quarter up 48% year-over-year and up 211% quarter-over-quarter. Revenues now exceed $120 million.

Speaker #3: We expect to launch debt benchmarking in the second half of this year with loan origination in the first quarter of 2027. Having had a chance to look at some of the features of the debt benchmarking, it's really remarkable, and I think it'll be an incredibly strong product.

Speaker #3: COSTAR real estate manager had an exceptionally strong fourth quarter with net new bookings in the quarter up 48% year over year and up 211% quarter over quarter.

Speaker #3: Revenue is now exceeding 120 million. We extended our reach into the Fortune 50 in 2025 with a new client win that's our largest initial contract ever for real estate manager.

Andy Florance: We've extended our reach into the Fortune 50 in 2025 with a new client win, that it's our largest initial contract ever for Real Estate Manager. We also won business from one of the top three real estate service providers in our industry, who will sunset their legacy in-house lease management technology in favor of outsourcing to Real Estate Manager. I'm pleased with the progress we're making on our product roadmap to consolidate Real Estate Manager, Visual Lease, CoStar, and our Transaction Manager into one best-in-class corporate real estate solution. In combination with AI-powered lease abstraction benchmarking, I believe we can take very significant share in this category over the next several years. LoopNet had an outstanding 2025, generating $312 million in revenue. Q4 2025 was the fastest growth at LoopNet since 2021, ending at 17% year-over-year.

Speaker #3: We also won business from one of the top three real estate service providers in our industry who will sunset their legacy in-house lease management technology in favor of outsourcing to real estate manager.

Speaker #3: I'm pleased with the progress we're making on our product roadmap to consolidate real estate manager visual lease, COSTAR, and our transaction manager into one best-in-class corporate real estate solution.

Speaker #3: In combination with AI-powered lease abstraction benchmarking, I believe we can take very significant share in this category over the next several years. LoopNet had an outstanding 2025, generating 312 million in revenue.

Speaker #3: Q4 '25 was the fastest growth that LoopNet since 2021, ending at 17% year over year. All of this was driven by record and net new sales, which tripled for the full year of '25 compared to '24.

Andy Florance: All of this was driven by record and net new sales, which tripled for the full year of 2025 compared to 2024. We intend to build on these extremely valuable gains by rapidly expanding the LoopNet sales team. We ended 2025 with 177 sales reps, and we plan to hire 80 more reps in 2026, a 43% increase. Over 2022 to 2024, LoopNet had over-indexed on depth advertising at the expense of coverage, and to some extent, to the expense of a predictable advertiser ROI. I'm pleased that our focus has changed, and that 93% of this record net new bookings in 2025 came from silver listings, which tend to have consistent higher renewal rates. Consequently, paid listings increased by 9% in the US, 42% in Canada, and 156% in the UK.

Speaker #3: We intend to build on these extremely valuable gains by rapidly expanding the LoopNet sales team. We ended Q4 '25 with 177 sales reps, and we plan to hire 80 more reps in '26, a 43% increase.

Speaker #3: Over 22 to 24, LoopNet had over-indexed on depth advertising at the expense of coverage and to some extent to the expense of a predictable advertiser ROI.

Speaker #3: I'm pleased that our focus has changed and that 93% of this record net new bookings in 2025 came from silver listings which tend to have consistent higher renewal rates.

Speaker #3: Consequently, paid listings increased by 9% in the US, 42% in Canada, and 156% in the UK. In fact, LoopNet offers more listings and therefore more searcher choice now in 90% of the user US markets versus last year, including every top 10 market in the US.

Andy Florance: In fact, LoopNet offers more listings and therefore more searcher choice now in 90% of the US markets versus last year, including every top 10 market in the US. In addition, our asset-based pricing tests now have thousands of transactions across multiple US markets, and the results are in. The strategy of linking price to the value of space being advertised is working. We intend to launch this new pricing model broadly across the US market and expect that it will continue to deliver material incremental growth in 2026. We're building out the first and only global commercial real estate marketplace with LoopNet. At the beginning of 2025, LoopNet was only present in Canada, the US, and UK. During the year, we launched in Spain and France, increasing the number of listings in Europe four times to over 130,000.

Speaker #3: In addition, our asset price our asset-based pricing tests now have thousands of transactions across multiple US markets, and the results are in. The strategy of linking price to the value of space being advertised is working.

Speaker #3: We intend to launch this new pricing model broadly across the US market and expect that it will continue to deliver material incremental growth in 2026.

Speaker #3: We're building out the first and only global LoopNet. At the beginning of '25, LoopNet was only present in Canada, the US, and UK. During the year, we launched in Spain and France, increasing the number of listings in Europe four times to over 130,000.

Speaker #3: In 2026, we will continue expanding LoopNet coverage by launching in Australia, and then Germany. As we grow, the network effects of LoopNet are increasing.

Andy Florance: In 2026, we will continue expanding LoopNet coverage by launching in Australia and then Germany. As we grow, the network effects of LoopNet are increasing. In 2026, we delivered over 400,000 leads and inquiries and 633 million total listing impressions. We are investing in Matterport's sales force in 2026, growing the team from 30 to 90 over the course of the year. This will enable us to expand our customer base, accelerate revenue growth in a wide range of segments, including residential, commercial, architecture, construction, insurance, and manufacturing. We eliminated approximately $120 million in cash and equity costs from the business in 2025, mostly from duplicative public company costs. The market-leading Pro3 camera has been the workhorse for our customers for the past few years. It's a wonderful camera.

Speaker #3: In 2026, we delivered over 400,000 leads and inquiries, and 633 million total listing impressions. We are investing in Matterport Salesforce in '26, growing the team from 30 to 90 over the course of the year.

Speaker #3: This will enable us to expand our customer base and accelerate revenue growth in a wide range of segments, including residential, commercial, architecture, construction, insurance, and manufacturing.

Speaker #3: We eliminated approximately 120 million in cash and equity costs from the business in '25, mostly from duplicative public company costs. The market-leading Pro3 camera has been the workhorse for our customers for the past few years.

Speaker #3: It's an wonderful camera. We will make it more accessible going forward for a wide range of customers by introducing a subscription-based pricing model in the future.

Andy Florance: We will make it more accessible going forward for a wide range of customers by introducing a subscription-based pricing model in the future, which is a little bit more of a razor blade model. We're currently hard at work on developing the next generation camera, the Pro4, which we expect will launch next year. The very popular Defurnish feature launched last year, which allows customers to remove objects such as furniture and clutter from spaces. We are developing the Furnish feature, which uses generative AI to virtually stage or imagine different uses for rooms. One result of this development is that we're gaining better semantic understanding of the space. We glean property data from this process that we can include in our centralized source of truth that can be leveraged across all CoStar products.

Speaker #3: Which is a little bit more of a razor-razor-razor blade model. We're currently hard at work on developing the next-generation camera of the Pro4, which we expect will launch next year.

Speaker #3: The very popular defurnace feature launched last year, which allows customers to remove objects such as furniture and clutter from spaces, we are developing the furnished feature, which uses generative AI to virtually stage or imagine different uses for rooms.

Speaker #3: One result of this development is that we're gaining better semantic understanding of the space. We glean property data from this process that we can include in our centralized source of truth that can be leveraged across all COSTAR products.

Speaker #3: As part of Matterport Exteriors, we're developing X-ray functionality that will allow users to remove elements of the building such as the roof or an entire floor to better understand the space in the context of the surroundings.

Andy Florance: As part of Matterport Exteriors, we're developing X-ray functionality that will allow users to remove elements of the building, such as the roof or an entire floor, to better understand the space in the context of the surroundings. We are integrating these capabilities into a seamless fly-through experience. This high-fidelity transition from exterior to interior creates a sophisticated narrative for the property, significantly elevating its market appeal and utility. BizBuySell generated $36 million in revenue in 2025 and growing EBITDA 19% over 2024, while delivering a 37% EBITDA margin. More than $143 billion in businesses for sale assets were marketed on the platform during the year, including $34 billion in commercial real estate. We are also steadily expanding the value of the platform through business comp data and workflow automation.

Speaker #3: We are integrating these capabilities into a seamless fly-through experience. This high-fidelity transition from exterior to interior creates a sophisticated narrative for the property, significantly elevating its market appeal and utility.

Speaker #3: This by self-generating 36 million revenue in 2025 and growing EBITDA 19% over '24, while delivering a 37% EBITDA margin. More than 143 billion in businesses for sale assets were marketed on the platform during the year, including 34 billion in commercial real estate.

Speaker #3: We are also steadily expanding the value of the platform through business comp data and workflow automation. Ed subscription revenue grew 35% in '25 as customers increasingly rely on our benchmarks to price with greater confidence.

Andy Florance: Add subscription revenue grew 35% in 2025, as customers increasingly rely on our benchmarks to price with greater confidence. At the same time, we are introducing features to streamline deal execution through Deal Accelerator. Adoption of Deal Accelerator continues to build, with 14% of broker members now using the product by year-end, capturing 10,000 qualified buyer profiles. CoStar Group's residential businesses aggregate consumer demand from homes for rent or sale, or apartments from rent or sale, we sell marketing and leads to the agents, owners, landlords, property management companies that need to market these properties to those consumers we aggregate. CoStar's residential business includes Apartments.com, Homes.com, Domain Residential, OnTheMarket, and Land.com. CoStar Group's residential revenue was $429 million in Q4 2025, up 35% year-over-year.

Speaker #3: At the same time, we are introducing features to streamline deal execution through Deal Accelerator. Adoption of Deal Accelerator continues to build with 14% of broker members now using the product by year-end, capturing 10,000 qualified buyer profiles.

Speaker #3: COSTAR Group's residential businesses aggregate consumer demand from homes for rent or sale or apartments from rent or sale, and we sell and market and sell marketing and leads to the agents, owners, landlords, property management companies, that need to market these properties to those consumers we aggregate.

Speaker #3: CoStar's residential business includes Apartments.com, Homes.com, Domain Residential, OnTheMarket, and Land.com. CoStar Group's residential revenue was $420.9 million in the fourth quarter of '25, up 35% year over year.

Speaker #3: For the full year 2025, revenue was $1.46 billion, up residential business is projected to be profitable in 2026, and we believe that it will eventually reach 50% margins.

Andy Florance: For the full year 2025, revenue was $1.46 billion, up 20% year-over-year. Our residential business is projected to be profitable in 2026, and we believe that it will eventually reach 50% margins. Apartments.com generated $308 million of revenue in the Q4, for an 11% increase year-over-year. Full year 2025 revenue was $1.25 billion. Apartments.com delivered for 841 million renter visits during the year. Those renters took 152 million Matterport 3D tours. They viewed over 16 billion photos, drove 16 million clicks directly to our customer community websites, and they submitted over 1 million applications directly from apartments.com. 1 million applications. That's good.

Speaker #3: Apartments.com generated $308 million of revenue in the fourth quarter for an 11% increase year over year. Full year '25 revenue was $1.25 billion. Apartments.com delivered $841 million renter visits during the year, and those renters took 152 million Matterport 3D tours.

Speaker #3: They viewed over 16 billion photos. Drove 16 million clicks directly to our customer community websites, and they submitted over 1 million applications directly from Apartments.com.

Speaker #3: 1 million applications. That's good. Apartment owners and managers realized that Apartments.com is the number one site recognized by Apartment Seekers with our 67% brand awareness in December, up 4 points from Q3 '25.

Andy Florance: Apartment owners and managers realize that Apartments.com is the number one site recognized by apartment seekers, with our 67% brand awareness in December, up 4 points from Q3 2025, while in contrast, the second rental competitor fell 5 points to 36%. We were thus able to accelerate our paying property count significantly in 2025 by adding almost 14,000 properties to our network to end the year at 89,275 properties. That's the largest number of properties we've ever added in a year. We won many of these new properties from Rent.com after Redfin, quote, unquote, sold those clients to Zillow. We estimate that Redfin had about four to 4.5 thousand apartment properties marketing on their platform that were not already on Apartments.com.

Speaker #3: While in contrast, the second rental competitor fell 5 points to 36%. We were thus able to accelerate our paying property count significantly in '25 by adding almost 14,000 properties to our network to end the year at 89,275 properties.

Speaker #3: That's the largest number of properties we've ever added in a year. We won many of these new properties from rent.com after Redfin "sold" those clients to Zillow.

Speaker #3: We estimate that Redfin had about 4,500 apartment properties marketing on their platform that were not already on Apartments.com. We signed approximately 1,200 of them to Apartments at just over about $1,000 a month, and we didn't have to acquire anything or end up in a legal thing.

Andy Florance: We signed approximately 1,200 of them to apartments at just over about $1,000 a month, and we didn't have to acquire anything or end up in a legal thing. This increase in properties, coupled with our 99% monthly renewal rate and 92 NPS, confirms that property owners and managers understand the value of the Apartments.com site, built specifically for the apartment industry. This is further reinforced by our number one ranking, 82% of the time for the core 10,000 multifamily SEO keywords and the most comprehensive SEM program in the industry. In 2025, our marketing campaign delivered over 12 billion media impressions, reaching 90% of US households. As you saw in our Super Bowl ad, we've begun to co-brand apartments with Homes.com, the place to find a place.

Speaker #3: This increase in properties coupled with our 99% monthly renewal rate and 92% NPS confirms that property owners and managers understand the value of the Apartments.com site built specifically for the apartment industry.

Speaker #3: This is further reinforced by our number one ranking 82% of the time for the core 10,000 multifamily SEO keywords, and the most comprehensive SEM program in the industry.

Speaker #3: In 2025, our marketing campaign delivered over 12 billion media impressions, reaching 90% of US households. As you saw in our Super Bowl ad, we've begun to co-brand Apartments with homes.com.

Speaker #3: The place to find a place. The campaign featuring Jeff Goldblum and Heidi Gardner, who have excellent chemistry together, kicked off with a Super Bowl which had a total audience of 125 million and the highest peak viewership in US media history.

Andy Florance: The campaign, featuring Jeff Goldblum and Heidi Gardner, who have excellent chemistry together, kicked off with a Super Bowl, which had a total audience of 125 million and the highest peak viewership in US media history. According to Comscore, visits to Apartments.com network were up 14% year-over-year in January. Our growth is in contrast with Comscore's data that showed that Zillow's rental traffic was down 48% year-over-year, and Zillow's partner, Redfin Rentals, was down 46% year-over-year. Zillow's expanded rental network, Zillow, Realtor, Redfin, was down 29% year-over-year in January. Zillow's rental revenue fell sequentially in Q4 compared to Q3 as the rental traffic was falling. With traffic falling, our closest competitor is now doing something called shotgunning leads.

Speaker #3: According to ComScore, visits to Apartments.com network were up 14% year over year in January. Our growth is in contrast with ComScore's data that showed that Zillow's rental traffic was down 48% year over year, and Zillow's partner Redfin Rentals was down 46% year over year.

Speaker #3: Zillow's expanded rental network, Zillow Realtor Redfin, was down 29% year over year in January. Zillow's rental revenue fell sequentially in the fourth quarter compared to the third quarter, as their rental traffic was falling.

Speaker #3: With traffic falling, our closest competitors now doing something called shotgunning leads. That's encouraging potential renters to contact not just the person you intend to contact, but all the competitors' properties and while this increases and distorts the number of pure leads, it significantly lowers the quality of the leads and therefore hurts ROI and lead-to-least conversion rate.

Andy Florance: That's encouraging potential renters to contact not just the person you intend to contact, but all the competitors' properties. While this increases and distorts the number of pure leads, it significantly lowers the quality of the leads and therefore hurts ROI and lead to lease conversion rate. Poor leads create more work for the apartment community as they sort through these leads to ultimately produce less leases. This behavior by our closest competitor, their drop in brand awareness, coupled with their traffic having declines and in site visits year-over-year, every single month in 2025, according to Comscore, makes us feel that our position within the multifamily industry is very solid. We currently have the largest and most active sales force in the industry.

Speaker #3: Poor leads create more work for the apartment community, as they sort through these leads to ultimately produce fewer leases. This behavior by our closest competitor, their dropping brand awareness coupled with their traffic having declines in site visits year over year every single month in '25, according to ComScore, makes us feel that our position within the multifamily industry is very solid.

Speaker #3: We currently have the largest and most active Salesforce in the industry. We add over 100 field and mid-market sales reps in '25 and ended the year with 522 total sales reps.

Andy Florance: We had over 100 field and mid-market sales reps in 2025, and ended the year with 522 total sales reps. These reps conducted 750,000 quality meetings in 2025, with over 350,000 of them in person. Our newer sales reps will continue to contribute more, as our experience has been that the reps that have been with us for a year add more net new revenue for us each year of experience they gain, until those reps with 5 years of experience are contributing 2 to 3 times what they did in year 1. We will continue to grow this sales team in 2026, as the opportunity in front of us is indeed massive.

Speaker #3: These reps conducted 750,000 quality meetings in '25, with over 350,000 of them in person. Our newer sales reps will continue to contribute more, as our experience has been that the reps who have been with us for a year add more net new revenue for us each year of experience they gain, until those reps with five years of experience are contributing two to three times what they did in year one.

Speaker #3: We will continue to grow this sales team in '26 as the opportunity in front of us is indeed massive. We still have approximately 460,000 prospects five units or larger and 22 million prospects under five units to sell to, with a total TAM of $10 billion.

Andy Florance: We still have approximately 460,000 prospects, 5 units or larger, and 22 million prospects under 5 units to sell to, with a total TAM of $10 billion. Apartment owners and managers need us now more than ever. They're operating in a macro environment, with overall vacancy rates still rising in Q4 to 8.5%, while vacancy in 4 or 5-star buildings were close to 12%. New supply, while lower in 2024, continued to exceed demand. The use of concessions continues to climb. In January, we saw almost half of all apartment buildings offering some type of concession, and that's up from 13% a year earlier. In just 2 years, Homes.com has become the fastest growing residential portal in the US.

Speaker #3: Apartment owners and managers need us now more than ever. They're operating in a macro environment with overall vacancy rates still rising in the fourth quarter to 8.5%, while vacancy in four or five-star buildings were close to 12%.

Speaker #3: And new supply, while lower in '24 than in '23, continued to exceed demand. The use of concessions continues to climb in January. We saw almost half of all apartment buildings offering some type of concession, and that's up from 13% a year earlier.

Speaker #3: In just two years, homes.com has become the fastest-growing residential portal in the US. In '25, the homes.com network had over 2.1 billion views and 100 million average monthly unique visitors to the network.

Andy Florance: In 2025, the Homes.com network had over 2.1 billion views and 100 million average monthly unique visitors to the network. Our January 2026 organic traffic increased 134% year-over-year and 21% month-over-month, hitting an all-time high. We feel we have achieved a good balance between SEM, SEO, and direct traffic. This allows us to optimize SEM for quality traffic and leads, not just pure quantity. Average session duration rose from 3 minutes and 36 seconds in January 2025 to 4 minutes, 33 seconds in January 2026. Our page sessions rose from 3.4 to 6.9 in the same year-over-year time period. Our bounce rate fell from 63% in January 2025 to 41% in January 2026. Lead volume rose 48% from January 2025 to January 2026.

Speaker #3: Our January '26 organic traffic increased 134% year over year, and '21% month over month, hitting an all-time high. We feel we have achieved a good balance between SEM, SEO, and direct traffic.

Speaker #3: This allows us to optimize SEM for quality traffic and leads, not just pure quantity. Average session duration rose from 3 minutes and 36 seconds in January 2025 to 4 minutes and 33 seconds in January 2026.

Speaker #3: Our page sessions rose from 3.4 to 6.9 in the same year-over-year time period. Our bounce rate fell from 63% in January '25 to 41% in January '26.

Speaker #3: Lead volume rose 48% from January '25 to January '26. Member lead volume rose 187% from January '25 to January '26. Rental lead volume rose 54% from January '25 to January '26.

Andy Florance: Member lead volume rose 187% from January 25 to January 26. Rental lead volume rose 54% from January 25 to January 26. Homes.com subscribers paid to promote 216,000 active listings, representing 9.4% of 2.3 million homes for sale in the US in Q4 2025. We now have over 31,000 agent subscribers, generating $100 million in annualized revenue run rate, with 76% of them on annual contracts. For CoStar, this is the fastest organic revenue build we've ever had for a new product, and we've achieved this revenue level faster than our US competitors, years faster. We have built a dedicated sales force of 600 sales reps to reach the top 750,000 agents in the business.

Speaker #3: Homes.com subscribers paid to promote 216,000 active listings representing 9.4% of the 2.3 million homes for sale in the US in Q4 '25. We now have over 31,000 agent subscribers generating 100 million in annualized revenue run rate, with 76% of them on annual contracts.

Speaker #3: For CoSTAR, this group, this is the fastest organic revenue build we've ever had for a new product. And we've achieved this revenue level faster than our US competitors, years faster.

Speaker #3: We have built a dedicated Salesforce of 600 sales reps, to reach the top 750,000 agents in the business. We've achieved and climbed to an excellent NPS score of 42 in less than two years, and it's still improving.

Andy Florance: We've achieved and climbed to an excellent NPS score of 42 in less than two years, and it's still improving. Our Your Listing, Your Lead principle in our market, the home and win more listings model, is now clearly resonating with agents. Homes.com is the only real estate portal in the United States whose core business model is to use the power of the internet to help real estate agents market their listings to potential home buyers. The Homes.com business model is the global best practice for real estate portals, and it's utilized by REA Group, idealista, Rightmove, Scout24, Hemnet, Domain, and many, many others.

Speaker #3: Are your listing your lead principal in our market, the home and win more listings model is now clearly resonating with agents. Homes.com is the only real estate portal in the United States whose core business model is to use the power of the internet to help real estate agents market their listings to potential homebuyers.

Speaker #3: The homes.com business model is the global best practice for real estate portals and it's utilized by REA Group, ED Lister, Rightmove, Scout24, Hemnet, Domain, and many, many others.

Speaker #3: If you normalize these portals' financials from their home countries to the US on a GDP basis, they would be generating 4 to 21 billion in revenue in the US and 1.5 to 11 billion of EBITDA in the US.

Andy Florance: If you normalize these portals financials from their home countries to the US on a GDP basis, they would be generating $4 to $21 billion in revenue in the US and $1.5 to $11 billion of EBITDA in the US, which is orders of magnitude more than anyone has ever generated in the United States. We believe we can generate $4.75 billion of revenue and $2.85 billion of EBITDA with Homes.com inside the next 13 years. Apartments.com has a very similar business model to Homes.com and grew revenue initially at a measured pace, but now, over 13 years, has reached $1.2 billion of revenue run rate with very high margins. The growth of Apartments and homes looks very similar at this point.

Speaker #3: Which is orders of magnitude more than anyone's ever generated in the United States. We believe we can generate 4.75 billion of revenue and 2.85 billion of EBITDA with homes.com inside the next 13 years.

Speaker #3: Apartments.com has a very similar business model to homes.com, and grew revenue initially at a measured pace, but now over 13 years has reached 1.2 billion of revenue run rate with very high margins.

Speaker #3: The growth of apartments and homes looks very similar at this point. Apartment real estate in the US is worth $6 trillion, while single-family homes and condos are worth almost 10 times as much at $56 trillion.

Andy Florance: Apartment real estate in the US is worth $6 trillion, while single-family homes and condos are worth almost 10 times as much at $56 trillion. Six trillion for apartments, $56 trillion for homes. In that context, it's very credible to believe that Homes.com can generate $5 billion in revenue with the next decade or so. Homes has a clear empirical potential for a very high IRR, similar to high IRRs, ranging from 17% to 53% we've generated on our other major investments like CoStar Apartments, LoopNet, Real Estate Manager, Land, BizBuySell, and STR. We have a clear path to accelerate top-line growth and drive profitability. We've reduced our net investment in Homes.com by $300 million in 2026 over 2025, and continued reducing the investment each year with discipline until we reach run rate profitability in 2029 and full profit, year profitability in 2030.

Speaker #3: So, $6 trillion for apartments, $56 trillion for homes. In that context, it's very credible to believe that Homes.com can generate $5 billion in revenue over the next decade or so.

Speaker #3: Homes has a clear empirical potential for a very high IRR, similar to high IRRs ranging from 17 to 53%. We've generated on our other major investments like CoSTAR Apartments, LoopNet Real Estate Manager, LandBizBysell.

Speaker #3: And STR. We have a clear path to accelerate top-line growth and drive profitability. Thus, we've reduced our net investment in homes.com by $300 million in 26 over 25, and continued to continue reducing the investment each year with discipline until we reach run rate profitability in '29 and full profit year profitability in 2030.

Speaker #3: Competing US real estate portals suffer from a lack of profitability and low growth, not because there's MLS in the US, but because they have chosen an inferior business model.

Andy Florance: Competing US real estate portals suffer from a lack of profitability and low growth, not because there's MLS in the US, but because they have chosen an inferior business model. In contrast to Homes.com, our US competitors' primary business model is to sell lower value buyer agency leads to a much smaller audience, rather than marketing the valuable homes. Selling buyer agency leads became their primary business model when their iBuying businesses, iBuying business models failed spectacularly. Last week, we launched the game-changing Homes AI, which we believe is the best-in-class and first fully integrated proprietary vertical real estate application, built upon the best strengths of the leading LLMs. One of the unique aspects of this product is that the UX is completely aware of the AI, and the AI is completely aware of the UI, and they work together seamlessly and beautifully.

Speaker #3: In contrast to homes.com, our US competitor's primary business model is to sell lower value buyer agency leads to a much smaller audience. Rather than marketing the valuable homes.

Speaker #3: Selling buyer agency leads became their primary business model. When their iBuying businesses iBuying business models failed, spectacularly. Last week, we launched the game-changing Homes AI, which we believe is the best in class and first fully integrated proprietary vertical real estate application built upon the best strengths of the leading LLMs.

Speaker #3: One of the unique aspects of this product is that the UX is completely aware of the AI and the AI is completely aware of the UI, and they work together seamlessly and beautifully.

Speaker #3: We strongly believe Homes AI will drive higher engagement, support significant growth in organic traffic, and contribute to a meaningful increase in agent subscriptions. Homes AI is either conversational or text interface with a highly artificial with a highly intelligent artificial intelligence real estate expert that guides the homebuyer through the search, exploration, comparison of homes, communities, and valuations.

Andy Florance: We strongly believe Homes AI will drive higher engagement, support significant growth in organic traffic, and contribute to a meaningful increase in agent subscriptions. Homes AI is either conversational or text interface with a highly intelligent artificial intelligence real estate expert, that guides the home buyer through the search, exploration, comparison of homes, communities, and valuations. Homes AI is like having a conversation with a knowledgeable real estate advisor who knows everything about all the properties, rather than spending your time doom scrolling through a static website searching with filters. It's the perfect example of extraordinary discontinuous innovation. The most common reaction we get from people who see it for the first time is, wow! A Homes.com member named Kim Owen said, That's amazing. I'm just flabbergasted.

Speaker #3: Homes AI is like having a conversation with a knowledgeable real estate advisor who knows everything about all the properties rather than spending your time doomscrolling through a static website searching with filters.

Speaker #3: It's the perfect example of extraordinary discontinuous innovation. The most common reaction we get from people who see it for the first time is, "Wow, a homes.com member named Kim Owen said, 'That's amazing.'" "I'm just flabbergasted.

Speaker #3: I think this is probably one of the best investments we've ever made," Stephanie Colinoff, another Homes.com member, said. "Freaking amazing. Seriously, thank you."

Andy Florance: I think this is probably the one of the best investments we've ever made." Steffi Kulinoff, another Homes.com member, said, quote, "Freaking amazing. Seriously, thank you. I love it. I could totally see my clients jonesing on this, and I think it's great for us as well. Like, it's really easier than searching MLS. Seriously, it's really terrific." End quote. Yet another Homes.com member, Susan Reres, gushed, quote, "You have just absolutely floored me. I cannot believe this. I mean, truly, this is a What did you call it? Homes AI?" End quote. In the first week post-release, Homes AI is having a huge impact on user engagement. Site visitors that hit the AI mode are on the site for 16 minutes, 50 seconds, as opposed to 4 minutes, 24 seconds for non-users.

Speaker #3: I love it. I could totally see my clients jonesing on this, and I think it's great for us as well. It's really easier than searching MLS.

Speaker #3: Seriously, it's really terrific. Yet another homes.com member, Susan Rehrez, gushed, "You have just absolutely floored me. I cannot believe this. I mean, truly, this is a what did you call it?

Speaker #3: Homes.ai?" In the first week post-release, Homes AI is having a huge impact on user engagement. Site visitors that hit the AI mode are on the site for 16 minutes, 50 seconds, as opposed to 4 minutes, 24 seconds for non-users.

Speaker #3: AI users do nearly four times as many searches. Favorite seven times as many properties. Look at four times as many properties. And submit seven times as many email leads.

Andy Florance: AI users do nearly four times as many searches, favorite seven times as many properties, look at four times as many properties, and submit seven times as many email leads. This transformative home search experience is powered by Microsoft Azure OpenAI advanced AI models, integrated with several other large and small models, including some models from AWS, as well as our own proprietary AI model. Using multiple models gives us tremendous flexibility and keeps token costs down. Using dynamic example injection, queries that originally consumed 2,000 tokens have been optimized to just 20 tokens. Unlike other AI implementations, Homes AI data remains entirely within the Homes.com proprietary ecosystem and is never used to train or refine external AI models, giving us a real advantage as we build out the best-in-class real estate AI.

Speaker #3: This transformative home search experience is powered by Microsoft Azure OpenAI Advanced AI Models, integrated with several other large and small models. Including some models from AWS, as well as our own proprietary AI model.

Speaker #3: Using multiple models gives us tremendous flexibility and keeps token costs down. Using dynamic example injection, queries that originally consumed 2,000 tokens have been optimized to just 20 tokens.

Speaker #3: Unlike other AI implementations, Homes AI data remains entirely within the homes.com proprietary ecosystem, and is never used to train or refine external AI models, giving us a real advantage as we build out the best-in-class real estate AI.

Speaker #3: While we're launching the capability of homes.com, we plan to deploy it to apartments.com, CoSTAR, LoopNet, LandBizBysell as soon as possible. We believe I believe that our deployment of this advanced AI software will result in substantial competitive advantage for CoSTAR Group for years to come.

Andy Florance: While we're launching the capability of Homes.com, we plan to deploy it to Apartments.com, CoStar, LoopNet, Land, BizBuySell as soon as possible. I believe that our deployment of this advanced AI software will result in substantial competitive advantage for CoStar Group for years to come. Homes.com is already and will become an even more important strategic part of Apartments.com's strategic success. While the Apartments.com brand is optimized to institutional rentals, Homes.com is optimized to single-family home and rental condos. With tens of millions of single-family rentals in the US, we believe that it represents at least half of the rental market in the US, and it's a $5 billion TAM. Homes.com is our essential gateway to reach the single-family rental market. In addition, just over half of all renters begin their home shopping journey open to renting or buying.

Speaker #3: Homes.com is already, and will become an even more important strategic part of Apartments.com's strategic success. While the Apartments.com brand is optimized to institutional rentals, Homes.com is optimized to single-family homes and rental condos.

Speaker #3: With tens of millions of single-family rentals in the US, we believe that it represents at least half of the rental market in the US, and it's a $5 billion TAM.

Speaker #3: Homes.com is our essential gateway to reach the single-family rental market. In addition, just over half of all renters begin their home shopping journey open to renting or buying.

Speaker #3: Apartments.com needs homes.com in order to bring those considering buying into the top of the rental funnel on one of our platforms. Our homes.com rentals traffic, which grew 25% year over year, is robust and important, and homes.com is second only to apartments.com as the top rentals traffic contributor to our network of 10 rental brands.

Andy Florance: Apartments.com needs Homes.com in order to bring those considering buying into the top of the rental funnel on one of our platforms. Our Homes.com's rentals traffic, which grew 25% year-over-year, is robust and important, and Homes.com is second only to Apartments.com as the top rentals traffic contributor to our network of 10 rental brands. In Q4 2025, Homes.com rentals traffic already accounted for 10% of the apartments network traffic, and we anticipate that it will grow very significantly. Our residential business achieved a record of 642,000 paid single-family rental listings in 2025, up 49% over the prior year. 400,000 new independent owners used our rental tools in 2025. We made the processing of over $5.5 billion in rents faster, allowing independent owners to receive 60% of their rent payments faster through Express Pay.

Speaker #3: In Q4 '25, homes.com rentals traffic already encountered for 10% of the apartments network traffic, and we anticipate that it will grow very significantly. Our residential business achieved a record of 642,000 paid single-family rental listings in '25, up 49% over the prior year.

Speaker #3: 400,000 new independent owners used our rental tools in '25. We made the processing of over 5.5 billion in rents faster, allowing independent owners to receive 60% of their rent payments faster through express pay.

Speaker #3: In '26, we will complete the process of offering all of the tools for the individual owner trying to manage rentals that you find on Apartments.com.

Andy Florance: In 2026, we will complete the process of offering all of the tools for the individual owner, trying to manage rentals that you find on Apartments.com. It'll be available on Homes.com, allowing those owners to rent their house, condo, townhouse on either platform. We began selling enhanced exposure on Homes.com to new home builders in August of 2025. In Q3, we delivered 524,000 annualized net new bookings for new construction. In Q4, we generated $1.2 million in annualized net new bookings, a 125% quarter-over-quarter increase. In just four months, this resulted in a total of $1.7 million in annualized net new bookings. Our Domain residential platform in Australia, in Q4, our residential marketplace, Domain, had revenue of $73 million, which was well ahead of our expectations.

Speaker #3: It'll be available on a homes.com. Allowing those owners to rent their house, condo, townhouse, on either platform. We began selling enhanced exposure on homes.com to new homebuilders in August of '25.

Speaker #3: In Q3, we delivered 524,000 annualized net new bookings for new construction. In Q4, we generated 1.2 million in annualized net new bookings, a 125% quarter-over-quarter increase.

Speaker #3: In just four months, this resulted in a total of $1.7 million in annualized net new bookings. Our Domain residential platform in Australia, in Q4, our residential marketplace Domain had revenue of $73 million, which was well ahead of our expectations.

Speaker #3: Domain residential marketplace is profitable, delivering approximately 28% margins in '25. Domain will become a part of homes.com within a year to 18 months. In the fourth quarter, we had exceptional audience momentum resulting in domain's strongest audience quarter on record.

Andy Florance: Domain residential marketplace is profitable, delivering approximately 28% margins in 2025. Domain will become a part of Homes.com within a year to 18 months. In Q4, we had exceptional audience momentum, resulting in Domain's strongest audience quarter on record, with an average of 8 million monthly unique audience. In October, Domain delivered a record residential audience of 9 million, up from 6.6 million in July, the month prior to our acquisition. Domain added 6 times more audience volume than its nearest competitor in Q4 2025 compared to Q3 2025. We did this through strategic increases in marketing investment, improved media mix, and leveraging Homes.com technology capabilities to deliver improvements in product speed, latency, and user experience. These results highlight our ability to realize global synergies that deliver competitive advantage. As our audience grew, quality remains a key advantage.

Speaker #3: With an average of 8 million monthly unique audience, in October Domain delivered a record residential audience of 9 million, up from 6.6 million in July, the month prior to our acquisition.

Speaker #3: Domain added six times more audience volume than its nearest competitor in Q4 '25 compared to Q3 '25. We did this through strategic increases in marketing investment, improved media mix, and leveraging homes.com technology capabilities to deliver improvements in product speed, latency, and user experience.

Speaker #3: These results highlight our ability to realize global synergies that deliver competitive advantage. As our audience grew, quality remains a key advantage. Inquiry volumes grew 21% year over year.

Andy Florance: Inquiry volumes grew 21% year-over-year. Last week, we announced the planned divestment of a number of non-core, non-strategic products at Domain so that we can sharpen our focus on the marketplace core businesses, which operate at excellent margin. This will temporarily eliminate some revenue, but will have a positive impact on profitability, and will allow the business to be more strongly focused on the key opportunities we see in commercial and residential in Australia. We are actively working on integrating the Domain residential platform into Homes.com and the Homes AI software platform. Doing so is essential to improving margins by eliminating duplicative development efforts and creating a cost-efficient competitive edge in Australia. In the UK, we had an excellent year at OnTheMarket. We ended 25 with our 20th consecutive month of positive net new bookings.

Speaker #3: Last week, we announced the planned investment of a number of non-core, non-strategic products at domain so that we can sharpen our focus on the marketplace core businesses which operate at excellent margin.

Speaker #3: This will temporarily eliminate some revenue, but will have a positive impact on profitability, and will allow the business to be more strongly focused on the key opportunities we see in commercial and residential in Australia.

Speaker #3: We are actively working on integrating the domain residential platform into homes.com and homes and the homes AI software platform. Doing so is essential to improving margins by eliminating duplicative development efforts, and creating a cost-efficient competitive edge in Australia.

Speaker #3: In the UK, we had an excellent year on the market. We ended '25 with our 20th consecutive month of positive net new bookings. We now have about the same number of listings as the number two player in the United Kingdom, and we have new more new home listings than the number one player.

Andy Florance: We now have about the same number of listings as the number two player in the United Kingdom, and we have more new home listings than the number one player, continuing to gain share there. We have achieved huge growth since our acquisition two years ago, growing sales leads by 94%, properties on site by 47%, increasing our re- brand awareness by 54%, increasing time on site by 77%. Importing best practices from Homes.com, OnTheMarket has dramatically improved the consumer experience with list and map view, along with rich map layers, property alerts that have become our largest source of leads. We plan to integrate OnTheMarket into Homes.com software platform environment in 2027 after we've completed migrating Domain into Homes.com. Our land business maximizes listings and brand exposure for America's top farm and lifestyle ranch brokerages.

Speaker #3: Continuing to gain share there. We have achieved huge growth since our acquisition two years ago. Growing sales leads by 94%, properties on site by 47%, increasing brand awareness by 54%, increasing time on site by 77%.

Speaker #3: Importing best practices from Homes.com, OnTheMarket has dramatically improved the consumer experience with list and map view, along with rich map layers, and proper alerts that have become our largest source of leads.

Speaker #3: We plan to integrate On the Market into the Homes.com software platform environment in '27 after we've completed migrating Domain into Homes.com. Our land business maximizes listings and brand exposure for America's top farm and lifestyle ranch brokerages.

Speaker #3: This is a 4.4 trillion asset class, and they're essentially homes. In '25, we had almost 9,000 member agents promoting 144,000 listings. Our addition to the more agricultural focus acre value strengthened our offering with aggregated nationwide farmland data such as soil surveys, flood hazards, crop productivity, and sales.

Andy Florance: This is a $4.4 trillion asset class, and they're essentially homes. In 25, we had almost 9,000 member agents promoting 144,000 listings. Our addition to the more agricultural focus, AcreValue strengthened our offering with aggregated nationwide farmland data, such as soil surveys, flood hazards, crop productivity, and sales. This powers Farmer Mac's Farmland Price Index and has created powerful automated valuation tools for use by lenders. CoStar Group is emerging as a clear winner in the artificial intelligence era. We're positioned to take transformative share with the advantage Homes AI gives us. We are using AI to cut significant costs and improve our product offerings and quality. We're launching new transformative products that would not have been feasible without our AI innovation. Finally, LLMs do not create information from thin air.

Speaker #3: This powers Farmer Max Farmland Price Index and has created powerful automated valuation tools for use by lenders. CoStar Group is emerging as a clear winner in the artificial intelligence era.

Speaker #3: We're positioned to take transformative share with the advantage homes AI gives us. We are using AI to cut significant costs and improve our product offerings and quality.

Speaker #3: We're launching new transformative products that would not have been feasible without our AI innovation. Finally, LLMs do not create information from thin air. Effective LLMs require massive amounts of accurate accessible data and no one has more proprietary real estate information than COSTAR GROUP.

Andy Florance: Effective LLMs require massive amounts of accurate, accessible data, and no one has more proprietary real estate information than CoStar Group. CoStar information products are protected by strong authentication. We've accumulated over 2.4 trillion fields of data. Only about 25% of our data is available on CoStar Group marketing portals. That means that the CoStar Group information content is not available to LLM AI crawlers. LLMs do not have the rights and cannot display CSGP imagery, including Matterport photos and videos. Over 35 years, we've collected nearly 700,000 Matterports and billions of proprietary images. The agentic tagging of our photographs creates hundreds of billions of new searchable, displayable, and model-ready data fields. We have massive proprietary information, 150 million properties. We receive direct leads of information from our clients that don't appear on the open internet.

Speaker #3: COSTAR information products are protected by strong authentication. We've accumulated over 2.4 trillion fields of data. Only about 25% of our data is available on COSTAR GROUP marketing portals.

Speaker #3: That means that the CoStar Group information content is not available to LLM AI crawlers. LLMs do not have the rights and cannot display CSGP imagery, including Matterport photos and videos.

Speaker #3: Over 35 years, we've collected nearly 700,000 Matterports and billions of proprietary images. The agentic tagging of our photographs creates hundreds of billions of new searchable, displayable, and model-ready data fields.

Speaker #3: We have massive proprietary information 150 million properties. We receive direct leads of information from our clients that don't appear on the open internet. Over 94,000 hotels provide us confidential performance data more than 500 financial institutions provide us with detailed confidential loan data.

Andy Florance: Over 94,000 hotels provide us confidential performance data. More than 500 financial institutions provide us with detailed confidential loan data. Over 2,000 corporations, including half the Fortune 500, provide us with millions of confidential lease documents. Hundreds of thousands of real estate brokers, brokerages, feed us millions of listings digitally, many of which do not appear on the open internet. 280 home builders, it's actually 300 home builders, feed us details digitally on their communities, and nearly 85,000 apartment managers give us direct digital access to extensive details about their properties. While there's a lot of accessible real estate data open to LLM crawlers, only CoStar has the massive, very difficult to replicate volumes of high quality, system of record, proprietary real estate data.

Speaker #3: Over 2,000 corporations, including half the Fortune 500, provide us with millions of confidential lease documents. Hundreds of thousands of real estate brokers and brokerages feed us millions of listings digitally, many of which do not appear on the open internet.

Speaker #3: 300 homebuilders feed us details digitally on their communities, and nearly 85,000 apartment managers give us direct digital access to extensive details about their properties.

Speaker #3: While there’s a lot of accessible real estate data open to LLM crawlers, only CoStar has the massive, very difficult-to-replicate volumes of high-quality, system-of-record proprietary real estate data.

Speaker #3: We believe that we will be competitively advantaged for building the most transformative AI-powered real estate solutions. So let me close with this. The results and the plan you heard today reflect what COSTAR has always done.

Andy Florance: We believe that we will be competitively advantaged for building the most transformative AI-powered real estate solutions. Let me close with this: the results and the plan you heard today reflect what CoStar has always done, build durable platforms on proprietary data, run them with discipline, and compound long-term shareholder value. We've strengthened our governance and capital allocation oversight. We're matching strategy with clear financial priorities, profitable growth, expanding adjusted EBITDA, and returns of capital. We're scaling Homes.com because it strengthens our entire real estate ecosystem globally and the completeness of our data, and we're doing it with a clear investment glide path. On AI, we're not conceding the future. We're productizing our proprietary information with experiences like you see in Homes AI, while driving efficiency across the company. Thank you for your trust and partnership, and I'll turn the call over to Mr.

Speaker #3: Build durable platforms on proprietary data, run them with discipline, and compound long-term shareholder value. We've strengthened our governance and capital allocation oversight, and we're matching strategy with clear financial priorities, profitable growth, expanding adjusted EBITDA, and returns of capital.

Speaker #3: We're scaling homes.com because it strengthens our entire real estate ecosystem globally and the completeness of our data. And we're doing it with a clear investment glide path.

Speaker #3: And on AI, we're not conceding the future. We're productizing our proprietary information with experiences like you see in homes AI. While driving efficiency across the company.

Speaker #3: So, thank you for your trust and partnership, and I'll turn the call over to Mr. Chris Oh, our CFO.

Andy Florance: Chris Hong, our CFO.

Speaker #2: Thank you, Andy. For the full year of 2025, revenue was $3.2 billion, and 19% year over year increase over 2024. This was ahead of consensus and above the high end of our full year revenue guidance range.

Chris Lown: Thank you, Andy. For the full year of 2025, revenue was $3.2 billion, a 19% year-over-year increase over 2024. This was ahead of consensus and above the high end of our full-year revenue guidance range. Our revenue outperformance primarily came from higher than expected contributions from CoStar, Matterport, and Domain. Full year adjusted EBITDA in 2025 also came in above expectations at $442 million, posting a 14% adjusted EBITDA margin. This also exceeded consensus in the high end of our guidance range. The combination of our revenue beat and lower than anticipated personnel costs drove the adjusted EBITDA beat for the year. As Andy mentioned in his remarks, we've revised our reporting segments into a commercial segment and a residential segment.

Speaker #2: Our revenue outperformance primarily came from higher than expected contributions from COSTAR, Matterport, and Domain. Full year adjusted EBITDA in 2025 also came in above expectations at $442 million, posting a 14% adjusted EBITDA margin.

Speaker #2: This also exceeded consensus and the high end of our guidance range. The combination of our revenue beat and lower than anticipated personnel costs drove the adjusted EBITDA beat for the year.

Speaker #2: As Andy mentioned in his remarks, we've revised our reporting segments into a Commercial segment and a Residential segment. The new presentation aligns with how we view and manage the business, and we believe it provides shareholders with the best understanding and representation of our financial performance.

Chris Lown: The new presentation aligns with how we view and manage the business, and we believe it provides shareholders with the best understanding and representation of our financial performance. On this call, I will address our results under both our historical and new disclosure methodologies. Going forward, I will discuss business performance and expectations using our new segment and disaggregated revenue disclosures. Revenue from our commercial segment totaled $1.79 billion, an 18% year-over-year increase from $1.52 billion in 2024. Our commercial segment is comprised of what we previously disclosed to CoStar, previously disclosed as CoStar and LoopNet, which also includes Domain's commercial marketplace, Information Services, Ten-X, BizBuySell, and Matterport. Ten-X, BizBuySell, and Matterport were previously included in other revenue. The 2025 acquisitions of Matterport and Domain contributed around 10 percentage points of this 18% revenue growth.

Speaker #2: On this call, I will address our results under both our historical and new disclosure methodologies. Going forward, I will discuss business performance and expectations using our new segment and disaggregated revenue disclosures.

Speaker #2: Revenue from our commercial segment totaled $1.79 billion. An 18% year over year increase from $1.52 billion in 2024. Our commercial segment is comprised of what we previously disclosed to COSTAR, previously disclosed as COSTAR, LubeNet, which also includes Domain's commercial marketplace, information services, 10X, BizBySell, and Matterport.

Speaker #2: 10X, BizBuySell, and Matterport were previously included in other revenue. The 2025 acquisitions of Matterport and Domain contributed around 10 percentage points of this 18% revenue growth.

Speaker #2: Revenue from our Residential segment totaled $1.46 billion, a 20% increase year over year, with an organic growth rate of 12%. The Residential segment includes Apartments.com, Homes.com, OnTheMarket, Land.com, and the residential revenue from Domain.

Chris Lown: Revenue from our residential segment totaled $1.46 billion, a 20% increase year-over-year, with an organic growth rate of 12%. The residential segment includes Apartments.com, Homes.com, OnTheMarket, Land.com, and the residential revenue from Domain. Here's a breakdown of our revenue by product that is consistent with our prior guidance. Apartments.com revenue grew 11% for both the Q4 and full year of 2025, in line with our expectations. We continue to see significant opportunity across all the Apartments.com TAMs, and saw a year-over-year rooftop growth of 18% to 89,275 at year-end 2025. We continue to invest in Apartments.com and expect to add an additional 50 salespeople in 2026, after adding nearly 100 in 2025.

Speaker #2: Here's a breakdown of our revenue by product that is consistent with our prior guidance. Apartments.com revenue grew 11% for both the fourth quarter and full year of 2025, in line with our expectations.

Speaker #2: We continue to see significant opportunity across all the apartments.com TAMs and saw a year-over-year rooftop growth of 18% to 89,275 at year-end 2025. We continue to invest in apartments.com and expect to add an additional 50 salespeople in 2026 after adding nearly 100 in 0 in 2025.

Speaker #2: Residential revenue was $108 million in the fourth quarter and $218 million for the full year of 2025, above the high end of our guidance estimate.

Chris Lown: Residential revenue was $108 million in Q4 and $218 million for the full year of 2025, above the high end of our guidance estimate. As a reminder, this revenue grouping included Homes, OnTheMarket, and Domain Residential. Revenue in 2025 included a $95 million contribution from Domain's residential revenue, with Homes.com delivering an impressive 63% year-over-year growth rate. CoStar revenue grew 9% for Q4 and 7% for the full year of 2025. This was at the high end of our guidance and a fantastic result as we are emerging from the worst commercial real estate crisis in recent memory. CoStar rep productivity increased every quarter in 2025, as this team delivered its highest sales year since 2022.

Speaker #2: As a reminder, this revenue grouping included Homes, On The Market, and Domain Residential. Revenue in 2025 included a $95 million contribution from Domain's residential revenue, with Homes.com delivering an impressive 63% year-over-year growth rate.

Speaker #2: CoStar revenue grew 9% for the fourth quarter and 7% for the full year of 2025. This was at the high end of our guidance and a fantastic result, as we are emerging from the worst commercial real estate crisis in recent memory.

Speaker #2: COSTAR reproductivity increased every quarter in 2025, as this team delivered its highest sales year since 2022. At 94%, COSTAR also saw its highest renewal rate since Q4 2022, with COSTAR debt solutions and STR posting strong year-over-year growth.

Chris Lown: At 94%, CoStar also saw its highest renewal rate since Q4 2022, with CoStar Debt Solutions and STR posting strong year-over-year growth. We are extremely excited about CoStar's pending product launches as we look to expand CoStar Debt Solutions' capabilities into our origination workflow solutions, expand STR's financial reporting modules, and launch the groundbreaking lease benchmarking product. LoopNet revenue increased 17% in Q4 and 11% for the full year of 2025, also at the high end of our guidance. Excluding the impact from the acquired Domain commercial marketplace revenue, LoopNet grew 11% for the quarter and 9% for the year. LoopNet delivered its highest ever sales year in 2025, and we expect to continue that momentum throughout 2026 as we create the only Pan-European CIRI market solution and launch LoopNet in Australia.

Speaker #2: We are extremely excited about CoStar's pending product launches, as we look to expand CoStar Debt Solutions' capabilities into our origination workflow solutions, expand STR's financial reporting modules, and launch the groundbreaking lease benchmarking product.

Speaker #2: LubeNet revenue increased 17% in the fourth quarter and 11% for the full year of 2025, also at the high end of our guidance. Excluding the impact from the acquired domain commercial marketplace revenue, LubeNet grew 11% for the quarter and 9% for the year.

Speaker #2: LubeNet delivered its highest-ever sales year in 2025, and we expect to continue that momentum throughout 2026 as we create the only pan-European CRI market solution and launch LubeNet in Australia.

Speaker #2: Revenue from information services increased 15% for the fourth quarter and 19% for 2025, in line with our guidance. We are excited about the combination of visual lease and real estate manager, as we drive synergies across the combined platform, launch new products in 2026, and integrate these businesses into COSTAR's unified tech platform, combining market data and analytics with applications for occupiers of real estate.

Chris Lown: Revenue from Information Services increased 15% for the Q4 and 19% for 2025, in line with our guidance. We are excited about the combination of Visual Lease and Real Estate Manager as we drive synergies across the combined platform, launch new products in 2026, and integrate these businesses into CoStar's unified tech platform, combining market data and analytics with applications for occupiers of real estate. Importantly, AI will feature prominently as we use it to extract rents, lease terms, and other data from leases to create benchmark solutions, and we will also provide this functionality to our customers for automated lease abstraction and audit purposes.

Speaker #2: Importantly, AI will feature prominently as we use it to extract rents, lease terms, and other data from leases to create benchmark solutions, and we will also provide this functionality to our customers for automated lease abstraction and audit purposes.

Speaker #2: As you can see in the disaggregated revenue tables and the earnings release, the information services revenue has now been incorporated into COSTAR revenue as we migrate these businesses into the COSTAR platform as we successfully did with STR.

Chris Lown: As you can see in the disaggregated revenue tables in the earnings release, the information services revenue has now been incorporated into CoStar revenue as we migrate these businesses into the CoStar platform, as we successfully did with STR. Other revenue was $75 million for Q4 and $272 million for the full year of 2025, above the high end of our guidance. This positive result reflects better than expected performance from Matterport, camera sales, and capture services revenue. Company-wide, we delivered $7 million of net income in 2025, which is $25 million above the high end of our guidance range. Our full year adjusted EBITDA of $442 million also exceeded the high end of our guidance by $17 million.

Speaker #2: Other revenue was $75 million for the fourth quarter and $272 million for the full year of 2025, above the high end of our guidance.

Speaker #2: This positive result reflects better than expected performance from Matterport. Camera sales and capture services revenue. Company-wide, we delivered $7 million of net income in 2025, which is 25 million above the high end of our guidance range.

Speaker #2: Our full-year adjusted EBITDA of $442 million also exceeded the high end of our guidance by $17 million. Our sales force at year-end was 2,175 people, which increased by nearly 800 in 2025, including the addition of 185 reps from our 2025 acquisitions.

Chris Lown: Our sales force at year-end was 2,175 people, which increased by nearly 800 in 2025, including the addition of 185 reps from our 2025 acquisitions. The majority of the increase was concentrated in our Homes.com residential business, which increased by more than 400 reps in the year. We expect to continue growing most of our sales forces in 2026, with a particular emphasis on growing the LoopNet and Matterport teams. Our contract renewal rate was 89% in Q4 2025, and customers who have been subscribers for 5 years or longer have a 95% renewal rate. Subscription revenue on annual contracts was 71% for Q4 2025. Domain does not operate using annual subscriptions, which has reduced this metric by 7 percentage points.

Speaker #2: The majority of the increase was concentrated in our homes.com residential business, which increased by more than 400 reps in the year. We expect to continue growing most of our sales forces in 2026, with a particular emphasis on growing the LubeNet and Matterport teams.

Speaker #2: Our contract renewal rate was 89% in the fourth quarter of 2025, and customers who have been subscribers for five years or longer have a 95% renewal rate.

Speaker #2: Subscription revenue on annual contracts was 71% for the fourth quarter of 2025. Domain does not operate using annual subscriptions, which has reduced this metric by 7 percentage points.

Speaker #2: Our other brands have remained relatively consistent with their subscription metrics. For full-year 2025, we delivered $308 million of net new bookings, a record for CoStar and 23% higher than 2024.

Chris Lown: Our other brands have remained relatively consistent with their subscription metrics. For full year 2025, we delivered $308 million of net new bookings, a record for CoStar and 23% higher than 2024. Net new bookings for the fourth quarter were $75 million, a 42% year-over-year increase. During 2025, we completed our $500 million share buyback program, announced in February 2025, and repurchased 7.1 million shares. We also recently announced that our board has authorized a new $1.5 billion share repurchase program.

Speaker #2: Net new bookings for the fourth quarter were $75 million, a 42% year-over-year increase. During 2025, we completed our $500 million share buyback program, announced in February 2025, and repurchased 7.1 million shares.

Speaker #2: We also recently announced that our board has authorized a new $1.5 billion share repurchase program. We expect to repurchase a total of $700 million worth of shares in 2026 and plan to execute an accelerated share repurchase this quarter to repurchase $500 million worth of shares, followed by $200 million of open market repurchases throughout the rest of 2026.

Chris Lown: We expect to repurchase a total of $700 million worth of shares in 2026, and plan to execute an accelerated share repurchase this quarter to repurchase $500 million worth of shares, followed by $200 million of open market repurchases throughout the rest of 2026. For 2026, we are affirming the guidance we provided on 7 January. Specifically, we expect revenue of $3.78 to 3.82 billion, implying an annual growth rate of 16% to 18%. Q1 2026 revenues is expected to range from $890 million to $900 million, representing an increase of 22% to 23% year-over-year at the midpoint.

Speaker #2: For 2026, we are affirming the guidance we provided on January 7th. Specifically, we expect revenue of $3.78 to $3.82 billion and are planning an annual growth rate of 16 to 18 percent.

Speaker #2: First quarter 2026 revenue is expected to range from 890 to 890 million to 900 million dollars, representing an increase of 22 to 23 percent year-over-year at the midpoint.

Speaker #2: We are also affirming our 2026 full-year adjusted EBITDA guidance range of $740 million to $800 million, reflecting an adjusted EBITDA margin of 20 to 21 percent.

Chris Lown: We are also affirming our 2026 full year adjusted EBITDA guidance range of $740 million to $800 million, reflecting an adjusted EBITDA margin of 20% to 21%. Q1 2026 adjusted EBITDA is expected to range from $95 million to $115 million. Our adjusted EBITDA margins are expected to increase by roughly 5 percentage points each quarter throughout 2026. I want to say that again. Our adjusted EBITDA margins are expected to increase by roughly 5 percentage points each quarter throughout 2026. This margin expansion during the year reflects the timing of our marketing campaigns, which are heavily weighted to the first half of the year, as well as the seasonality of revenue from Domain.

Speaker #2: First quarter 2026 adjusted EBITDA is expected to range from 95 to 115 million dollars. Our adjusted EBITDAs our adjusted EBITDA margins are expected to increase by roughly 5 percentage points each quarter through throughout 2026.

Speaker #2: I want to say that again. Our adjusted EBITDA margins are expected to increase by roughly 5 percentage points each quarter throughout 2026. This margin expansion during the year reflects the timing of our marketing campaigns, which are heavily weighted to the first half of the year, as well as the seasonality of revenue from Domain.

Speaker #2: As an aside, I would suggest you review 2024 and 2025 quarterly adjusted EBITDA numbers and margins where you will see a similar seasonality pattern of rising margins throughout the year.

Chris Lown: As an aside, I would suggest you review 2024 and 2025 quarterly adjusted EBITDA numbers and margins, where you will see a similar seasonality pattern of rising margins throughout the year. For additional context on Q1 guidance, our marketing expenses tend to be the highest in the Q1 and Q2 of the year, and 2026 should follow that same pattern. Events such as the Super Bowl, Winter Olympics, and the successful launch of Homes AI, drive spend earlier in 2026. Additionally, Domain revenue is seasonally lower in the Q1 as Domain comes off its high selling season. As a point of reference, based on current exchange rates, revenue for Domain has dropped an average of $14 million sequentially from Q4 to Q1 over the past two years.

Speaker #2: For additional context on first quarter guidance, our marketing expense tends to be the highest in the first and second quarters of the year, and 2026 should follow that same pattern.

Speaker #2: Events such as the Super Bowl, Winter Olympics, and the successful launch of Homes AI drive spend earlier in 2026. Additionally, Domain revenue is seasonally lower in the first quarter, as Domain comes off its high selling season.

Speaker #2: As a point of reference, based on current exchange rates, revenue for Domain has dropped an average of $14 million sequentially from Q4 to Q1 over the past two years.

Speaker #2: Broken down by segment, we expect commercial revenue in 2026 of 1.955 to 1.975 billion dollars, a 10% increase at the mid at its midpoint from 2025's revenue of 1.79 billion dollars.

Chris Lown: Broken down by segment, we expect commercial revenue in 2026 of $1.955 to $1.975 billion, a 10% increase at its midpoint from 2025's revenue of $1.79 billion. For Q1, we expect commercial revenue of $470 to $475 million, an increase of 16% at the midpoint from Q1 2025. Residential revenue is expected to range from $1.825 to $1.845 billion in 2026, a 26% increase year-over-year at the midpoint of the range. Q1 residential revenue is expected to range from $420 to $425 million, an increase of 31% year-over-year at the midpoint of the range.

Speaker #2: For the first quarter, we expect commercial revenue of 470 to 475 million dollars, an increase of 16% at the midpoint from Q1 2025. Residential revenue is expected to range from 1.825 to 1.845 billion dollars in 2026, a 26% increase year over year at the midpoint of the range.

Speaker #2: First quarter residential revenue is expected to range from 420 to 425 million dollars, an increase of 31% year over year at the midpoint of the range.

Speaker #2: We expect adjusted EBITDA margins for 2026 of 33% to 34%, as we make a number of significant investments in the commercial segment to drive future growth.

Chris Lown: We expect adjusted EBITDA margins for 2026 of 33% to 34%, as we make a number of significant investments in the commercial segment to drive future growth. These investments include building CoStar Australia and expanding in Europe, CoStar Debt Solutions, origination workflow modules, the integration of Real Estate Manager and Visual Lease into CoStar, the revolutionary lease benchmarking product, a new homes information product, SCR profitability modules, AI across our businesses, new Matterport technology, and additional salespeople. For the residential segment, we expect adjusted EBITDA margins of 5% to 7%. Our level of CapEx is expected to range from $175 million to $225 million in 2026 as we complete the build-out of our Richmond campus, which should be finished in Q2.

Speaker #2: These investments include building CoStar Australia and expanding in Europe, CoStar Debt Solutions, origination workflow modules, the integration of Real Estate Manager and visualization to CoStar, the revolutionary lease benchmarking product, a new homes information product, STR profitability modules, AI across our businesses, new Matterport technology, and additional salespeople.

Speaker #2: For the residential segment, we expect adjusted EBITDA margins of 5 to 7 percent. Our level of capex is expected to range from $175 to $225 million in 2026, as we complete the build-out of our Richmond campus, which should be finished in the second quarter.

Speaker #2: Second quarter. In summary, I'm extremely proud of our 2025 results, delivered during a year complicated by high interest rates, inflation, and economic volatility. We remain focused on delivering on our strategic investments in the commercial and residential markets for our shareholders, while producing record profit levels in our established businesses as we drive revenue and margin expansion in the coming years.

Chris Lown: In summary, I'm extremely proud of our 2025 results delivered during a year complicated by high interest rates, inflation, and economic volatility. We remain focused on delivering on our strategic investments in the commercial and residential markets for our shareholders, while producing record profit levels in our established businesses as we drive revenue and margin expansion in the coming years. I'll now turn the call back over to the operator for questions.

Speaker #2: I'll now turn the call back over to the operator for questions. Thank you. As a reminder, to ask a question, please press star 11 on your telephone and wait for your name to be announced.

Operator: ... Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for questions. Our first question comes from Stephen Sheldon with William Blair. You may proceed.

Speaker #2: To withdraw your question, please press star 11 again. One moment for questions. And our first question comes from Stephen Sheldon with William Blair. You may proceed.

Stephen Sheldon: Hey, thanks for taking my questions. I think the Q4 bookings were plus lighter than some had been expecting. Could you maybe talk some about the puts and takes in the quarter by business? Then secondarily, it sounds like you're planning to continue growing sales head count. Just wanted to ask what you're seeing in the productivity ramp for those added in 2025, and whether that ramp has looked any different than what you've seen historically for added sales head count.

Speaker #3: Hey, thanks for taking my questions. I think the Q4 bookings were a plus lighter than some had been expecting. So can you maybe talk some about the puts and takes in the quarter by business?

Speaker #3: And then secondarily, it sounds like you're planning to continue growing sales headcount. So just wanted to ask, what you're seeing in the productivity ramp for those added in 2025, and whether that ramp has looked any different than for added sales headcount?

Speaker #4: So I'll answer the second part of the question. I'll answer the second part of the question first, and I'll let Chris answer the first part.

Andy Florance: I'll answer the second part of the question. I'll answer the second core part of the question first, and I'll let Chris Lown answer the first part. In terms of a sales ramp, we obviously are growing the sales force dramatically. When you first bring people on, as we brought a lot of people on in 2025, they're not at maximum productivity. They're in line with what we've historically seen, but I think I commented during the call that they become two to three times more productive in the fifth year than they were in the first year. You know, we manage them closely on a, you know, nine-box and make sure they're on trajectory.

Speaker #4: So, in terms of sales ramp, we've obviously been growing the sales force dramatically. And when you first bring people on, as we've done as we brought a lot of people on in 2025, they're not at maximum productivity.

Speaker #4: So they're in line with what we've historically seen. But I think I commented during the call that they've become two to three times more productive in the fifth year than they were in the first year.

Speaker #4: So we manage them closely on a nine-box and make sure they're on trajectory. We're seeing good initial results, but it is a large addition of salespeople.

Andy Florance: We're, you know, we're seeing good initial results, but it is a large addition of salespeople.

Speaker #5: Yeah, and with regard to your first question, I'd point you into the investor deck, which we put on our website. Our Q4 net new was the second highest Q4 in our company's history.

Chris Lown: Yeah, with regard to your first question, I'd point you into the investor deck, which we put on our website. Our Q4 net new was the second highest Q4 in our company's history. I repeat, it was the second highest Q4 in history, and I go back and look at it. We feel great about our outcome and for as far as puts and takes, you know, I think the number speaks for itself.

Speaker #5: I repeat, it was the second highest Q4 in history. And I go back and look at it, so we feel great about our outcome.

Speaker #5: And as far as puts and takes, I think the number speaks for itself.

Speaker #2: Thank you.

Operator: Thank you.

Speaker #3: All right, thank you.

Stephen Sheldon: All right. Thank you.

Speaker #2: Our next question comes from Ryan Tomasello with KBW. You may proceed.

Operator: Our next question comes from Ryan Tomasello with KBW. He may proceed.

Speaker #6: Hi, everyone. Thanks for taking the questions. Just following up on Apartments.com—if you can just help us understand how you're thinking about the growth for that business this year.

Ryan Tomasello: Hi, everyone. Thanks for taking the questions. Just following up on Apartments.com, if you can just help us understand how you're thinking about the growth of that business this year. With respect to the other half of residential with Homes.com, obviously, there's been a lot of upheaval lately in the industry regarding the role of the MLS and listing ownership. Just curious, Andy, how you're thinking about managing the home strategy around that fluid evolution of the industry and what opportunities that might unlock. Thanks.

Speaker #6: And then, with respect to the other half of residential with Homes.com, obviously there's been a lot of upheaval lately in the industry regarding the role of the MLS and listing ownership.

Speaker #6: So, just curious, Andy, how you're thinking about managing the Homes strategy around that fluid evolution of the industry, and what opportunities that might unlock.

Speaker #6: Thanks.

Speaker #4: So, I guess there's two parts to that question. I'll handle the second part as usual. Yeah, there's upheaval and there is some instability, as I believe that the CEO of the largest brokerage firm made some statements to his staff, in an all-hands call, talking about the fact that if his agents did not want to belong to the major association, they wouldn't have to within two years.

Andy Florance: I guess there's two parts to that question. I'll handle the second part, as usual. Yeah, there's upheaval and there is some instabilities. I believe that the CEO of the largest brokerage firm made some statements to his staff in an all hands call, talking about the fact that if his agents did not want to belong to the major association, they wouldn't have to within two years.

Speaker #4: I think that reflects dissatisfaction within the industry about having their listings go into a system that then syndicates them out to real estate portals, which divert the leads from their own listings to their competitors.

Andy Florance: I think that reflects dissatisfaction with the industry, with having their listings go into a system that then syndicates them out to real estate portals that divert the leads from their own listings to their competitors, and that's not in the interest of the homeowner, it's not in the interest of the listing agent, it's not even in the interest of the buyer. I believe that instability does create opportunities for a platform that is resonant with the brokerages, the agents, and the home seller. It's difficult to see exactly how that will break, but I believe that would break in our favor.

Speaker #4: And that's not in the interest of the homeowner. It's not in the interest of the listing agent. It's not even in the interest of the buyer.

Speaker #4: So I believe that that instability does create opportunities for a platform that is resonant with the brokerages, the agents, and the home seller. So it's difficult to see exactly how that will break, but I believe that would break in our favor.

Speaker #5: Yeah, and on your first question, I would just point you to the guidance we gave on the residential side. We feel you heard the stats that Andy talked about.

Chris Lown: Yeah, on your, on your first question, I would just point you to the guidance we gave on the residential side. We feel you heard the stats that Andy talked about. We feel great about our position in Apartments.com, and just point to the guidance we gave on the residential segment.

Speaker #5: We feel great about our position in Apartments.com and just point to the guidance we gave on the residential segment.

Speaker #2: Thank you. Our next question comes from Brett Huff with Stephens. You may proceed.

Operator: Thank you. Our next question comes from Brett Huff with Stephens. You may proceed.

Speaker #6: Good afternoon, and thanks for all the info, guys. Two quick questions for me. Can you talk again about the commercial EBITDA guidance? You all kind of articulated some of the things you're investing in.

Brett Huff: Good afternoon, thanks for all the info, guys. 2 quick questions for me. Can you talk again about the commercial EBITDA guidance? Y'all kind of articulated some of the things you're investing in. There was a long list, but I wonder if you could sort of give us the top few, maybe that seem the biggest priority. The other question I had was, Andy, you mentioned some reductions in Matterport, and I didn't get the number, but it sounded like a large number. Can you just talk a little bit about that for us? Thank you.

Speaker #6: There was a long list, but I wonder if you could sort of give us the top few—maybe those that seem the biggest priority? And then, the other question I had was, Andy, you mentioned some reductions in Matterport, and I didn't get the number, but it sounded like a large number.

Speaker #6: And can you just talk a little bit about that for us? Thank you.

Speaker #4: Sure. So again, answering the second part of the question first—and that's probably the first question, Scott. I'm sorry, not Scott. We have a new CFO.

Andy Florance: Sure. Again, answering the second part of the question first, and then try the first question. Scott. I'm sorry, not Scott.

Chris Lown: Oh.

Andy Florance: We have a new CFO. He's only been here for 2 to 3 years. Chris. I'm sorry, Chris. Can you ever forgive me? After we merged with Matterport, we eliminated a number of duplicative public company costs, generally in the C-suite, and it was about $120 million of executive comp, both in cash and equity. You know, some HR, finance related duplicative areas, and made great progress towards improving the profitability of Matterport. We're focused on growing revenue at Matterport through adding salespeople and reaching more of our potential market. This is about $120 million duplicative public company costs.

Speaker #4: He's only been here for two or three years, Chris. I'm sorry, Chris. Can you ever forgive me? So yeah, after we merged with Matterport, we eliminated a number of duplicative public company costs.

Speaker #4: Generally, in the C-suite— and it was about $120 million of executive comp, both in cash and equity. Some HR, finance-related duplicative areas. And made great progress towards improving the profitability of Matterport.

Speaker #4: And then we're focused on growing revenue at Matterport through adding salespeople and reaching more of our potential market. So, yeah, this is about $120 million, duplicative public company costs.

Speaker #5: Yeah, and on the commercial adjusted EBITDA margin, I want to make sure also people remember the Commercial segment does not have Apartments.com, and that's obviously in the Residential segment.

Chris Lown: ... Yeah, on the commercial adjusted EBITDA margin, I want to make sure also people remember the commercial segment does not have Apartments.com, and that's obviously in the residential segment. If we look at the primary investments that we're making in 2026, we have a de novo build to CoStar Australia. Obviously, we have the software and the technology, so we just have to fill in the data and information, and that team is well on its way, and they're very excited. That's a great result. Again, there's 200-ish plus people that we sent that we hired down there to help us drive that information. In addition, we're expanding further in Europe, so that there's an ongoing effort.

Speaker #5: But then if we look at the primary investments that we're making in 2026, we have a de novo build to CoStar Australia. Obviously, we have the software and the technology, so we just have to fill in the data and information.

Speaker #5: And that team's well on its way, and they're very excited. So that's a great result. But again, there's 200-ish plus people that we sent, that we hired down there to help us drive that information.

Speaker #5: In addition, we're expanding further in Europe. So there's an ongoing effort, obviously, and the business has been very successful, as Andy mentioned, in Canada and the UK.

Chris Lown: Obviously, the business has been very successful, as Andy mentioned, in Canada and the UK. We look forward to getting to those same success levels in Spain and France and Germany, et cetera, and Australia. As I mentioned, we're building out a origination workflow module for CoStar Debt Solutions. This has actually been driven by our clients who said, If you could give us, you know, workflows for originations, we'd love to tie it all together, and that creates a huge amount of proprietary data and information, which we're excited about, so we're moving aggressively on that. We also talked about integrating Real Estate Manager and Visual Lease into CoStar.

Speaker #5: We look forward to getting to those same success levels in Spain and France and Germany, etc., and Australia. As I mentioned, we're building out an origination workflow module for CoStar Debt Solutions.

Speaker #5: This has actually been driven by our clients, who said, "If you could give us workflows for originations, we'd love to tie it all together." And that creates a huge amount of proprietary data and information, which we're excited about.

Speaker #5: So we're moving aggressively on that. We also talked about integrating Real Estate Manager and Visual Lease into CoStar. So just so people fully understand, we are—just like we did with SDR.

Chris Lown: Just so people fully understand, we are, just like we did with SDR, we're actually taking CoStar Real Estate Manager and Visual Lease, rewriting all the code into CoStar, as we do with everything, creating a brand-new, better platform embedded within CoStar, which also will have all the data and information around it. That will be a fantastic and revolutionary capability. Alongside that will be the Lease Benchmarking product. That will be a first-time, you know, a product that has never existed before. We're investing on that. We have a new Homes Information product that we've launched and is already generating revenue, which is fantastic.

Speaker #5: We're actually taking Real Estate Manager and Visual Lease, rewriting all the code into CoStar, as we do with everything, creating a brand new, better platform embedded within CoStar, which also will have all the data and information around it.

Speaker #5: So that will be a fantastic and revolutionary capability. Alongside that will be the lease benchmarking product that will be a first-time product that has never existed before.

Speaker #5: So we're investing in that. We have a new homes information product that we've launched and it's already generating revenue, which is fantastic. We actually just launched, I believe, the SDR Profitability Module.

Chris Lown: We actually just launched, I believe, SDR Profitability module, so that those just came out, and that gives our customers an ability to understand their profitability on a gross profit basis, not on a not on a per unit basis. They're excited about that. As you've seen, we launched Homes AI very successfully, and it's been a great, you know, couple weeks. We're going to take that capability across all our businesses, first in Apartments.com, but then quickly across all other businesses. That is really exciting for us. Our Matterport team is, a long one, and it's all getting done. Our Matterport team is really excited about building a new camera, so there's work going on around building the new camera, plus enhancing the technology they have.

Speaker #5: So that just those just came out. And that gives our customers an ability to understand their profitability on a gross profit basis, not on a not on a per unit basis.

Speaker #5: So they're excited about that. As you've seen, we launched Homes AI very successfully, and it's been a great couple of weeks. We are going to take that capability across all our businesses, first in Apartments.com, but then quickly across all other businesses.

Speaker #5: So that is really exciting for us. Our Matterport team has a long list, and it's all getting done. Our Matterport team is really excited about building a new camera.

Speaker #5: So there's work going on around building the new camera, plus enhancing the technology they have. And you talked about the furnace function, the furnish function.

Chris Lown: Andy talked about the Furnish function, which is a real technology feed, you know, when they get it done, but also building a new camera, which is faster, better, et cetera. Finally, additional salespeople. As you see, a meaningful amount of investment going into our commercial business, all great opportunities to grow revenue, to grow TAM, to grow margins. That inevitably will have a minor impact in 2026.

Speaker #5: Which is a real technology feat when they get it done. But also, building a new camera, which is faster, better, etc. And finally, additional salespeople.

Speaker #5: So as you see, a meaningful amount of investment going into our commercial business—all great, all great opportunities to grow revenue, to grow TAM, to grow margins.

Speaker #5: And so, but that inevitably will have a minor impact in 2026.

Speaker #4: Clearly paying attention to and investing in the core.

Andy Florance: Clearly paying attention to and investing in the core.

Speaker #2: Great, thank you. Thank you. Our next question comes from Pete Christensen with Citi. You may proceed.

Kimin On: Great. Thank you.

Brett Huff: Great. Thank you.

Operator: Thank you. Our next question comes from Peter Christiansen with Citi. You may proceed.

Peter Christiansen: Thank you. Good evening. Andy, sorry, another AI disruption question. This time, a little bit more second order. The CRE broker space has kind of been under fire lately for concerns on disruption there. I guess if we were to think if the CRE broker space were to see a reduction, do you think CoStar would have the ability to change its pricing around? Do you see this as a potential disruption to the CoStar suite business? Thank you.

Speaker #7: Thank you. Good evening. Andy, sorry, another AI disruption question. This time, a little bit more second-order—the CRE broker space has kind of been under fire lately.

Speaker #7: For concerns on disruption there, and I guess if we were to think, if the CRE broker space were to see a reduction in C, do you think CoStar would have the ability to change its pricing around?

Speaker #7: Do you see this as a potential disruption to the CoStar Suite business? Thank you.

Speaker #4: Sure. I have, gosh, spent 40 years working with commercial real estate brokers. And I think that—I think that it is missing some of the personal relationship sales nature of a commercial real estate broker.

Andy Florance: Sure. I have spent 40 years working with commercial real estate brokers, I think that it is missing some of the personal relationship sales nature of a commercial real estate broker. These are really relationship people. I'm somewhat puzzled at the level of AI fear in that sector. For sure, there are high volumes of people in some of those commercial real estate service companies, who will be disintermediated by AI, but they're not the revenue driver relationship people. I don't think they're gonna go anywhere, and those are the core audience for our CoStar product.

Speaker #4: And so these are really relationship people. And so I'm somewhat puzzled at the level of the level of AI fear in that sector. For sure, there are high volumes of people in some of those commercial real estate service companies which will who will be distributed by AI.

Speaker #4: But they're not the revenue-driver relationship people. I don't think they're going to go anywhere. And those are the core audience for our CoStar product.

Andy Florance: The 500 people building models in the background, they may disappear, but they're typically not the property managers doing accounting and all that stuff. They're typically not the people buying seats. If, I think that there is the ability to retain comparable prices with seat reduction. We've done that in the past successfully during downturns. Certainly over the last 5 years, you saw a significant reduction in the number of people doing commercial real estate, yet we continued to grow revenues. I do think that there's resilience there. Remember that brokers only represent, at this point, about 30%, 33% of our revenue. The majority of our revenue is banks and owners and institutions and CMBSs and government agencies, many of whom are not on a seat license basis.

Speaker #4: The 500 people building models in the background—they may disappear, but they're typically not our property managers doing accounting and all this stuff.

Speaker #4: They're typically not the people buying seats. If I think that there is the ability to retain comparable prices with seat reduction, we've done that in the past successfully during downturns.

Speaker #4: So, certainly, over the last five years, you saw a significant reduction in the number of people doing commercial real estate. Yet we continue to grow revenues.

Speaker #4: So I do think that there's resilience there. And then remember that brokers only represent, at this point, about 30% to 33% of our revenue.

Speaker #4: The majority of our revenue is banks and owners and institutions and CMBSs and government agencies, many of whom are not on a seat license basis.

Speaker #3: Well, and I'd also add to that all the investment we're making is actually more geared toward those exact customers. And so, you should expect to continue to see that percentage decrease as those investments bear fruit.

Chris Lown: Well, also add to that, all the investment we're making is actually more gear-geared toward those exact customers. We should expect to continue to see that percentage decrease as those investments bear fruit.

Speaker #4: But who will tomorrow's AI fear be?

Andy Florance: Who will tomorrow's AI fear be?

Speaker #7: Thank you, Andy. Chris, very helpful.

Peter Christiansen: Thank you, Andy, Chris, very helpful.

Speaker #2: Thank you. Our next question comes from Curtis Nagel with Bank of America. You may proceed.

Operator: Thank you. Our next question comes from Curtis Nagle with Bank of America. You may proceed.

Speaker #8: You may proceed.

Curtis Nagle: All righty. Thanks very much. Chris, maybe just one for you, one to follow up. Just, I guess, trying to get the EBITDA guide for commercial, I think a slight decline on a dollar basis to midpoint. Talk about some of the investments. I think the other thing, though, we'd love to get some help with is, I guess, could you disaggregate, you know, so how much of that is due to the re-platforming of shared costs, right, from Homes.com over the past few years? I think some of that's going back to commercial. Any commentary there to kind of help bridge that would be helpful or anything else, you know, might have missed.

Speaker #3: Well, alrighty. Thanks very much. Chris, maybe just one for you—I wanted to follow up, just I guess trying to get the EBITDA guide for commercial.

Speaker #3: I think a slight decline on a dollar basis to midpoint. Talking about some of the investments, I think the other thing, though—we'd love to get some help with—is, I guess, could you disaggregate how much of that is due to the re-platforming of shared costs right from Homes.com over the past few years?

Speaker #3: I think some of that's going back to commercial. Any commentary there to kind of help bridge that would be helpful? Or anything else I might have missed?

Speaker #9: Yeah, no, it's a great question. So, obviously, again, first thing—and again, we're sort of apples to oranges a little bit about the old commercial.

Chris Lown: Yeah, no, it's a great question. Obviously, again, first thing. Again, we're sort of apples, oranges, a little bit about the old commercial. There was taking out apartments. Apartments was a very attractive margin business. That's A. B, we brought into this business inorganic companies in Matterport and Domain, and those have an impact on that margin, which we expect will grow back after we get through 26, but in their first full year, will have an impact. From a organic perspective, margin perspective, when we look at this, the margin's roughly similar. As with 25, even with all this investment, it's roughly flat.

Speaker #9: There was taking out apartments. Apartments was a very attractive margin business. That's a B, we brought into this business, inorganic companies in Matterport and Domain.

Speaker #9: And those have an impact on that margin, which we expect will grow back after we get through '26. But in their first full year, we'll have an impact.

Speaker #9: From an organic perspective, from a margin perspective, when we look at this, the margins are roughly similar, as even with all this investment, it's roughly flat. And so what you really see is a little bit more of the inorganic side having the biggest impact on that margin.

Chris Lown: What you really see is a little bit more of the inorganic side having the biggest impact on that margin in that period of time.

Speaker #9: In that period of time.

Speaker #3: Okay. I'll keep it to one. Thank you.

Curtis Nagle: Okay. I'll keep it to one. Thank you.

Speaker #2: Thank you. Our next question comes from Andrew Boone with Citizens. You may proceed.

Operator: Thank you. Our next question comes from Andrew Boone with Citizens. You may proceed.

Speaker #3: Thanks so much for taking the question. Andy, I'd love to hear about early results from Homes AI. Can you help connect this, though, in terms of the model?

Andrew Boone: Thanks so much for taking the question. Andy, I'd love to hear about early results from Homes AI. Can you help connect this, though, in terms of the model? Like, what are you expecting in terms of retention or driving more traffic? How do you do that within the context of marketing spend in a newer product where you have to drive awareness? Thanks so much.

Speaker #3: What are you expecting in terms of retention or driving more traffic? How do you do that within the context of marketing spend in a newer product, where you have to drive awareness?

Speaker #3: Thanks so much.

Speaker #4: Okay. So, in terms of marketing spend, we're shifting from top-of-funnel brand awareness to much more specific product feature marketing. Over the next week or two, you'll see all that shifting to product functionality.

Andy Florance: Okay. In terms of marketing spend, we're shifting from top-of-funnel brand awareness to much more specific product feature marketing. Over the next week or two, you'll see all that shifting to product functionality. The product functionality is so remarkable and so compelling that we wanna basically simplify the marketing and highlight what it actually does, because when people see it and use it's compelling. We are shifting some of our marketing budget closer to lower funnel, things like SEM, just because at this point, with the number of clients we've got, we want to deliver lead results, and you're seeing that with 187% year-over-year lead growth with Homes.com members. The biggest impact here is engagement.

Speaker #4: The product functionality is so remarkable and so compelling that we want to basically simplify the marketing and highlight what it actually does. Because when people see it and use it, it's compelling.

Speaker #4: We are shifting some of our marketing budget closer to lower funnel, things like SEM. Just because, at this point, with the number of clients we've got, we want to deliver lead results.

Speaker #4: And you're seeing that with 187% year over year lead growth with member subscribe homes members. The biggest impact here is engagement. As I mentioned, the engagement with a product goes up 4 to 7 times when you're using the Home AI interface.

Andy Florance: As I mentioned, the engagement with the product goes up four to seven times when you're using the Homes AI interface. I believe that it's gonna be something that a year from now, people are not gonna be able to imagine the old way of interfacing with a website. It shifts a lot more time and attention in the search process from offline to online, and it has dramatic appeal even when you're out physically in the market. When you're driving around, and you can ask questions about the neighborhood and like, Are there any houses that are sold right around here, and where are they? And the phone actually guides you to it, you can drive over.

Speaker #4: I believe that it's going to be something that, a year from now, people are not going to be able to imagine the old way of interfacing with a website.

Speaker #4: It shifts a lot more time and attention in the search process from offline to online. And it has dramatic appeal even when you're out physically in the market.

Speaker #4: So when you're driving around and you can ask questions about the neighborhood, like, are there any houses that have sold right around here? And where are they?

Speaker #4: And the phone actually guides you to it. And you can drive over. Or, I was talking to a commercial residential broker the other day, and he said, yeah, I was on my way to a listing presentation, which I had not prepared for.

Andy Florance: Or I was talking to a residential broker the other day, he said, yeah, I was on my way to a listing presentation, which I had not prepared for. As I was driving over the listing presentation, I got my whole briefing and my CMA and everything from Homes.com, talking as I was on my way. It's a tool that's gonna be adopted or is being adopted by both the agents and by the consumers, and it's a much deeper experience than a filter and a result.

Speaker #4: And as I was driving over to the listing presentation, I got my whole briefing and my CMA and everything from Homes.com talking as I was on my way.

Speaker #4: So it's a tool that's going to be adopted, or is being adopted, by both the agents and by the consumers. And it's a much deeper experience than a filter and a result.

Andy Florance: One of the things I thought was kind of interesting, I think we've had, we've reached out to 18,000 of our clients over the last week or so with Homes AI, and we use artificial intelligence to sort of map what the conversations are and what we're hearing. I think an odd element of this is that it is extracting agents from relying on the MLS as their primary information tool. We're getting a lot of folks saying, Gosh, this is a lot easier to use than the MLS. I hope that answers the question.

Speaker #4: One of the things I thought was kind of interesting, we have—I think we've had—we've reached out to 18,000 of our clients over the last week or so with Homes AI.

Speaker #4: And we use artificial intelligence to sort of map what the conversations are and what we're hearing. I think an odd element of this is that it is extracting agents from relying on the MLS as their primary information tool.

Speaker #4: We're getting a lot of folks saying, 'Gosh, this is a lot easier to use than the MLS.' But I hope that answers the question.

Speaker #9: If I may, let me add two additional points. Remember that the AI agent will remember who you are, what school zone you want to be in, how many kids you have, and whether you like a house that's in the sunshine more, or has a view.

Chris Lown: If I may.

Andy Florance: Yeah.

Chris Lown: Add two additional points. Remember, that AI agent will remember who you are, what school zone you want to be in, how many kids you have, if you like a house that it's in the sunshine more than or has a view. The learning of it and the results that you will get as a user are just gonna exponentially get better, and it'll know you as well as you know yourself or your spouse knows you. I think that's a really important point. It's not like you go every time and it's a clean slate. It's building its knowledge and understanding to help you on your journey and provide you even better results, which, by the way, ends up being a much better lead for our subscribers, right?

Speaker #9: So, the learning of it and the results that you will get as a user are just going to exponentially get better. And it'll know you as well as you know yourself, or as your spouse knows you.

Speaker #9: So I think that's a really important point. It's not like you go every time and it's a clean slate. It's building. It's knowledge and understanding to help you on your journey and provide you even better results, which, by the way, ends up being a much better lead for our subscribers, right?

Speaker #9: And that handoff, they will have a lot more information. So I think that's really important. Now, also take that into Apartments.com. Say you own a building.

Chris Lown: That handoff, they will have a lot more information. I think that's really important. Now, also take that into Apartments.com. Say you own a building. You have people working in your building who are leasing agents or people who help. You are now gonna have hundreds of AI leasing agents who are gonna be following these customers, understanding they may spend more time on a two-bedroom versus a one-bedroom, so they're really more into a two-bedroom. They really want a view of the pool, they really, you know, wanna be on the corner, on the outside, et cetera. Again, this learning and the capability is gonna be hugely beneficial and important to our customers, which is gonna be almost irreplaceable. I think it's just this multitude of growth.

Speaker #9: You have people working in your building who are leasing agents or people who help. You are now going to have hundreds of AI leasing agents who are going to be following these customers, understanding they may spend more time on a two-bedroom versus a one-bedroom.

Speaker #9: So they're really more into a two-bedroom. They really want a view of the pool. They really want to be on the corner, on the outside, etc.

Speaker #9: So again, the learning and the capability is going to be hugely beneficial and important to our customers, which is going to be almost irreplaceable.

Speaker #9: So I think it's just this multiple of growth. And once people realize it, once our subscribers and our customers get that and understand that, it's just going to make such a better relationship with our customers and a better experience for them.

Chris Lown: Once people realize that, once our subscribers and our customers get that and understand that, it's just gonna make such a better relationship with our customers and a better experience for them.

Speaker #4: And the plan is to integrate all the platforms on this. So when Chris talks about the fact that we remember who the consumer is, who the shopper is, or what their interests are, and where they work and where they play and what their needs are for education, that is persistent across Apartments.com, across CoStar, and will even be persistent across Alumni, and eventually Homes and BizBuySell.

Andy Florance: The plan is to integrate all the platforms on this. When Chris talks about the fact that we remember what the consumer is, what the shopper is, or what their interests are, and where they work and where they play, and, you know, what their needs are for education, that is persistent across Apartments.com, across CoStar, and will even be persistent across Illumna and eventually, Homes, and BizBuySell. It's really quite powerful. Then our goal and our plan is to have the interface back to the lister, whether they be a property manager, real estate owner, real estate agent, that's consistent. You'll have one sort of lead dashboard listing management tool in AI that has much higher quality leads across all these platforms.

Speaker #4: So it's really quite powerful. And then our goal and our plan is to have the interface back to the lister—whether they be a property manager, real estate owner, or real estate agent—that's consistent.

Speaker #4: And you'll have one sort of lead dashboard listing management tool in AI that has much higher quality leads across all these platforms. And as someone who manages billions of these visits across many, many sites—many, many hundreds of thousands, millions of leads—agents really struggle with managing the leads they get off these sites.

Andy Florance: As someone who manages billions of these visits across many sites, many, you know, hundreds of thousands, millions of leads, agents really struggle with managing the leads they get off these sites. I mean, the best of them respond to 50%, 60% of the leads in a timely fashion. The tools are building here, will dramatically change that equation and make it much more efficient for them to be able to handle these. I think we're far, far away from your original question, I'll shut up.

Speaker #4: I mean, the best of them respond to 50, 60 percent of the leads in a timely fashion. The tools we're going to build here, are building here, will dramatically change that equation and make it much more efficient for them to be able to handle these.

Speaker #4: But I think we're far, far away from your original question, so I'll shut up.

Speaker #9: Thank you.

Chris Lown: Thank you.

Andrew Boone: Thank you.

Speaker #10: Thank you. Our next question comes from Scott Wertel at Wolf Research. You may proceed.

Operator: Thank you. Our next question comes from Scott Wurtzel with Wolfe Research. You may proceed.

Speaker #11: Hey, thanks for taking my questions, guys. I just wanted to follow up from the bookings question at the beginning and was wondering if you can give any kind of commentary around Apartments and Homes.com bookings from the quarter. If it's not numbers, any sort of directional qualitative commentary relative to last quarter would be great.

Scott Wurtzel: Hey, thanks for taking my questions, guys. Just wanted to follow up from the bookings question at the beginning and wondering if you can give any kind of commentary around Apartments.com and Homes.com bookings from the quarter. If it's, you know, not numbers, any sort of directional, qualitative commentary relative to last quarter would be great. Thanks.

Speaker #11: Thanks.

Speaker #9: Yeah, you know, we get a lot of requests for a lot of information, etc. And I think what we feel is we provide a new disclosure and new disclosure with new segments.

Chris Lown: Yeah, you know, I, we get a lot of requests for a lot of different information, et cetera, and I think what we feel is we provided new disclosure, a new disclosure with new segments, and we've given you, again, the second highest net new bookings number in the company ever since 2015. The guidance is, like I said, I think Homes.com and Apartments.com, we still feel great about the businesses and the trajectory we're on, and we'll leave it at that.

Speaker #9: And we've given you, again, the second-highest net new bookings number in the company ever since 2015. And so the guidance is, like I said, I think Homes.com and Apartments.com—we still feel very—we feel great about the businesses and the trajectory we're on.

Speaker #9: And we'll leave it at that.

Scott Wurtzel: Thanks, guys.

Speaker #10: Thanks, guys.

Speaker #11: Thank you. Our next question comes from Greg Huber with Huber Research Partners. You may proceed.

Operator: Thank you. Our next question comes from Craig Huber with Huber Research Partners. You may proceed.

Craig Huber: Great. Thank you. I wanted to ask about Apartments.com. It sounds like you think, given the metrics you talked about, that Apartments.com revenue this new year will accelerate. Maybe talk a little bit more about that if that's the case. What are you expecting for margins for Apartments.com for this year? Flat or down slightly with maybe some extra marketing expenses? How should we think about how margins will play out there? Thank you.

Speaker #12: Great, thank you. I wanted to ask about Apartments.com. It sounds like you think, given the metrics you talked about, that Apartments.com revenue this new year will accelerate. Maybe talk a little bit more about that, if that's the case.

Speaker #12: And what are you expecting for margins for Apartments.com for this year? Flat or down slightly if maybe some extra marketing expenses? How should we think about how margins will play out there?

Speaker #12: Thank you.

Speaker #9: Yeah, yeah. So we're not giving specific margins for any business, etc. I think what you can hold stock in, is Andy's comments around how our business is performing versus what we can see publicly versus our number two competitor, which is significantly behind ours.

Chris Lown: Yeah, we're not giving specific margins for any business, et cetera. I think what you can hold stock in is Andy's comments around how our business is performing versus what we can see publicly versus our number two competitor, which is significantly behind ours. We're excited about what we're seeing and the opportunity. We're excited about bringing AI. Like I said, it was and continues to be one of our most attractive businesses. Andy's talked historically, there's been a little more invested in marketing, but that's just because we had sweated that equity down over a period of time, there was a little bit more marketing, but, you know, this isn't a meaningful amount, we feel as good today about Apartments.com as we have been in the recent past.

Speaker #9: We're excited about what we're seeing in the opportunity. We're excited about bringing AI, like I said, it was one of our it was and continues to be one of our most attractive businesses.

Speaker #9: Andy's talked historically. There's been a little more invested in marketing, but that's just because we had sweated that equity down over a period of time.

Speaker #9: And so there was a little bit more marketing, but this isn't a meaningful amount. So we feel as good today about Apartments.com as we have been in the recent past.

Speaker #4: I do not see any increase in marketing Apartments.com that I'm aware of. It's basically predictable as it has been in the past. And what I was trying to communicate is I do believe there's a little bit of smoke and mirrors occurring in the industry with the apartment space.

Andy Florance: I do not see any increase in marketing Apartments.com that I'm aware of. It's basically predictable as it has been in the past. What I was trying to communicate is, I do believe there's a little bit of smoke and mirrors occurring in the industry with the apartment space, and that we actually are in a much stronger position than the market realizes. There's been some acquisition activity, and competitors are gonna create some tough comparables year-over-year, and it's gonna be tough to retain some of the acquired revenue, I believe. You can already see that in our ability to take significant share from some of the folks that have been picked up or, you know, synthetically acquired. In a way, to me, this is Groundhog Day.

Speaker #4: And that we actually are in a much stronger position than the market realizes. So, there's been some acquisition activity in competitors; they're going to create some tough comparables year over year.

Speaker #4: And it's going to be tough to retain some of the acquired revenue, I believe. And you can already see that in our ability to take significant share from some of the folks that have been picked up or synthetically acquired.

Speaker #4: And in a way, to me, this is Groundhog Day. We've competed so many times against some of the same players who fail repeatedly and recapitalize.

Andy Florance: We've competed against so many times against some of the same players who fail repeatedly and recapitalize, and then we compete again very successfully. I just wanted to communicate in my remarks that I believe that Apartments.com is an incredibly strong franchise with continued strength that will become clearer and clearer over the quarters to come.

Speaker #4: And then we compete again very successfully. So, I just wanted to communicate my remarks that I believe that Apartments.com is an incredibly strong franchise, with continued strength that will become clearer and clearer over the quarters to come.

Speaker #11: Thank you.

Kimin On: Thank you.

Craig Huber: Thank you.

Speaker #10: Thank you. Our next question comes from Jeff Silver with BMO Capital Markets. You may proceed.

Operator: Thank you. Our next question comes from Jeff Silber with BMO Capital Markets. You may proceed.

Speaker #11: Thanks so much. I appreciate you squeezing me in. You talk a lot about the investments that you're making in the different businesses, and I think we get that.

George Tong: Thanks so much. Appreciate you squeezing me in. You talk a lot about the investments that you're doing in the different businesses, and I think we get that. Beyond that, can you just remind us what your capital allocation priorities are? I'm specifically interested if you're going to continue to do M&A, what you think you're missing in the portfolio, either from a product or geographic segment? Thanks.

Jeff Silber: Thanks so much. Appreciate you squeezing me in. You talk a lot about the investments that you're doing in the different businesses, and I think we get that. Beyond that, can you just remind us what your capital allocation priorities are? I'm specifically interested if you're going to continue to do M&A, what you think you're missing in the portfolio, either from a product or geographic segment? Thanks.

Speaker #11: Beyond that, can you just remind us what your capital allocation priorities are? And I'm specifically interested if you're going to continue to do M&A, what you think you're missing in the portfolio, either from a product or geographic segment.

Speaker #11: Thanks.

Speaker #9: Well, so listen, I think from a capital allocation—we obviously went through a capital allocation process. I think we all, it was a great experience.

Chris Lown: Well, listen, I think from a capital allocation, we obviously went through a capital allocation process. I think we all. It was a great experience. Obviously, what came out of that was a buyback program. You know, we looked at buybacks as a percentage of free cash flow and how to think about that going forward. I'll let Andy opine on sort of what he may see as opportunities for us within an M&A perspective. I would say, you know, our ability to acquire companies and generate not only significant synergies from expense savings, also accelerating growth is really incredible in this company. I'll give it to Andy, if he sees what opportunities he thinks about.

Speaker #9: Obviously, what came out of that was a buyback program. We looked at buybacks as a percentage of free cash flow and how to think about that going forward.

Speaker #9: I'll let Andy opine on what he may see as opportunities for us from an M&A perspective. But I would say our ability to acquire companies and generate not only significant synergies from expense savings, but also accelerate growth, is really incredible in this company.

Speaker #9: But I'll give it to Andy if he sees what opportunities he thinks about.

Speaker #4: Yeah, so from a capital allocation perspective, I love the concept that we’re pursuing—having fewer shares today than we did two years ago. And retiring shares and having good capital discipline there.

Andy Florance: Yeah, from a capital allocation perspective, I love the concept that we're pursuing having fewer shares today than we did 2 years ago, and retiring shares and having good capital discipline there. I like the fact that we did the Matterport acquisition with a little bit of share dilution, but we actually retire those shares at a more favorable cost point in hopefully going forward. I hope you get the sense that we have a incredible amount of innovation going on here. We have a lot of intellectual firepower building really transformative products across the board, both in the commercial and the residential side. We have a lot on our plate right now, and we want to focus on the things we've got on our plate.

Speaker #4: And I like the fact that we did the Matterport acquisition with a little bit of shared dilution, but we actually retire those shares at a more favorable cost point, hopefully going forward.

Speaker #4: But I hope you get the sense that we have an incredible amount of innovation going on here. We have a lot of intellectual firepower building really transformative products across the board.

Speaker #4: Both on the commercial and the residential side, we have a lot on our plate right now, and we want to focus on the things we've got on our plate.

Speaker #4: Now, having said that, there are a lot of interesting acquisition opportunities. But we have so much going on organically right now that that is a priority.

Andy Florance: Having said that, there are a lot of interesting acquisition opportunities, but we have so much going on organically right now that is a priority. The business generates a lot of cash, we believe will generate a lot of cash, and give us the ability to approach what we want to approach, the time we want to approach it. We're not going to comment on any specific things, but there are dozens, if not 100, opportunities out there.

Speaker #4: And the business generates a lot of cash. We believe it will generate a lot of cash and give us the ability to approach what we want to approach at the time we want to approach it.

Speaker #4: We're not going to comment on any specific things, but there are dozens—if not 100—opportunities out there.

Speaker #9: Yeah, and just to add a finer point to that—cash generation—with the completion of the Richmond campus and also our building in Arlington, you're actually going to see real acceleration of cash flow in '27 and really into '28.

Chris Lown: Just to add a finer point to that cash generation. With the completion of the Richmond campus and also our building in Arlington, you're actually going to see real acceleration of cash flow in 2027 and really into 2028. I'd also highlight one thing that we've talked about historically. Don't forget, we built the Richmond campus, and we acquired the Arlington building, and they're on our balance sheet. When we expect this to happen, when rates come down and cap rates come down, there is a release of capital that we would expect to see. An additional increase as a result of those sell leaseback processes for those two buildings. We're excited about the cash generation we're going to accelerate over the next three years.

Speaker #9: I'd also highlight one thing that we've talked about historically. Don't forget, we built the Richmond campus, and we acquired the Arlington building. And they're on our balance sheet.

Speaker #9: And when—and we expect this to happen when rates come down and cap rates come down—there is a release of capital. That we would expect to see.

Speaker #9: So, an additional increase as a result of those sale-leaseback processes for those two buildings. So we're excited about the cash generation we're going to accelerate over the next three years.

Speaker #11: Thank you. Our next question comes from Jason Hoss with Wells Fargo. You may proceed.

Operator: Thank you. Our next question comes from Jason Haas with Wells Fargo. You may proceed.

Speaker #9: Hi, this is Jimmy Yuan for Jason Hoss. Thanks for fitting me in. You guys are guiding to negative $45 million of EBITDA in one quarter for the resi segment and positive $105 million for the full year at the midpoint.

Kimin On: Hi, this is John Yoon for Jason Haas. Thanks for fitting me in.

John Yoon: Hi, this is John Yoon for Jason Haas. Thanks for fitting me in.

Chris Lown: Absolutely.

Kimin On: You guys are guiding to negative $45 million of EBITDA in Q1 for the resi segment and positive $105 million for the full year at the midpoint. I just want to better understand the timing of the profitability improvement through the year for resi, as well as the key drivers behind it. Thank you.

John Yoon: You guys are guiding to negative $45 million of EBITDA in Q1 for the resi segment and positive $105 million for the full year at the midpoint. I just want to better understand the timing of the profitability improvement through the year for resi, as well as the key drivers behind it. Thank you.

Speaker #9: I just want to better understand the timing of the profitability improvement through the year for resi, as well as the key drivers behind it.

Speaker #9: Thank you. Well, we talked about the marketing aspect, which is really front-loaded in the first quarter and, to a lesser extent, the second quarter.

Chris Lown: Well, we talked about the marketing aspect, which is really front-loaded in Q1 and to a less extent, Q2. That is a meaningful part of that acceleration and the underlying growth in revenue, both across both businesses, apartments and homes, both on relatively fixed cost basis. That drives that acceleration over the 2026 period.

Speaker #9: So, that is a meaningful part of that acceleration. And the underlying growth in revenue, across both businesses—apartments and homes—both on relatively fixed cost bases.

Speaker #9: And so that drives that acceleration over the 2026 period.

Speaker #10: Thank you.

Kimin On: Thank you.

John Yoon: Thank you.

Speaker #11: Thank you. Our next question comes from George Tong with Goldman Sachs. You may proceed. Hi, thanks, good afternoon. You mentioned domain revenue came well ahead of expectations in Q4.

Operator: Thank you. Our next question comes from George Tong with Goldman Sachs. You may proceed.

George Tong: Hi, thanks. Good afternoon.

Andy Florance: Hey, George.

George Tong: Hi. You mentioned Domain revenue came well ahead of expectations in Q4, and Matterport's also contributing inorganically. Can you outline what M&A contributions you expect for 2026, and what organic growth rates for commercial and residential are being embedded in the full year guide?

Speaker #11: And Matterport's also contributing inorganically. Can you outline what M&A contributions you expect for 2026, and what organic growth rates for commercial and residential are being embedded in the full-year guide?

Speaker #9: No, George, I don’t have those numbers in front of me, but let me come back to you. I know what you’re saying. Let me come back to you.

Chris Lown: No, George, I don't have those numbers in front of me, let me come back to you. I know what you're saying. Let me come back to you. As far as additional M&A, we have all you've really affect is the full year impact of the acquisitions we made in 25 into 26, right? That impact, we obviously aren't in the midst of any M&A activity or closing anything, any that we're aware of.

Speaker #9: As far as additional M&A, all you really effect is the full-year impact of the acquisitions we made in '25 into '26.

Speaker #9: But we obviously are in the midst of any M&A activity or closing anything that we're aware of.

Speaker #11: Thank you. Our next question comes from Nick Jones with BNP Paribas. You may proceed.

Operator: Thank you. Our next question comes from Nick Jones with BNP Paribas. You may proceed.

Nick Jones: Great. Thanks for taking the questions. I guess, maybe going back to CoStar Suite and the moats you have there, I guess, can you speak to maybe how you're using AI to maybe enhance the moats or build out stronger data sets? I guess, how confident are you that some of these, maybe AI-driven solutions that are maybe coming in from the legal side, can't maybe start to-

Speaker #10: Great. Thanks for taking the questions. I guess maybe going back to CoSTAR suite and the modes you have there, I guess, can you speak to maybe how you're using AI to maybe enhance the modes or build out stronger data sets?

Speaker #10: And I guess, how confident are you that some of these maybe AI-driven solutions that are maybe coming in from the legal side can't maybe start to rapidly replicate a similar data set?

Ashish Chhabra: ... rapidly replicate a similar data set. Any clarity, I guess, on the threat and maybe what you guys are doing to basically take new technology and enhance the moats further?

Nick Jones: ... rapidly replicate a similar data set. Any clarity, I guess, on the threat and maybe what you guys are doing to basically take new technology and enhance the moats further?

Speaker #10: Any clarity, I guess, on the threat and maybe what you guys are doing to basically take new technology and enhance the modes further? Thanks.

Speaker #4: Sure. So we are definitely creating new data sets from proprietary content at an accelerated pace, facilitated by AI. So, what if you take a look at the corporate leases, which are not available to the general public.

Andy Florance: Sure. We are definitely creating new data sets from proprietary content, at an accelerated pace facilitated by AI. If you take a look at the corporate leases, which are not available to the general public, they're proprietary, and they require careful treatment, protecting confidentiality on the behalf of clients. Abstracting those leases, pre our AI abstraction tools would have taken hundreds and hundreds of people, years and years and years to do. Now, we can do it in a matter of weeks at, you know, a cost of less than $200,000. That is, you know, just one proof point of how we're actually growing our proprietary datasets much more rapidly than we could have in a non-AI world.

Speaker #4: They're proprietary, and they require careful treatment, protecting confidentiality on behalf of the clients. Abstracting those leases, prior to our AI abstraction tools, would have taken hundreds and hundreds of people years and years and years to do.

Speaker #4: Now we can do it in a matter of weeks, at a cost of less than a couple hundred thousand dollars. So that is just one proof point of how we're actually growing our proprietary data sets much more rapidly than we could have in a non-AI world.

Andy Florance: I, you know, I'm going to stress again that AI cannot create data from nothing. If it doesn't know something, it can't create something it does not know. That's a fact, right? It's not mythical, magical. It's just a reality. So much of the data in our data moat is proprietary, like you're seeing with Homes AI, we are quite capable of building very powerful, innovative products that where we have more data to put into our models than another player. Just a simple standalone AI can abstract some datasets off the internet, but we have more. We have significantly more. We'll leverage that more. We believe that the information begets information. That's been the nature of our business since the beginning of time.

Speaker #4: I'm going to stress again that AI cannot create data from nothing. If it doesn't know something, it can't create something it does not know.

Speaker #4: That's a fact, right? And so it's not mythical, magical—it's just a reality. So much of the data in our data mode is proprietary.

Speaker #4: And so, like you’re seeing with Homes AI, we are quite capable of building very powerful, innovative products where we have more data to put into our models than another player.

Speaker #4: And just a simple standalone AI can abstract some data sets off the internet, but we have more. We have significantly more. And we'll leverage that more.

Speaker #4: And we believe that information begets information. That's been the nature of our business since the beginning of time. Because we have data, we can draw clients who give us more data, and more data, and more data.

Andy Florance: Because we have data, we can draw clients who give us more data and more data and more data. It's a race, and it's a data begets data race. You can see that's what STR is, that's what Real Estate Manager is doing, that's what Debt Solutions is doing. That's three of them in just a matter of a couple of years that are these proprietary data generators that you can't get at the data unless you have the keys, and we have the keys.

Speaker #4: So it's a race. And it's a data-begets-data race, if I and you could see that's what STR is. That's what real estate managers are doing.

Speaker #4: That's what Debt Solutions is doing. And that's three of them in just a matter of a couple of years that are these proprietary data generators that you can't get at the data unless you have the keys. And we have the keys.

Speaker #10: Thank you.

Ashish Chhabra: Thank you.

Nick Jones: Thank you.

Andy Florance: Mm-hmm.

Speaker #11: Thank you. And our last question comes from Ashish Abadra with RBC Capital Markets. You may proceed.

Operator: Thank you. Our last question comes from Ashish Chhabra with RBC Capital Markets. You may proceed.

Speaker #12: I'm taking the question. I was just—I just wanted to follow up on the earlier question on commercial segment margins. I understand the investment in '26, but how should we think about the commercial margins over your midterm targets?

[Company Representative] (CoStar Group): Thank you for taking the question. I just wanted to follow up on the earlier question on commercial segment margins. I understand the investment in 26. How should we think about the commercial margins over your mid-term targets? Thanks.

Ashish Sabadra: Thank you for taking the question. I just wanted to follow up on the earlier question on commercial segment margins. I understand the investment in 26. How should we think about the commercial margins over your mid-term targets? Thanks.

Speaker #12: Thanks.

Speaker #9: Yeah, Ashish. I mean, you should see the midterm grow from '26 to actually '27 to '30, right? You get through this investment phase in '26, and then you should expect them to grow '27 to '30.

Chris Lown: Yeah, Ashish, I mean, you should see the mid term grow from 26 to actually, 27 to 30, right? You get through this investment phase in 26, and then you should expect them to grow 27 to 30.

[Company Representative] (CoStar Group): Thank you.

Ashish Sabadra: Thank you.

Chris Lown: The full impact of the investments is happening as we speak, right? Although amazingly, all those investments are basically happening at the same time. A lot of them should be finalized by, in 2026.

Speaker #9: The full impact of the investments is happening as we speak, right? Amazingly, all of those investments are basically happening at the same time.

Speaker #9: And so we should—a lot of them should be finalized by, in 2026.

Speaker #12: Thanks. Thanks for that.

[Company Representative] (CoStar Group): Thanks. Thanks for that, Connor.

Ashish Sabadra: Thanks. Thanks for that, Connor.

Speaker #4: I think with that, we're going to wrap up the call. Thank you, everyone, for joining us on the call. We appreciate your time and attention.

Andy Florance: I think with that, we're going to wrap up the call. Thank you, everyone, for joining us on the call. We appreciate your time and attention and the opportunity to be working for you guys. I guess you guys are going to catch the city. We actually have a great view of the capital here from where we're sitting or doing this call. I guess that's the next thing tonight.

Speaker #4: And the opportunity to be working for you guys. And I guess you guys are going to catch us at the end. We actually have a great view of the Capitol here from where we sit and are doing this call.

Speaker #4: So, I guess that's the next thing tonight.

Chris Lown: Hear you.

Speaker #12: Hear you.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect. Good day, and thank you for standing by. Welcome to the Q4 and Year-End 2025 CoStar Group Earnings Conference Call. At this time, all participants are in a listen-only mode. Please be advised that today's conference is being recorded. After the speaker's presentation, there will be a question-and-answer session. To ask a question, please press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. I would now like to hand the conference over to your speaker today, Rich Simonelli, Head of Investor Relations.

Operator: Thank you. This concludes the conference. Thank you for your participation. You may now disconnect.

Speaker #11: Disconnect. Good day, and thank you for standing by. Welcome to the Q4 and year-end 2025 CoStar Group earnings conference call. At this time, all participants are in a listen-only mode.

Speaker #11: Please be advised that today's conference is being recorded. After the speakers' presentation, there will be a question-and-answer session. To ask a question, please press *11 on your telephone and wait for your name to be announced.

Speaker #11: To withdraw your question, please press *11 again. I would now like to hand the conference over to your speaker today, Rich Simonelli, Head of Investor Relations.

Speaker #2: Hello, and thank you for joining us to discuss the full year and fourth quarter of 2025 results of CoStar Group. Before I turn the call over to Andy Florance, CoStar CEO and founder, and Chris Lown, our CFO, I'd like to review our safe-harbor statement.

Rich Simonelli: Hello. Thank you for joining us to discuss the full year and Q4 2025 results of CoStar Group. Before I turn the call over to Andy Florance, CoStar CEO and Founder, and Chris Lown, our CFO, I'd like to review our safe harbor statement. Certain portions of the discussion today may contain forward-looking statements, including the company's outlook and expectations for the Q1, full year of 2026, and beyond. These statements are based on current beliefs and assumptions. Forward-looking statements involve many risks, uncertainties of assumptions, estimates, and other factors that can cause actual results to differ materially from such statements.

Speaker #2: Certain portions of the discussion today may contain forward-looking statements, including the company's outlook and expectations for the first quarter, full year of 2026, and beyond.

Rich Simonelli: 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 annual report on Form 10-K and quarterly reports on Form 10-Q, included under the heading Risk Factors in these filings, as well as other filings with the SEC available on the SEC's website. 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, except as required by applicable law. Reconciliation is the most directly comparable GAAP measure or of any non-GAAP financial measure discussed on this call, is shown in detail in our press release issued today, along with the definitions of those terms.

Speaker #2: 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 annual report on Form 10-K and quarterly reports on Form 10-Q, included under the heading 'Risk Factors' in these filings, as well as other filings with the SEC available on the SEC's website.

Speaker #2: 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, except as required by applicable law.

Speaker #2: Reconciliation is the most directly comparable GAAP measure of any non-GAAP financial measure discussed on this call, as shown in detail in our press release issued today.

Speaker #2: Along with the definitions of those terms. Press release is available on our website, located at costargroup.com, under Press Room. Please refer to the press release for information on how to access the replay of this call.

Rich Simonelli: Press release is available on our website, located at costargroup.com, under Press Room. Please refer to the press release on how to access the replay of this call. Remember, it's one question during the Q&A session, so make it a good one. Be good. With that, I'd like to turn the call over to our Founder and CEO, Andy Florance.

Speaker #2: So remember, it's one question during the Q&A session, so make it a good one. Be good. And with that, I'd like to turn the call over to our founder and CEO, Andy Florance.

Speaker #3: I think today we're going to do two questions.

Andy Florance: I think today we're going to do two questions.

Rich Simonelli: Nice.

Speaker #2: Nice.

Andy Florance: Good afternoon, everybody. Revenue for Q4 rose 27% year-over-year to $900 million. That's an increase of $191 million from $709 million of revenue in Q4 of 2024. Revenue for 2025 was $3.2 billion, up 19% from $2.7 billion in 2024. This is our 59th consecutive quarter of double-digit revenue growth. Adjusted EBITDA of 2025 was $442 million, up 83% from $241 million in 2024. This result positions us well to achieve our guidance range of $740 million to 800 million full-year adjusted EBITDA in 2026. With the heavy lifting of Homes.com national brand launch behind us, we are entering a phase of significant EBITDA expansion.

Speaker #3: Revenue for 2025 was $3.2 billion, up 19% from $2.7 billion in 2024. This is our 59th consecutive quarter of double-digit revenue growth. Adjusted EBIT for 2025 was $442 million, up 83% from $241 million in 2024.

Speaker #3: This result positions us well to achieve our guidance range of $740 million to $800 million full-year adjusted EBIT in 2026. With the heavy lifting of the Homes.com national brand launch behind us, we are entering a phase of significant EBIT expansion.

Speaker #3: We delivered our strongest year ever for annualized net new sales bookings in 2025, reaching $308 million, up 23% from 2024. Fourth quarter net new bookings were up 42% year over year.

Speaker #3: We consider CoStar, LoopNet, Real Estate Manager, Ten-X, BizBuySell, and elements of Matterport as commercial real estate-related businesses, and their operations are connected and related.

Speaker #3: The US commercial real estate market is showing good recovery from the extraordinary headwinds it experienced in the COVID years. After years of massive negative absorption of office space, it is now turned positive and the past two quarters and it's been positive for the past two quarters and vacancies are clearly dropping.

Andy Florance: After years of massive negative absorption of office space, it has now turned positive in the past two quarters, and vacancies are clearly dropping. After the ultra-low COVID vacancy rates, industrial vacancy rates are normalizing. With the leasing fundamentals stabilizing, commercial sales volumes have climbed 30% year-over-year, and in fact, now are above long-term averages. The CRE economy is shifting from headwind to tailwind. For our disclosures moving forward, we have combined CoStar with what we've previously referred to as information services. Any reference to CoStar now includes our information services products. As the CRE economy improves and we continue to expand the product offering, CoStar has generated 7 consecutive quarters of accelerating growth. Net new bookings in Q4 2025 were up 54% year-over-year.

Speaker #3: After the ultra-low COVID vacancy rates, industrial vacancy rates are normalizing. With the leasing fundamentals stabilizing, commercial sales volumes have climbed 30% year over year and, in fact, now are above long-term averages.

Speaker #3: The CRE economy is shifting from headwind to tailwind. For our disclosures moving forward, we have combined CoStar with what we've previously referred to as Information Services.

Speaker #3: Any reference to CoStar now includes our information services products. As the CRE economy improves and we continue to expand the product offering, CoStar Group has generated seven consecutive quarters of accelerating growth.

Speaker #3: Net new bookings in Q4 '25 were up 54% year over year. CoStar revenues grew 10% year over year, generating $325 million in the fourth quarter of '25.

Andy Florance: CoStar revenues grew 10% year-over-year, generating $325 million in Q4 2025. We have grown the CoStar sales team 20% year-over-year to 492 reps, and believe that will support further revenue acceleration. We ended 2025 with our NPS at an all-time high of 70, and our quarterly renewal rate rose to 94%. CoStar now has more than 300,000 subscribers, up 26% year-over-year in Q4. Total searches in CoStar climbed 14% year-over-year to 422 million. CoStar Canada is solidly profitable, and revenues grew 21% year-over-year. Canadian CoStar is French, English, bilingual. CoStar UK is solidly profitable, is enjoying a 92% renewal rate, and has gained significant competitive share in 2025.

Speaker #3: We have grown the CoStar sales team 20% year over year to 492 reps, and believe that we'll support further revenue acceleration. We ended 2025 with our NPS at an all-time high of 70, and our quarterly renewal rate rose to 94%.

Speaker #3: COSTAR now has more than 300,000 subscribers, up 26% year over year in Q4. Total searches in COSTAR climbed 14% year over year to 422 million.

Speaker #3: CoStar Canada is solidly profitable, and revenues grew 21% year over year. Canadian CoStar is French-English bilingual. CoStar UK is solidly profitable, is enjoying a 92% renewal rate, and has gained significant competitive share in 2025.

Speaker #3: A primary UK competitor, EG Radia, shut down their operations in December 2025. We have onboarded 166 of their reported 150 clients, so I think we got most of them.

Andy Florance: A primary UK competitor, EG Radius, shut down their operations in December 2025. We have onboarded 166 of their reported 150 clients, I think we got most of them, with 75% of them on 3-year deals. EG Radius has passed between various ownership groups through time, It descends from Estates Gazette, which was the clear major market leader in the UK when we entered that market 21 years ago. We have built out the software and datasets for CoStar France, expect to release in Q2, expect to have similar successes there. We are now well underway in staffing our CoStar research and photography capabilities in Australia, with over 50 people already in place. These teams are instrumental in generating a depth of proprietary data and visual assets that's not currently available in Australia.

Speaker #3: With 75% of them on three-year deals. EG Radius has passed between various ownership groups through time, but it descends from Estates Gazette, which was the clear major market leader in the UK when we entered that market 21 years ago.

Speaker #3: We have built out the software and datasets for CoStar France, and expect to release in the second quarter. We also expect to have similar successes there.

Speaker #3: We are now well underway in staffing our CoStar research and photography capabilities in Australia, with over 50 people already in place. These teams are instrumental in generating a depth of proprietary data and visual assets that's not currently available in Australia.

Speaker #3: In just over six weeks, we've added thousands of listings, and we expect to release CoStar for Australia in late '26. In a typical year, there are about 1,000,000 new single-family homes and condos built in the US, with a combined value of just under half a trillion dollars.

Andy Florance: In just over six weeks, we've added thousands of listings, and we expect to release CoStar for Australia in late 2026. In a typical year, there are about 1 million new single-family homes and condos built in the US, with a combined value of just under half a trillion dollars. The developers and lenders behind these projects need reliable information on supply, absorption, prices, land comps, and model mixes. Because 300-plus developers are feeding us data to market their new homes for sale on Homes.com, we can release a new homes information module in CoStar in Q3 2026. With the wealth of residential land valuation analytic information already in CoStar, we can build a very competitive offering. We expect demand for new homes information is a $200 to $300 million dollar revenue opportunity for CoStar.

Speaker #3: The developers and lenders behind these projects need reliable information on supply, absorption, prices, land comps, and model mixes. Because 300-plus developers are feeding a state-of-the-market their new homes for sale in Homes.com, we can release a new homes information module in CoStar in the third quarter of '26.

Speaker #3: With the wealth of residential land valuation analytic information already in offering, we expect demand for new homes information is a $200 to $300 million revenue opportunity for CoStar.

Andy Florance: In December, we launched our coverage of nearly 4,000 data centers worldwide. For each property, we have data on capacity, redundancy, and resilience attributes, and how well it fits in the broader build-out of the power grid infrastructure. The product also provides visibility into substation locations, transmission lines, their peak capacity, and retail utility providers. Our dataset includes over 1,600 individual center, with sales value exceeding $43 billion and over 29GW of power capacity. In increasingly AI-centric global economy, our rapidly growing data set will prove an invaluable day-to-day tool for center developers, operators, and owners. As discussed on previous earning calls, we're developing a rent benchmark product, which we expect to deliver in Q2.

Speaker #3: The product also provides visibility into substation locations, transmission lines, their peak capacity, and retail utility providers. Our data set includes over 1,600 individual centers with sales value exceeding $43 billion, and over 29 gigawatts of power capacity.

Speaker #3: In an increasingly eccentric global economy, our rapidly growing data set will prove an invaluable day-to-day tool for center developers, operators, and owners. As discussed on previous earnings calls, we're developing a rent benchmark product, which we expect to deliver in Q2.

Speaker #3: Built upon the industry's largest collection of lease deals, CoStar Rent Benchmark uses AI to extract starting rents, TI allowances, rent concessions, escalations, and more from the actual legal leasing document.

Speaker #3: After abstraction, leases are anonymized and aggregated to deliver the industry's only net effective rent product, allowing the user to understand the true cost of occupancy.

Speaker #3: In January 2026, we added more than 110 million residential parcels into our CoStar information product, providing our users with public record information across every parcel in America.

Speaker #3: For STR, Q4 capped off a record-breaking 2025, delivering the highest net new revenue in the company's history there. Twenty-five percent of that net new revenue came from owner and management companies.

Andy Florance: 25% of that net new revenue came from owner and management companies. Q4 also marked the completion of a major client migration, ultimately bringing 98,000 new users into the CoStar platform, with the STR benchmark feature serving as their entry point. Q4 was equally pivotal from a product development perspective, culminating in a major release this week. Yesterday, STR announced the launch of a profitability benchmarking, giving hotel owners and operators a fully integrated view of top-line and bottom-line performance. With this release, CoStar with STR Benchmark becomes the only hotel benchmarking solution to integrate revenue, expenses, profits, and full property life cycle insights into one place. We have rebranded our lender product to CoStar Debt Solutions to better reflect the breadth of customers we serve, including banks, credit unions, private lenders, insurers, agency lenders and debt funds, CMBS investors, and regulators.

Speaker #3: Q4 also marked the completion of a major client migration, ultimately bringing 98,000 new users into the CoStar platform, with the STR benchmark feature serving as their entry point.

Speaker #3: Q4 was equally pivotal from a product development perspective, culminating in a major release this week. Yesterday, STR announced the launch of a profitability benchmarking, giving hotel owners and operators a fully integrated view of top-line and bottom-line performance.

Speaker #3: With this release, CoStar, with STR benchmark, becomes the only hotel benchmarking solution to integrate revenue, expenses, profits, and full property life cycle insights into one place.

Speaker #3: CMBS investors and regulators. CoStar Debt Solutions has surpassed $100 million in annual run rate revenue, and we see a clear path to a billion-dollar-plus opportunity as we expand our debt product with benchmarking, loan origination, and residential solutions.

Andy Florance: CoStar Debt Solutions has surpassed $100 million in annual run rate revenue, and we see a clear path to a $1 billion-plus opportunity as we expand our debt product with benchmarking, loan origination, and residential solutions. We expect to launch debt benchmarking in the second half of this year, with loan origination in Q1 2027. Having had a chance to look at some of the features of the debt benchmarking, it's really remarkable, and I think it'll be an incredibly strong product. CoStar Real Estate Manager had an exceptionally strong Q4, with net new bookings in the quarter up 48% year-over-year and up 211% quarter-over-quarter. Revenues now exceed $120 million.

Speaker #3: We expect to launch debt benchmarking in the second half of this year, with loan origination in the first quarter of 2027. Having had a chance to look at some of the features of the debt benchmarking, it's really remarkable, and I think it'll be an incredibly strong product.

Speaker #3: CoStar Real Estate Manager had an exceptionally strong fourth quarter, with net new bookings in the quarter up 48% year over year and up 211% quarter over quarter.

Speaker #3: Revenue is now exceeding $120 million. We extended our reach into the Fortune 50 in 2025 with a new client win that's our largest initial contract ever for a real estate manager.

Andy Florance: We've extended our reach into the Fortune 50 in 2025 with a new client win, that it's our largest initial contract ever for Real Estate Manager. We also won business from 1 of the top 3 real estate service providers in our industry, who will sunset their legacy in-house lease management technology in favor of outsourcing to Real Estate Manager. I'm pleased with the progress we're making on our product roadmap to consolidate Real Estate Manager, Visual Lease, CoStar, and our Transaction Management into 1 best-in-class corporate real estate solution. In combination with AI-powered lease abstraction benchmarking, I believe we can take very significant share in this category over the next several years. LoopNet had an outstanding 2025, generating $312 million in revenue. Q4 2025 was the fastest growth at LoopNet since 2021, ending at 17% year-over-year.

Speaker #3: We also won business from one of the top three real estate service providers in our industry, who will sunset their legacy in-house lease management technology in favor of outsourcing to Real Estate Manager.

Speaker #3: I'm pleased with the progress we're making on our product roadmap to consolidate Real Estate Manager, Visual Lease, CoStar, and our Transaction Manager into one best-in-class corporate real estate solution.

Speaker #3: In combination with AI-powered lease abstraction benchmarking, I believe we can take a very significant share in this category over the next several years. LoopNet had an outstanding 2025, generating $312 million in revenue.

Speaker #3: Q4 '25 was the fastest growth that LoopNet has seen since 2021, ending at 17% year over year. All of this was driven by record net new sales, which tripled for the full year of '25 compared to '24.

Andy Florance: All of this was driven by record and net new sales, which tripled for the full year of 2025 compared to 2024. We intend to build on these extremely valuable gains by rapidly expanding the LoopNet sales team. We ended 2025 with 177 sales reps, and we plan to hire 80 more reps in 2026, a 43% increase. Over 2022 to 2024, LoopNet had overindexed on depth advertising at the expense of coverage, and to some extent, to the expense of a predictable advertiser ROI. I'm pleased that our focus has changed and that 93% of this record net new bookings in 2025 came from silver listings, which tend to have consistent higher renewal rates. Consequently, paid listings increased by 9% in the US, 42% in Canada, and 156% in the UK.

Speaker #3: We intend to build on these extremely valuable gains by rapidly expanding the LoopNet sales team. We ended '25 with 177 sales reps, and we plan to hire 80 more reps in '26—a 43% increase.

Speaker #3: Over '22 to '24, LoopNet had over-indexed on depth advertising at the expense of coverage and, to some extent, at the expense of a predictable advertiser ROI.

Speaker #3: I'm pleased that our focus has changed and that 93% of this record net new bookings in 2025 came from silver listings, which tend to have consistently higher renewal rates.

Speaker #3: Consequently, paid listings increased by 9% in the U.S., 42% in Canada, and 156% in the U.K. In fact, LoopNet offers more listings and, therefore, more searcher choice now in 90% of the user U.S. markets versus last year, including every top 10 market in the U.S.

Speaker #3: In addition, our asset-based pricing tests now have thousands of transactions across multiple U.S. markets, and the results are in. The strategy of linking price to the value of space being advertised is working.

Speaker #3: We intend to launch this new pricing model broadly across the U.S. market, and expect that it will continue to deliver material incremental growth in 2026.

Speaker #3: We're building out the first and only global commercial real estate marketplace with LoopNet. At the beginning of '25, LoopNet was only present in Canada, the US, and the UK.

Speaker #3: During the year, we launched in Spain and France, increasing the number of listings in Europe fourfold to over 130,000. In 2026, we will continue expanding LoopNet coverage by launching in Australia, and then Germany.

Andy Florance: During the year, we launched in Spain and France, increasing the number of listings in Europe four times to over 130,000. In 2026, we will continue expanding LoopNet coverage by launching in Australia and then Germany. As we grow, the network effects of LoopNet are increasing. In 2026, we delivered over 400,000 leads and inquiries and 633 million total listing impressions. We are investing in Matterport's Salesforce in 2026, growing the team from 30 to 90 over the course of the year. This will enable us to expand our customer base to accelerate revenue growth in a wide range of segments, including residential, commercial, architecture, construction, insurance, and manufacturing. We eliminated approximately $120 million in cash and equity costs from the business in 2025, mostly from duplicative public company costs.

Speaker #3: As we grow, the network effects of LoopNet are increasing. In 2026, we delivered over 400,000 leads and inquiries, and 633 million total listing impressions.

Speaker #3: We are investing in Matterport Salesforce in '26, growing the team from 30 to 90 over the course of the year. This will enable us to expand our customer base and accelerate revenue growth in a wide range of segments, including residential, commercial, architecture, construction, insurance, and manufacturing.

Speaker #3: We eliminated approximately $120 million in cash and equity costs from the business in '25, mostly from duplicative public company costs. The market-leading Pro3 camera has been the workhorse for our customers for the past few years.

Andy Florance: The market-leading Pro3 camera has been the workhorse for our customers for the past few years. It's a wonderful camera. We will make it more accessible going forward for a wide range of customers by introducing a subscription-based pricing model in the future, which is a little bit more of a razor blade model. We're currently hard at work on developing the next generation camera, the Pro4, which we expect will launch next year. The very popular Defurnish feature launched last year, which allows customers to remove objects such as furniture and clutter from spaces. We are developing the Furnish feature, which uses generative AI to virtually stage or imagine different uses for rooms. One result of this development is that we're gaining better semantic understanding of the space.

Speaker #3: It's a wonderful camera. We will make it more accessible going forward for a wide range of customers by introducing a subscription-based pricing model in the future.

Speaker #3: Which is a little bit more of a razor-razor blade model. We're currently hard at work on developing the next generation camera of the Pro4, which we expect will launch next year.

Speaker #3: The very popular Defurnished feature launched last year, which allows customers to remove objects such as furniture and clutter from spaces. We are developing the Furnished feature, which uses generative AI to virtually stage your imagined different uses for rooms.

Andy Florance: We glean property data from this process that we can include in our centralized source of truth that can be leveraged across all CoStar products. As part of Matterport Exteriors, we're developing X-ray functionality that will allow users to remove elements of the building, such as the roof or an entire floor, to better understand the space in the context of the surroundings. We are integrating these capabilities into a seamless fly-through experience. This high-fidelity transition from exterior to interior creates a sophisticated narrative for the property, significantly elevating its market appeal and utility. BizBuySell generated $36 million in revenue in 2025 and growing EBITDA 19% over 2024, while delivering a 37% EBITDA margin. More than $143 billion in businesses for sale assets were marketed on the platform during the year, including $34 billion in commercial real estate.

Speaker #3: As part of Matterport Exteriors, we're developing X-ray functionality that will allow users to remove elements of the building, such as the roof or an entire floor, to better understand the space in the context of the surroundings.

Speaker #3: This by self-generating $36 million in revenue in 2025 and growing EBITDA 19% over '24, while delivering a 37% EBITDA margin. More than $143 billion in businesses-for-sale assets were marketed on the platform during the year, including $34 billion in commercial real estate.

Andy Florance: We are also steadily expanding the value of the platform through business comp data and workflow automation. Ad subscription revenue grew 35% in 2025 as customers increasingly rely on our benchmarks to price with greater confidence. At the same time, we are introducing features to streamline deal execution through Deal Accelerator. Adoption of Deal Accelerator continues to build, with 14% of broker members now using the product by year-end, capturing 10,000 qualified buyer profiles. CoStar Group's residential businesses aggregate consumer demand from homes for rent or sale, or apartments from rent or sale, and we sell and market and sell marketing and leads to the agents, owners, landlords, property management companies that need to market these properties to those consumers we aggregate. CoStar's residential business includes Apartments.com, Homes.com, Domain Residential, OnTheMarket, and Land.com.

Speaker #3: At the same time, we are introducing features to streamline deal execution through Deal Accelerator. Adoption of Deal Accelerator continues to build, with 14% of broker members now using the product by year-end, capturing 10,000 qualified buyer profiles.

Speaker #3: CoStar Group's residential businesses aggregate consumer demand from homes for rent or sale, or apartments for rent or sale, and we sell and market—sell marketing and leads to the agents, owners, landlords, property management companies—that need to market these properties to those consumers we aggregate.

Andy Florance: CoStar Group's residential revenue was $429 million in Q4 2025, up 35% year-over-year. For the full year 2025, revenue was $1.46 billion, up 20% year-over-year. Our residential business is projected to be profitable in 2026, and we believe that it will eventually reach 50% margins. Apartments.com generated $308 million of revenue in Q4, for an 11% increase year-over-year. Full year 2025 revenue was $1.25 billion. Apartments.com delivered for 841 million renter visits during the year, and those renters took 152 million Matterport 3D tours. They viewed over 16 billion photos, drove 16 million clicks directly to our customer community websites, and they submitted over 1 million applications directly from Apartments.com.

Speaker #3: For the full year 2025, revenue was $1.46 billion, up 20% year over year. Our residential business is projected to be profitable in 2026, and we believe that it will eventually reach 50% margins.

Speaker #3: Apartments.com generated $308 million of revenue in the fourth quarter for an 11% increase year over year. Full-year '25 revenue was $1.25 billion. Apartments.com delivered 841 million renter visits during the year, and those renters took 152 million Matterport 3D tours.

Speaker #3: They viewed over 16 billion photos, drove 16 million clicks directly to our customer community websites, and they submitted over 1 million applications directly from Apartments.com.

Speaker #3: One million applications. That's good. Apartment owners and managers realized that Apartments.com is the number one site recognized by apartment seekers, with our 67% brand awareness in December, up 4 points from Q3 '25.

Andy Florance: 1 million applications. That's good. Apartment owners and managers realize that Apartments.com is the number 1 site recognized by apartment seekers, with our 67% brand awareness in December, up 4 points from Q3 2025, while in contrast, the second rental competitor fell 5 points to 36%. We were thus able to accelerate our paying property count significantly in 2025 by adding almost 14,000 properties to our network to end the year at 89,275 properties. That's the largest number of properties we've ever added in a year. We won many of these new properties from Rent.com after Redfin, quote, unquote, sold those clients to Zillow. We estimate that Redfin had about 4 to 4.5 thousand apartment properties marketing on their platform that were not already on Apartments.com.

Speaker #3: That's the largest number of properties we've ever added in a year. We won many of these new properties from Rent.com after Redfin 'sold' those clients to Zillow.

Andy Florance: We signed approximately 1,200 of them to apartments at just over about $1,000 a month. We didn't have to acquire anything or end up in a legal thing. This increase in properties, coupled with our 99% monthly renewal rate and 92% and 92 NPS, confirms that property owners and managers understand the value of the Apartments.com site, built specifically for the apartment industry. This is further reinforced by our number one ranking, 82% of the time for the core 10,000 multifamily SEO keywords and the most comprehensive SEM program in the industry. In 2025, our marketing campaign delivered over 12 billion media impressions, reaching 90% of US households. As you saw in our Super Bowl ad, we've begun to co-brand Apartments.com with Homes.com, the place to find a place.

Speaker #3: This increase in properties, coupled with our 99% monthly renewal rate and 92% NPS, confirms that property owners and managers understand the value of the Apartments.com site built specifically for the apartment industry.

Speaker #3: This is further reinforced by our number one ranking 82% of the time for the core 10,000 multifamily SEO keywords, and the most comprehensive SEM program in the industry.

Speaker #3: In 2025, our marketing campaign delivered over $12 billion media impressions, reaching 90% of U.S. households. As you saw in our Super Bowl ad, we've begun to co-brand Apartments with Homes.com.

Andy Florance: The campaign, featuring Jeff Goldblum and Heidi Gardner, who have excellent chemistry together, kicked off with the Super Bowl, which had a total audience of $125 million, and the highest peak viewership in US media history. According to Comscore, visits to Apartments.com network were up 14% year-over-year in January. Our growth is in contrast with Comscore's data that showed that Zillow's rental traffic was down 48% year-over-year, and Zillow's partner, Redfin Rentals, was down 46% year-over-year. Zillow's expanded rental network, Zillow Realtor Redfin, was down 29% year-over-year in January. Zillow's rental revenue fell sequentially in Q4 compared to Q3 as the rental traffic was falling. With traffic falling, our closest competitor is now doing something called shotgunning leads.

Speaker #3: According to ComScore, visits to the Apartments.com network were up 14% year over year in January. Our growth is in contrast with ComScore's data that showed Zillow's rental traffic was down 48% year over year, and Zillow's partner Redfin Rentals was down 46% year over year.

Speaker #3: Zillow's expanded rental network—Zillow, Realtor, Redfin—was down 29% year over year in January. Zillow's rental revenue fell sequentially in the fourth quarter compared to the third quarter, as the rental traffic was falling.

Speaker #3: With traffic falling, our closest competitors are now doing something called shotgunning leads. That's encouraging potential renters to contact not just the person you intend to contact, but all the competitors' properties, and while this increases and distorts the number of pure leads, it significantly lowers the quality of the leads and therefore hurts ROI and lead-to-lease conversion rate.

Speaker #3: Poor leads create more work for the apartment community, as I sort through these leads to ultimately produce fewer leases. This behavior by our closest competitor, their drop in brand awareness, coupled with their traffic having declines in site visits year over year every single month in '25, according to ComScore, makes us feel that our position within the multifamily industry is very solid.

Speaker #3: We currently have the largest and most active salesforce in the industry. We added over 100 field and mid-market sales reps in '25, and ended the year with 522 total sales reps.

Andy Florance: We had over 100 field and mid-market sales reps in 2025, and ended the year with 522 total sales reps. These reps conducted 750,000 quality meetings in 2025, with over 350,000 of them in person. Our newer sales reps will continue to contribute more, as our experience has been that the reps that have been with us for a year, add more net new revenue for us each year of experience they gain, until those reps with 5 years of experience are contributing 2 to 3 times what they did in year 1. We will continue to grow this sales team in 2026, as the opportunity in front of us is indeed massive.

Speaker #3: We will continue to grow this sales team in '26, as the opportunity in front of us is indeed massive. We still have approximately 460,000 prospects with five units or larger, and 22 million prospects under five units to sell to, with a total TAM of $10 billion.

Speaker #3: And new supply, while lower in '24 than in '23, continued to exceed demand. The use of concessions continues to climb. In January, we saw almost half of all apartment buildings offering some type of concession, and that's up from 13% a year earlier.

Speaker #3: In just two years, Homes.com has become the fastest-growing residential portal in the US. In '25, the Homes.com network had over 2.1 billion views and 100 million average monthly unique visitors to the network.

Andy Florance: In 2025, the Homes.com network had over 2.1 billion views and 100 million average monthly unique visitors to the network. Our January 2026 organic traffic increased 134% year-over-year, 21% month-over-month, hitting an all-time high. We feel we have achieved a good balance between SEM, SEO, and direct traffic. This allows us to optimize SEM for quality traffic and leads, not just pure quantity. Average session duration rose from 3 minutes and 36 seconds in January 2025 to 4 minutes 33 seconds in January 2026. Our page sessions rose from 3.4 to 6.9 in the same year-over-year time period. Our bounce rate fell from 63% in January 2025 to 41% in January 2026. Lead volume rose 48% from January 2025 to January 2026.

Speaker #3: Our January '26 organic traffic increased 134% year over year, and 21% month over month, hitting an all-time high. We feel we have achieved a good balance between SEM, SEO, and direct traffic.

Speaker #3: This allows us to optimize SEM for quality traffic and leads, not just pure quantity. Average session duration rose from 3 minutes and 36 seconds in January '25 to 4 minutes and 33 seconds in January '26.

Speaker #3: Our page sessions rose from 3.4 to 6.9 in the same year-over-year time period. Our bounce rate fell from 63% in January '25 to 41% in January '26.

Speaker #3: Lead volume rose 48% from January '25 to January '26. Member lead volume rose 187% from January '25 to January '26. Rental lead volume rose 54% from January '25 to January '26.

Andy Florance: Member lead volume rose 187% from January 2025 to January 2026. Rental lead volume rose 54% from January 2025 to January 2026. Homes.com subscribers paid to promote 216,000 active listings, representing 9.4% of 2.3 million homes for sale in the US in Q4 2025. We now have over 31,000 agent subscribers, generating $100 million in annualized revenue run rate, with 76% of them on annual contracts. For CoStar, this is the fastest organic revenue build we've ever had for a new product, and we've achieved this revenue level faster than our US competitors, years faster. We have built a dedicated sales force of 600 sales reps to reach the top 750,000 agents in the business.

Speaker #3: Homes.com subscribers paid to promote 216,000 active listings, representing 9.4% of the 2.3 million homes for sale in the U.S. in Q4 '25. We now have over 31,000 agent subscribers generating $100 million in annualized revenue run rate, with 76% of them on annual contracts.

Speaker #3: For CoStar, this group, this is the fastest organic revenue build we've ever had for a new product. And we've achieved this revenue level faster than our U.S. competitors—years faster.

Speaker #3: We have built a dedicated Salesforce of 600 sales reps to reach the top 750,000 agents in the business. We've achieved and climbed to an excellent NPS score of 42 in less than two years, and it's still improving.

Speaker #3: Are you listing your lead principal in our market? The Home and Win More Listings model is now clearly resonating with agents. Homes.com is the only real estate portal in the United States whose core business model is to use the power of the internet to help real estate agents market their listings to potential homebuyers.

Speaker #3: The Homes.com business model is the global best practice for real estate portals, and it's utilized by REA Group, Ed Lister, Rightmove, Scout24, Hemnet, Domain, and many, many others.

Speaker #3: If you normalize these portals' financials from their home countries to the US on a GDP basis, they would be generating $4 to $21 billion in revenue in the US and $1.5 to $11 billion of EBITDA in the US.

Andy Florance: If you normalize these portals financials from their home countries to the US on a GDP basis, they would be generating $4 to 21 billion in revenue in the US and $1.5 to 11 billion of EBITDA in the US, which is orders of magnitude more than anyone has ever generated in the United States. We believe we can generate $4.75 billion of revenue and $2.85 billion of EBITDA with Homes.com inside the next 13 years. Apartments.com has a very similar business model to Homes.com and grew revenue initially at a measured pace, but now over 13 years, has reached $1.2 billion of revenue run rate with very high margins. The growth of Apartments and Homes looks very similar at this point.

Speaker #3: Which is orders of magnitude more than anyone's ever generated in the United States. We believe we can generate $4.75 billion of revenue and $2.85 billion of EBITDA with Homes.com inside the next 13 years. Apartments.com has a very similar business model to Homes.com, and grew at a measured pace, but now, over 13 years, has reached $1.2 billion of revenue run rate with very high margins.

Speaker #3: The growth of apartments and homes looks very similar at this point. Apartment real estate in the U.S. is worth $6 trillion, while single-family homes and condos are worth almost 10 times as much at $56 trillion.

Speaker #3: So, $6 trillion for apartments, $56 trillion for homes. In that context, it's very credible to believe that Homes.com can generate $5 billion in revenue within the next decade or so.

Speaker #3: Homes has a clear empirical potential for a very high IRR, similar to high IRRs ranging from 17% to 53% we've generated on our other major investments like CoStar Apartments, LoopNet, Real Estate Manager, and LandBizByself.

Speaker #3: And STR. We have a clear path to accelerate top-line growth and drive profitability. Thus, we've reduced our net investment in Homes.com by $300 million in '26 over '25, and continued to continue reducing the investment each year with discipline until we reach run-rate profitability in '29 and full-year profitability in 2030.

Speaker #3: Competing US real estate portals suffer from a lack of profitability and low growth, not because there's MLS in the US, but because they have chosen an inferior business model.

Speaker #3: In contrast to Homes.com, our U.S. competitor's primary business model is to sell lower value buyer agency leads to a much smaller audience, rather than marketing the valuable homes.

Speaker #3: Selling buyer agency leads became their primary business model when their iBuying business models failed spectacularly. Last week, we launched the game-changing Homes AI, which we believe is best-in-class and the first fully integrated, proprietary, vertical real estate application built upon the best strengths of the leading LLMs.

Speaker #3: One of the unique aspects of this product is that the UX is completely aware of the AI, and the AI is completely aware of the UI, and they work together seamlessly and beautifully.

Speaker #3: We strongly believe Homes AI will drive higher engagement, support significant growth in organic traffic, and contribute to a meaningful increase in agent subscriptions. Homes AI is either a conversational or text interface with a highly intelligent artificial intelligence real estate expert that guides the homebuyer through the search, exploration, and comparison of homes, communities, and valuations.

Andy Florance: We strongly believe Homes AI will drive higher engagement, support significant growth in organic traffic, and contribute to a meaningful increase in agent subscriptions. Homes AI is either conversational or text interface with a highly intelligent artificial intelligence real estate expert, that guides the home buyer through the search, exploration, comparison of homes, communities, and valuations. Homes AI is like having a conversation with a knowledgeable real estate advisor who knows everything about all the properties, rather than spending your time doom scrolling through a static website searching with filters. It's the perfect example of extraordinary discontinuous innovation. The most common reaction we get from people who see it for the first time is: Wow! A Homes.com member named Kim Owen said, That's amazing. I'm just flabbergasted.

Speaker #3: Homes AI is like having a conversation with a knowledgeable real estate advisor who knows everything about all the properties, rather than spending your time doomscrolling through a static website, searching with filters.

Speaker #3: It's the perfect example of extraordinary, discontinuous innovation. The most common reaction we get from people who see it for the first time is, "Wow."

Speaker #3: A Homes.com member named Kim Owen said, "That's amazing. I'm just flabbergasted. I think this is probably one of the best investments we've ever made." Stephanie Kolonoff, another Homes.com member, said, "Freaking amazing."

Andy Florance: I think this is probably the one of the best investments we've ever made." Steffi Kolenoff, another Homes.com member, said, quote, "Freaking amazing. Seriously, thank you. I love it. I could totally see my clients jonesing on this, and I think it's great for us as well. Like, it's really easier than searching MLS. Seriously, it's really terrific." End quote. Yet another Homes.com member, Susan Reres, gushed, quote, "You have just absolutely floored me. I cannot believe this. I mean, truly, this is a, what did you call it? Homes. Homes AI?" End quote. In the first week post-release, Homes AI is having a huge impact on user engagement. Site visitors that hit the AI mode are on the site for 16 minutes, 50 seconds, as opposed to 4 minutes, 24 seconds for non-users.

Speaker #3: Seriously, thank you. I love it. I could totally see my clients jonesing on this, and I think it's great for us as well. It's really easier than searching MLS, seriously.

Speaker #3: It's really terrific. Yet another Homes.com member, Susan Rehres, gushed, "You have just absolutely floored me. I cannot believe this. I mean, truly, this is a— what did you call it?"

Speaker #3: Homes.ai? In the first week post-release, Homes AI is having a huge impact on user engagement. Site visitors that hit the AI mode are on the site for 16 minutes, 50 seconds, as opposed to four minutes, 24 seconds for non-users.

Speaker #3: AI users do nearly four times as many searches, favorite seven times as many properties, look at four times as many properties, and submit seven times as many email leads.

Andy Florance: AI users do nearly four times as many searches, favorite seven times as many properties, look at four times as many properties, and submit seven times as many email leads. This transformative home search experience is powered by Microsoft Azure Open Advanced AI models, integrated with several other large and small models, including some models from AWS, as well as our own proprietary AI model. Using multiple models gives us tremendous flexibility and keeps token costs down. Using dynamic example injection, queries that originally consumed 2,000 tokens have been optimized to just 20 tokens. Unlike other AI implementations, Homes AI data remains entirely within the Homes.com proprietary ecosystem and is never used to train or refine external AI models, giving us a real advantage as we build out the best-in-class real estate AI.

Speaker #3: This transformative home search experience is powered by Microsoft Azure OpenAI advanced AI models, integrated with several other large and small models, including some models from AWS, as well as our own proprietary AI model.

Speaker #3: Unlike other AI implementations, Homes AI data remains entirely within the Homes.com proprietary ecosystem, and has never been used to train or refine external AI models, giving us a real advantage as we build out the best-in-class real estate AI.

Speaker #3: While we're launching the capability of Homes.com, we plan to deploy it to Apartments.com, CoStar, LoopNet, and LandBizBySelf as soon as possible. We believe—I believe—that our deployment of this advanced AI software will result in substantial competitive advantage for CoStar Group for years to come.

Speaker #3: Homes.com is already, and will become, an even more important strategic part of Apartments.com's strategic success. While the Apartments.com brand is optimized to institutional rentals, Homes.com is optimized to single-family homes and rental condos.

Speaker #3: With tens of millions of single-family rentals in the U.S., we believe that it represents at least half of the rental market in the U.S., and it's a $5 billion TAM.

Speaker #3: Homes.com is our essential gateway to reach the single-family rental market. In addition, just over half of all renters begin their home shopping journey open to renting or buying.

Speaker #3: Apartments.com needs Homes.com in order to bring those considering buying into the top of the rental funnel on one of our platforms. Our Homes.com rentals traffic, which grew 25% year over year, is robust and important, and Homes.com is second only to Apartments.com as the top rentals traffic contributor to our network of 10 rental brands.

Andy Florance: Apartments.com needs Homes.com in order to bring those considering buying into the top of the rental funnel on one of our platforms. Our Homes.com's rentals traffic, which grew 25% year-over-year, is robust and important. Homes.com is second only to Apartments.com as the top rentals traffic contributor to our network of 10 rental brands. In Q4 2025, Homes.com rentals traffic already accounted for 10% of the apartments network traffic, and we anticipate that it will grow very significantly. Our residential business achieved a record of 642,000 paid single-family rental listings in 2025, up 49% over the prior year. 400,000 new independent owners used our rental tools in 2025. We made the processing of over $5.5 billion in rents faster, allowing independent owners to receive 60% of their rent payments faster through Express Pay.

Speaker #3: In Q4 '25, Homes.com rentals traffic already accounted for 10% of the Apartments network traffic, and we anticipate that it will grow very significantly. Our Residential business achieved a record of 642,000 paid single-family rental listings in '25, up 49% over the prior year.

Speaker #3: 400,000 new independent owners used our rental tools in '25. We made the processing of over $5.5 billion in rents faster, allowing independent owners to receive 60% of their rent payments faster through express pay.

Speaker #3: In ’26, we will complete the process of offering all of the tools for the individual owner trying to manage rentals that you find on Apartments.com.

Andy Florance: In 2026, we will complete the process of offering all of the tools for the individual owner trying to manage rentals that you find on Apartments.com. It'll be available on Homes.com, allowing those owners to rent their house, condo, townhouse on either platform. We began selling enhanced exposure on Homes.com to new home builders in August 2025. In Q3, we delivered 524,000 annualized net new bookings for new construction. In Q4, we generated $1.2 million in annualized net new bookings, a 125% quarter-over-quarter increase. In just four months, this resulted in a total of $1.7 million in annualized net new bookings. Our Domain residential platform in Australia, in Q4, our residential marketplace Domain had revenue of $73 million, which was well ahead of our expectations.

Speaker #3: It'll be available on Homes.com, allowing those owners to rent their house, condo, or townhouse on either platform. We began selling enhanced exposure on Homes.com to new homebuilders in August of '25.

Speaker #3: In Q3, we delivered $524,000 in annualized net new bookings for new construction. In Q4, we generated $1.2 million in annualized net new bookings, a 125% quarter-over-quarter increase.

Speaker #3: In just four months, this resulted in a total of $1.7 million in annualized net new bookings. Our domain residential platform in Australia in Q4—our residential marketplace domain—had revenue of $73 million, which was well ahead of our expectations.

Speaker #3: Domain Residential Marketplace is profitable, delivering approximately 28% margins in '25. Domain will become a part of Homes.com within a year to 18 months. In the fourth quarter, we had exceptional audience momentum, resulting in Domain's strongest audience quarter on record.

Speaker #3: With an average of 8 million monthly unique audience, in October, Domain delivered a record residential audience of 9 million, up from 6.6 million in July, the month prior to our acquisition.

Speaker #3: Domain added six times more audience volume than its nearest competitor in Q4 '25 compared to Q3 '25. We did this through strategic increases in marketing investment, improved media mix, and leveraging Homes.com technology capabilities to deliver improvements in product speed, latency, and user experience.

Andy Florance: Inquiry volumes grew 21% year-over-year. Last week, we announced the planned divestment of a number of non-core, non-strategic products at Domain, that we can sharpen our focus on the marketplace core businesses which operate at excellent margin. This will temporarily eliminate some revenue, will have a positive impact on profitability, will allow the business to be more strongly focused on the key opportunities we see in commercial and residential in Australia. We are actively working on integrating the Domain residential platform into homes.com and the Homes AI software platform. Doing so is essential to improving margins by eliminating duplicative development efforts and creating a cost-efficient competitive edge in Australia. In the UK, we had an excellent year at OnTheMarket. We ended 25 with our 20th consecutive month of positive net new bookings.

Speaker #3: Last week, we announced the planned divestment of a number of non-core, non-strategic products at Domain, so that we can sharpen our focus on the marketplace core businesses which operate at excellent margin.

Speaker #3: This will temporarily eliminate some revenue, but will have a positive impact on profitability and will allow the business to be more strongly focused on the key opportunities we see in commercial and residential in Australia.

Speaker #3: We are actively working on integrating the Domain Residential platform into Homes.com and the Homes AI software platform. Doing so is essential to improving margins by eliminating duplicative development efforts and creating a cost-efficient competitive edge in Australia.

Andy Florance: We now have about the same number of listings as the number two player in the UK, we have new, more new home listings than the number one player, continuing to gain share there. We have achieved huge growth since our acquisition 2 years ago, growing sales leads by 94%, properties on site by 47%, increasing our brand awareness by 54%, increasing time on site by 77%. Importing best practices from Homes.com, OnTheMarket has dramatically improved the consumer experience with list and map view, along with rich map layers, property alerts that have become our largest source of leads. We plan to integrate OnTheMarket into Homes.com software platform environment in 2027, after we've completed migrating Domain into Homes.com. Our land business maximizes listings and brand exposure for America's top farm and lifestyle ranch brokerages.

Speaker #3: Continuing to gain share there. We have achieved huge growth since our acquisition two years ago—growing sales leads by 94%, properties on site by 47%, increasing brand awareness by 54%, and increasing time on site by 77%.

Speaker #3: We plan to integrate OnTheMarket into the Homes.com software platform environment in ’27, after we’ve completed migrating Domain into Homes.com. Our land business maximizes listings and brand exposure for America’s top farm and lifestyle ranch brokerages.

Speaker #3: This is a $4.4 trillion asset class, and they're essentially homes. In '25, we had almost 9,000 member agents promoting 144,000 listings. Our addition to the more agricultural-focused acre value strengthened our offering with aggregated nationwide farmland data such as soil surveys, flood hazards, crop productivity, and sales.

Speaker #3: We're positioned to take transformative share with the advantage Homes AI gives us. We are using AI to cut significant costs and improve our product offerings and quality.

Speaker #3: We're launching new, transformative products that would not have been feasible without our AI innovation. Finally, LLMs do not create information from thin air. Effective LLMs require massive amounts of accurate, accessible data, and no one has more proprietary real estate information than CoStar Group.

Speaker #3: CoStar information products are protected by strong authentication. We've accumulated over $2.4 trillion fields of data. Only about 25% of our data is available on CoStar Group marketing portals.

Speaker #3: Over 35 years, we've collected nearly 700,000 Matterports and billions of proprietary images. The agentic tagging of our photographs creates hundreds of billions of new, searchable, displayable, and model-ready data fields.

Speaker #3: We have massive proprietary information—150 million properties. We receive direct leads of information from our clients that don't appear on the open internet. Over 94,000 hotels provide us confidential performance data, and more than 500 financial institutions provide us with detailed, confidential loan data.

Andy Florance: Over 94,000 hotels provide us confidential performance data. More than 500 financial institutions provide us with detailed confidential loan data. Over 2,000 corporations, including half the Fortune 500, provide us with millions of confidential lease documents. Hundreds of thousands of real estate brokers, brokerages feed us millions of listings digitally, many of which do not appear on the open internet. 280 home builders, it's actually 300 home builders, feed us details digitally on their communities, and nearly 85,000 apartment managers give us direct digital access to extensive details about their properties. While there's a lot of accessible real estate data open to LLM crawlers, only CoStar has the massive, very difficult to replicate volumes of high quality, system of record, proprietary real estate data.

Speaker #3: Three hundred homebuilders feed us details digitally on their communities, and nearly 85,000 apartment managers give us direct digital access to extensive details about their properties.

Speaker #3: While there's a lot of accessible real estate data open to LLM crawlers, only CoStar has the massive, very difficult-to-replicate volumes of high-quality, system-of-record, proprietary real estate data.

Speaker #3: We believe that we will be competitively advantaged for building the most transformative AI-powered real estate solutions. So let me close with this: the results in the plan you heard today reflect what CoStar has always done.

Andy Florance: We believe that we will be competitively advantaged for building the most transformative AI-powered real estate solutions. Let me close with this: The results and the plan you heard today reflect what CoStar has always done, build durable platforms on proprietary data, run them with discipline, and compound long-term shareholder value. We've strengthened our governance and capital allocation oversight, and we're matching strategy with clear financial priorities, profitable growth, expanding adjusted EBITDA, and returns of capital. We're scaling Homes.com because it strengthens our entire real estate ecosystem globally and the completeness of our data, and we're doing it with a clear investment glide path. On AI, we're not conceding the future. We're productizing our proprietary information with experiences like you see in Homes AI, while driving efficiency across the company. Thank you for your trust and partnership, and I'll turn the call over to Mr. Chris Campbell.

Speaker #3: Build durable platforms on proprietary data, run them with discipline, and compound long-term shareholder value. We've strengthened our governance and capital allocation oversight, and we're matching strategy with clear financial priorities: profitable growth, expanding adjusted EBITDA, and returns of capital.

Speaker #3: We're scaling Homes.com because it strengthens our entire real estate ecosystem globally and the completeness of our data. And we're doing it with a clear investment glide path.

Speaker #3: And on AI, we're not conceding the future. We're productizing our proprietary information with experiences like you see in Homes AI, while driving efficiency across the company.

Speaker #3: So, thank you for your trust and partnership, and I'll turn the call over to Mr. Chris Owen, our CFO.

Operator: ... Hong, our CFO.

Speaker #2: Thank you, Andy. For the full year of 2025, revenue was $3.2 billion, a 19% year-over-year increase over 2024. This was ahead of consensus and above the high end of our full-year revenue guidance range.

Chris Lown: Thank you, Andy Florance. For the full year of 2025, revenue was $3.2 billion, a 19% year-over-year increase over 2024. This was ahead of consensus and above the high end of our full year revenue guidance range. Our revenue outperformance primarily came from higher than expected contributions from CoStar, Matterport and Domain. Full year adjusted EBITDA in 2025 also came in above expectations at $442 million, posting a 14% adjusted EBITDA margin. This also exceeded consensus in the high end of our guidance range. The combination of our revenue beat and lower than anticipated personnel costs drove the adjusted EBITDA beat for the year. As Andy Florance mentioned in his remarks, we've revised our reporting segments into a commercial segment and a residential segment.

Speaker #2: Our revenue outperformance primarily came from higher-than-expected contributions from CoStar, Matterport, and Domain. Full-year adjusted EBITDA in 2025 also came in above expectations at $442 million, posting a 14% adjusted EBITDA margin.

Speaker #2: This also exceeded consensus at the high end of our guidance range. The combination of our revenue beat and lower-than-anticipated personnel costs drove the adjusted EBITDA beat for the year.

Speaker #2: Revenue from our commercial segment totaled $1.79 billion. An 18% year over year increase from $1.52 billion in 2024. Our commercial segment is comprised of what we previously disclosed to CoSTAR, previously disclosed as CoSTAR, LubeNet, which also includes Domain's commercial marketplace, information services, 10X, BizBySell, and Matterport.

Speaker #2: Revenue from our residential segment totaled $1.46 billion, a 20% increase year over year, with an organic growth rate of 12%. The residential segment includes Apartments.com, Homes.com, OnTheMarket, Land.com, and the residential revenue from Domain.

Speaker #2: We continue to see significant opportunity across all the Apartments.com TAMs and saw a year-over-year rooftop growth of 18% to $89,275 at year-end 2025. We continue to invest in Apartments.com and expect to add an additional 50 salespeople in 2026 after adding nearly 100 in 2025.

Speaker #2: Residential revenue was $108 million in the fourth quarter and $218 million for the full year of 2025, above the high end of our guidance estimate.

Chris Lown: Residential revenue was $108 million in Q4, and $218 million for the full year of 2025, above the high end of our guidance estimate. As a reminder, this revenue grouping included Homes, OnTheMarket, and Domain residential. Revenue in 2025 included a $95 million contribution from Domain's residential revenue, with Homes.com delivering an impressive 63% year-over-year growth rate. CoStar revenue grew 9% for Q4 and 7% for the full year of 2025. This was at the high end of our guidance and a fantastic result as we are emerging from the worst commercial real estate crisis in recent memory. CoStar rep productivity increased every quarter in 2025, as this team delivered its highest sales year since 2022.

Speaker #2: As a reminder, this revenue grouping included Homes, OnTheMarket, and Domain Residential. Revenue in 2025 included a $95 million contribution from Domain's residential revenue, with Homes.com delivering an impressive 63% year-over-year growth rate.

Speaker #2: CoStar productivity increased every quarter in 2025, as this team delivered its highest sales year since 2022. At 94%, CoStar also saw its highest renewal rate since Q4 2022, with CoStar Debt Solutions and STR posting strong year-over-year growth.

Chris Lown: At 94%, CoStar also saw its highest renewal rate since Q4 2022, with CoStar Debt Solutions and STR posting strong year-over-year growth. We are extremely excited about CoStar's pending product launches as we look to expand CoStar Debt Solutions' capabilities into origination workflow solutions, expand STR's financial reporting modules, and launch the groundbreaking lease benchmarking product. LoopNet revenue increased 17% in Q4 and 11% for the full year of 2025, also at the high end of our guidance. Excluding the impact from the acquired Domain commercial marketplace revenue, LoopNet grew 11% for the quarter and 9% for the year. LoopNet delivered its highest ever sales year in 2025, and we expect to continue that momentum throughout 2026 as we create the only pan-European CIRI market solution and launch LoopNet in Australia.

Speaker #2: We are extremely excited about CoStar's pending product launches, as we look to expand CoStar Debt Solutions' capabilities into origination workflow solutions, expand STR's financial reporting modules, and launch the groundbreaking lease benchmarking product.

Speaker #2: LubeNet revenue increased 17% in the fourth quarter and 11% for the full year of 2025, also at the high end of our guidance. Excluding the impact from the acquired Domain commercial marketplace revenue, LubeNet grew 11% for the quarter and 9% for the year.

Speaker #2: LubeNet delivered its highest-ever sales year in 2025, and we expect to continue that momentum throughout 2026 as we create the only pan-European CRE market solution and launch LubeNet in Australia.

Speaker #2: Revenue from information services increased 15% for the fourth quarter and 19% for 2025, in line with our guidance. We are excited about the combination of Visual Lease and Real Estate Manager, as we drive synergies across the combined platform, launch new products in 2026, and integrate these businesses into CoStar's unified tech platform, combining market data and analytics with applications for occupiers of real estate.

Chris Lown: Revenue from information services increased 15% for Q4 and 19% for 2025, in line with our guidance. We are excited about the combination of Visual Lease and Real Estate Manager as we drive synergies across the combined platform, launch new products in 2026, and integrate these businesses into CoStar's unified tech platform, combining market data and analytics with applications for occupiers of real estate. Importantly, AI will feature prominently as we use it to extract rents, lease terms, and other data from leases to create benchmark solutions, and we will also provide this functionality to our customers for automated lease abstraction and audit purposes.

Speaker #2: Importantly, AI will feature prominently as we use it to extract rents, lease terms, and other data from leases to create benchmark solutions. We will also provide this functionality to our customers for automated lease abstraction and auto purposes.

Speaker #2: As you can see in the disaggregated revenue tables and the earnings release, the information services revenue has now been incorporated into CoStar revenue, as we migrate these businesses into the CoStar platform, as we successfully did with STR.

Chris Lown: As you can see in the disaggregated revenue tables in the earnings release, the information services revenue has now been incorporated into CoStar revenue as we migrate these businesses into the CoStar platform, as we successfully did with STR. Other revenue was $75 million for Q4 and $272 million for the full year of 2025, above the high end of our guidance. This positive result reflects better than expected performance from Matterport, camera sales, and capture services revenue. Company-wide, we delivered $7 million of net income in 2025, which is $25 million above the high end of our guidance range. Our full-year adjusted EBITDA of $442 million also exceeded the high end of our guidance by $17 million.

Speaker #2: Other revenue was $75 million for the fourth quarter and $272 million for the full year of 2025, above the high end of our guidance.

Speaker #2: This positive result reflects better than expected performance from Matterport. Camera sales and capture services revenue. Company-wide, we delivered $7 million of net income in 2025, which is $25 million above the high end of our guidance range.

Chris Lown: Our sales force at year-end was 2,175 people, which increased by nearly 800 in 2025, including the addition of 185 reps from our 2025 acquisitions. The majority of the increase was concentrated in our Homes.com residential business, which increased by more than 400 reps in the year. We expect to continue growing most of our sales forces in 2026, with a particular emphasis on growing the LoopNet and Matterport teams. Our contract renewal rate was 89% in Q4 of 2025. Customers who have been subscribers for five years or longer have a 95% renewal rate. Subscription revenue on annual contracts was 71% for Q4 of 2025. Domain does not operate using annual subscriptions, which has reduced this metric by 7 percentage points.

Speaker #2: The majority of the increase was concentrated in our Homes.com residential business, which increased by more than 400 reps in the year. We expect to continue growing most of our sales forces in 2026, with a particular emphasis on growing the LubeNet and Matterport teams.

Speaker #2: Our contract renewal rate was 89% in the fourth quarter of 2025, and customers who have been subscribers for five years or longer have a 95% renewal rate.

Chris Lown: Our other brands have remained relatively consistent with their subscription metrics. For full year 2025, we delivered $308 million of net new bookings, a record for CoStar and 23% higher than 2024. Net new bookings for the Q4 were $75 million, a 42% year-over-year increase. During 2025, we completed our $500 million share buyback program, announced in February 2025, and repurchased 7.1 million shares. We also recently announced that our board has authorized a new $1.5 billion share repurchase program.

Chris Lown: We expect to repurchase a total of $700 million worth of shares in 2026, and plan to execute an accelerated share repurchase this quarter to repurchase $500 million worth of shares, followed by $200 million of open market repurchases throughout the rest of 2026. For 2026, we are affirming the guidance we provided on 7 January. Specifically, we expect revenue of $3.78 to 3.82 billion, implying an annual growth rate of 16% to 18%. Q1 of 2026 revenues is expected to range from $890 to 900 million, representing an increase of 22% to 23% year-over-year at the midpoint.

Speaker #2: For 2026, we are affirming the guidance we provided on January 7th. Specifically, we expect revenue of $3.78 to $3.82 billion, and we are planning an annual growth rate of 16 to 18 percent.

Speaker #2: First quarter 2026 revenue is expected to range from $890 million to $900 million, representing an increase of 22 to 23 percent year-over-year at the midpoint.

Speaker #2: We are also affirming our 2026 full-year adjusted EBITDA guidance range of $740 million to $800 million, reflecting an adjusted EBITDA margin of 20 to 21 percent.

Speaker #2: First quarter 2026 adjusted EBITDA is expected to range from $95 million to $115 million. Our adjusted EBITDA margins are expected to increase by roughly 5 percentage points each quarter throughout 2026.

Speaker #2: As an aside, I would suggest you review 2024 and 2025 quarterly adjusted EBITDA numbers and margins, where you will see a similar seasonality pattern of rising margins throughout the year.

Chris Lown: As an aside, I would suggest you review 2024 and 2025 quarterly adjusted EBITDA numbers and margins, where you will see a similar seasonality pattern of rising margins throughout the year. For additional context on Q1 guidance, our marketing expenses tend to be the highest in the Q1 and Q2 of the year, and 2026 should follow that same pattern. Events such as the Super Bowl, Winter Olympics, and the successful launch of Homes AI, drive spend earlier in 2026. Additionally, Domain revenue is seasonally lower in Q1 as Domain comes off its high selling season. As a point of reference, based on current exchange rates, revenue for Domain has dropped an average of $14 million sequentially from Q4 to Q1 over the past two years.

Speaker #2: For additional context on first quarter guidance, our marketing expense tends to be the highest in the first and second quarters of the year, and 2026 should follow that same pattern.

Speaker #2: As a point of reference, based on current exchange rates, revenue for Domain has dropped an average of $14 million US dollars sequentially from Q4 to Q1 over the past two years.

Speaker #2: Broken down by segment, we expect commercial revenue in 2026 of 1.955 to 1.975 billion dollars, a 10% increase at the mid at its midpoint from 2025's revenue of 1.79 billion dollars.

Chris Lown: Broken down by segment, we expect commercial revenue in 2026 of $1.955 to $1.975 billion, a 10% increase at its midpoint, from 2025's revenue of $1.79 billion. For the Q1, we expect commercial revenue of $470 to $475 million, an increase of 16% at the midpoint from Q1 2025. Residential revenue is expected to range from $1.825 to $1.845 billion in 2026, a 26% increase year-over-year at the midpoint of the range. Q1 residential revenue is expected to range from $420 to $425 million, an increase of 31% year-over-year at the midpoint of the range.

Speaker #2: For the first quarter, we expect commercial revenue of $470 to $475 million, an increase of 16% at the midpoint from Q1 2025. Residential revenue is expected to range from $1.825 to $1.845 billion in 2026, a 26% increase year-over-year at the midpoint of the range.

Speaker #2: First quarter residential revenue is expected to range from $420 million to $425 million, an increase of 31% year-over-year at the midpoint of the range.

Speaker #2: We expect adjusted EBITDA margins for 2026 of 33 to 34 percent, as we make a number of significant investments in the commercial segment to drive future growth.

Chris Lown: We expect adjusted EBITDA margins for 2026 of 33% to 34%, as we make a number of significant investments in the commercial segment to drive future growth. These investments include building CoStar Australia and expanding in Europe, CoStar Debt Solutions, origination workflow modules, the integration of Real Estate Manager and Visualization to CoStar, the revolutionary lease benchmarking product, a new homes information product, SCR profitability modules, AI across our businesses, new Matterport technology, and additional salespeople. For the residential segment, we expect adjusted EBITDA margins of 5% to 7%. Our level of CapEx is expected to range from $175 to $225 million in 2026, as we complete the build-out of our Richmond campus, which should be finished in the Q2.

Speaker #2: These investments include building CoStar Australia and expanding in Europe, CoStar Debt Solutions, origination workflow modules, the integration of Real Estate Manager and visualization into CoStar, the revolutionary lease benchmarking product, a new homes information product, STR profitability modules, AI across our businesses, new Matterport technology, and additional salespeople.

Speaker #2: For the residential segment, we expect adjusted EBITDA margins of 5 to 7 percent. Our level of CapEx is expected to range from $175 to $225 million in 2026, as we complete the build-out of our Richmond campus, which should be finished in the second quarter.

Chris Lown: In summary, I'm extremely proud of our 2025 results, delivered during a year complicated by high interest rates, inflation, and economic volatility. We remain focused on delivering on our strategic investments in the commercial and residential markets for our shareholders, while producing record profit levels in our established businesses as we drive revenue and margin expansion in the coming years. I'll now turn the call back over to the operator for questions.

Speaker #2: I'll now turn the call back over to the operator for questions.

Speaker #1: Thank you. As a reminder, to ask a question, please press *11 on your telephone and wait for your name to be announced. To withdraw your question, please press *11 again.

Operator: Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. One moment for questions. Our first question comes from Stephen Sheldon with William Blair. You may proceed.

Speaker #1: One moment for questions. And our first question comes from Stephen Sheldon with William Blair. You may proceed.

Speaker #2: Hey, thanks for taking my questions. I think the Q4 bookings were a plus lighter than some had been expecting. So, can you maybe talk some about the puts and takes in the quarter by business?

Stephen Sheldon: Hey, thanks for taking my questions. I think the Q4 bookings were plus lighter than some had been expecting. Could you maybe talk some about the puts and takes in the quarter by business? Secondarily, it sounds like you're planning to continue growing sales head count. Just wanted to ask what you're seeing in the productivity ramp for those added in 2025, and whether that ramp has looked any different than what you've seen historically for added sales head count?

Speaker #2: And then, secondarily, it sounds like you're planning to continue growing sales headcount. So I just wanted to ask what you're seeing in the productivity ramp for those added in 2025, and whether that ramp has looked any different than what you've seen historically for added sales headcount?

Andy Florance: I'll answer the second part of the question. I'll answer the second part of the question first, and I'll let Chris Lown answer the first part. In terms of a sales ramp, we obviously are growing the sales force dramatically. When you first bring people on, as we've done, as we brought a lot of people on in 2025, they're not at maximum productivity. They're in line with what we've historically seen. I think I commented during the call that they become 2 to 3 times more productive in the fifth year than they were in the first year.

Speaker #3: So I'll answer the second part of the question. I'll answer the second part of the question first, and let Chris answer the first part.

Speaker #3: So in terms of sales ramp, we've obviously been growing the sales force dramatically. And when you first bring people on, as we've done as we brought a lot of people on in 2025, they're not at maximum productivity.

Speaker #3: So they're in line with what we've historically seen. But I think I commented during the call that they've become two to three times more productive in the fifth year than they were in the first year.

Speaker #3: So, we manage them closely on a nine-box and make sure they're on trajectory. We're seeing good initial results, but it is a large addition of salespeople.

Andy Florance: You know, we manage them closely on a, you know, nine-box and make sure they're on trajectory, but we're, you know, we're seeing good initial results, but it is a large addition of salespeople.

Speaker #4: Yeah, and with regard to your first question, I’d point you to the investor deck, which we put on our website. Our Q4 net new was the second highest Q4 in our company’s history.

Speaker #4: I repeat, it was the second-highest Q4 in history. And I go back and look at it, so we feel great about our outcome.

Speaker #4: And as far as puts and takes, I think the number speaks for itself.

Speaker #1: Thank you.

Operator: Thank you.

Speaker #2: All right, thank you.

Andy Florance: All right. Thank you.

Speaker #1: Our next question comes from Ryan Tomasello with KBW. You may proceed.

Operator: Our next question comes from Ryan Tomasello with KBW. He may proceed.

Speaker #5: Hi, everyone. Thanks for taking the questions. Just following up on Apartments.com—if you can just help us understand how you're thinking about the growth for that business this year.

Ryan Tomasello: Hi, everyone. Thanks for taking the questions. Just following up on Apartments.com, if you can just help us understand how you're thinking about the growth of that business this year. Then with respect to the other half of residential with Homes.com, obviously, there's been a lot of upheaval lately in the industry regarding the role of the MLS and listing ownership. Just curious, Andy, how you're thinking about managing the home strategy around that fluid evolution of the industry and what opportunities that might unlock. Thanks.

Speaker #5: And then with respect to the other half of residential, with Homes.com, obviously there's been a lot of upheaval lately in the industry regarding the role of the MLS and listing ownership.

Speaker #5: So just curious, Andy, how you're thinking about managing the Homes strategy around that fluid evolution of the industry, and what opportunities that might unlock.

Speaker #5: Thanks.

Speaker #3: So, I guess there are two parts to that question. I'll handle the second part as usual. Yeah, there's upheaval and there is some instability, as I believe that the CEO of the largest brokerage firm made some statements to his staff, in an all-hands call, talking about the fact that if his agents did not want to belong to the major association, they wouldn't have to within two years.

Andy Florance: The, I guess there's 2 parts to that question. I'll handle the second part, as usual. The, yeah, there is upheaval, and there is some instabilities. I believe that the CEO of the largest brokerage firm made some statements to his staff in an all hands call, talking about the fact that if his agents did not want to belong to the major association, they wouldn't have to within 2 years.

Andy Florance: I think that reflects dissatisfaction with the industry, with having their listings go into a system that then syndicates them out to real estate portals that divert the leads from their own listings to their competitors. That's not in the interest of the homeowner, it's not in the interest of the listing agent, it's not even in the interest of the buyer. I believe that that instability does create opportunities for a platform that is resonant with the brokerages, the agents, and the home seller. It's difficult to see exactly how that will break, but I believe that would break in our favor.

Speaker #3: I think that reflects dissatisfaction within the industry with having their listings go into a system that then syndicates them out to real estate portals that divert the leads from their own listings to their competitors.

Speaker #3: And that's not in the interest of the homeowner. It's not in the interest of the listing agent. It's not even in the interest of the buyer.

Speaker #3: So, I believe that instability does create opportunities for a platform that is resonant with the brokerages, the agents, and the home seller. So, it's difficult to see exactly how that will break, but I believe that would break in our favor.

Speaker #4: Yeah, and on your first question, I would just point you to the guidance we gave on the residential side. We feel—you heard the stats that Andy talked about.

Speaker #4: We feel great about our position in Apartments.com and just point to the guidance we gave on the Residential segment.

Speaker #1: Thank you. Our next question comes from Brett Huff with Stephens. You may proceed.

Operator: Thank you. Our next question comes from Brett Huff with Stephens. You may proceed.

Speaker #6: Good afternoon, and thanks for all the info, guys. Two quick questions from me. Can you talk again about the commercial EBITDA guidance? You all kind of articulated some of the things you're investing in.

Brett Huff: Good afternoon, thanks for all the info, guys. 2 quick questions for me. Can you talk again about the commercial EBITDA guidance? You all kind of articulated some of the things you're investing in. There was a long list, I wonder if you could sort of give us the top few, maybe that seem the biggest priority. The other question I had was, Andy, you mentioned some reductions in Matterport, I didn't get the number, but it sounded like a large number. Can you just talk a little bit about that for us? Thank you.

Speaker #6: There was a long list, but I wonder if you could sort of give us the top few, maybe, that seem the biggest priority? And then the other question I had was, Andy, you mentioned some reductions in Matterport, and I didn't get the number, but it sounded like a large number.

Speaker #6: And can you just talk a little bit about that for us? Thank you.

Speaker #3: Sure. So again, answering the second part of the question first— and that's probably the first question, Scott. I'm sorry, not Scott. We have a new CFO.

Andy Florance: Sure. Again, answering the second part of the question first, and then trying the first question, Scott. I'm sorry, not Scott.

Chris Lown: Oh.

Andy Florance: We have a new CFO. He's only been here for two to three years. Chris, I'm sorry, Chris. Can you ever forgive me? Yeah, after we merged with Matterport, we eliminated a number of duplicative public company costs, generally in the C-suite, and it was about $120 million of executive comp, both in cash and equity, you know, some HR, finance related duplicative areas, and made great progress towards improving the profitability of Matterport. We're focused on growing revenue at Matterport through adding salespeople and reaching more of our potential market. Yeah, it's about $120 million duplicative public company costs.

Speaker #3: He's only been here for two or three years, Chris. I'm sorry, Chris. Can you ever forgive me? So yeah, so after we merged with Matterport, we eliminated a number of duplicative public company costs.

Speaker #3: Generally, in the C-suite, and it was about $120 million of executive comp, both in cash and equity. Some HR, finance-related duplicative areas. And made great progress towards improving the profitability of Matterport.

Speaker #3: And then we're focused on growing revenue at Matterport through adding salespeople and reaching more of our potential market. So yeah, this is about $120 million, duplicative public company costs.

Speaker #4: Yeah, and on the commercial adjusted EBITDA margin, I want to make sure also people remember the commercial segment does not have Apartments.com, and that's obviously in the residential segment.

Chris Lown: Yeah, on the commercial adjusted EBITDA margin, I wanna make sure also people remember, the commercial segment does not have Apartments.com, and that's obviously in the residential segment. If we look at the primary investments that we're making in 2026, we have a de novo build to CoStar Australia. Obviously, we have the software and the technology, we just have to fill in the data and information, and that team is well on its way, and they're very excited. That's a great result. Again, there's 200-ish plus people that we sent that we hired down there to help us drive that information. In addition, we're expanding further in Europe, there's an ongoing effort.

Speaker #4: But then, if we look at the primary investments that we're making in 2026, we have a de novo build to CoStar Australia. Obviously, we have the software and the technology, so we just have to fill in the data and information.

Speaker #4: And that team's well on its way, and they're very excited. So that's a great result. But again, there's 200-ish plus people that we hired down there to help us drive that information.

Speaker #4: In addition, we're expanding further in Europe. So there's an ongoing effort, obviously, that the business has been very successful, as Andy mentioned, in Canada and the UK.

Chris Lown: Obviously, the business has been very successful, as Andy mentioned, in Canada and the UK. We look forward to getting to those same success levels in Spain, France, Germany, et cetera, and Australia. As I mentioned, we're building out a origination workflow module for CoStar Debt Solutions. This has actually been driven by our clients who said, if you could give us, you know, workflows for originations, we'd love to tie it all together. That creates a huge amount of proprietary data and information, which we're excited about, so we're moving aggressively on that. We also talked about integrating Real Estate Manager and Visual Lease into CoStar.

Speaker #4: We look forward to getting to those same success levels in Spain, France, Germany, and Australia. As I mentioned, we're building out an origination workflow module for CoStar Desolutions.

Speaker #4: This has actually been driven by our clients, who said, 'If you could give us workflows for originations, we'd love to tie it all together.' And that creates a huge amount of proprietary data and information, which we're excited about.

Speaker #4: So we're moving aggressively on that. We also talked about integrating Real Estate Manager and Visual Lease into CoStar. So just so people fully understand, we are, just like we did with SDR.

Chris Lown: Just so people fully understand, we are, just like we did with SDR, we're actually taking Real Estate Manager and Visual Lease, rewriting all the code into CoStar, as we do with everything, creating a brand-new, better platform embedded within CoStar, which also will have all the data and information around it. That will be a fantastic and revolutionary capability. Alongside that will be the Lease Benchmarking product. That will be a first-time, you know, a product that has never existed before. We're investing on that. We have a new homes information product that we've launched and is already generating revenue, which is fantastic.

Speaker #4: We're actually taking Real Estate Manager and Visual Lease, rewriting all the code into CoStar, as we do with everything, creating a brand new, better platform embedded within CoStar, which also will have all the data and information around it.

Speaker #4: So that will be a fantastic and revolutionary capability. Alongside that will be the lease benchmarking product, which will be a first-time product that has never existed before.

Speaker #4: So we're investing on that. We have a new homes information product that we've launched and is already generating revenue, which is fantastic. We actually just launched, I believe, the SDR Profitability Module.

Chris Lown: We actually just launched, I believe, SDR profitability module. Those just came out, and that gives our customers an ability to understand their profitability on a gross profit basis, not on a per unit basis. They're excited about that. As you've seen, we launched Homes AI very successfully, and it's been a great, you know, couple weeks. We are gonna take that capability across all our businesses, first in Apartments.com, quickly across all other businesses. That is really exciting for us. Our Matterport team is a long list, and it's all getting done. Our Matterport team is really excited about building a new camera, so there's work going on around building the new camera, plus enhancing the technology they have.

Speaker #4: So that just came out. And that gives our customers an ability to understand their profitability on a gross profit basis, not on a per-unit basis.

Speaker #4: So, they're excited about that. As you've seen, we launched Homes AI very successfully, and it's been a great couple of weeks. We are going to take that capability across all our businesses—first in Apartments.com, but then quickly across all other businesses.

Speaker #4: So that is really exciting for us. Our Matterport team has a long list, and it's all getting done. Our Matterport team is really excited about building a new camera.

Speaker #4: So there's work going on around building the new camera, plus enhancing the technology they have. And you talked about the furnace function, the furnish function, which is a real technology feed.

Chris Lown: Andy talked about the Furnish function, the Furnish function, which is a real technology feed, you know, when they get it done, but also building a new camera, which is faster, better, et cetera, and finally, additional salespeople. As you see, a meaningful amount of investment going into our commercial business, all great opportunities to grow revenue, to grow TAM, to grow margins, but that inevitably will have a minor impact in 2026.

Speaker #4: When they get it done, but also building a new camera, which is faster, better, etc. And finally, additional salespeople. So as you see, a meaningful amount of investment going into our commercial business—all great opportunities to grow revenue, to grow TAM, to grow margins.

Speaker #4: And so, but that inevitably will have a minor impact in 2026.

Speaker #3: Clearly paying attention to and investing in the core.

Andy Florance: Clearly paying attention to and investing in the core.

Speaker #1: Great. Thank you.

Kimin On: Great. Thank you.

Speaker #2: Thank you.

Operator: Thank you. Our next question comes from Pete Christensen with Citi. You may proceed.

Speaker #1: Our next question comes from Pete Christensen with Citi. You may proceed.

Speaker #5: Thank you. Good evening. Andy, sorry, another AI disruption question. This time, a little bit more second-order. The CRE broker space has kind of been under fire lately.

Speaker #5: For concerns on disruption there. And I guess, if we were to think, if the CRE broker space were to see a reduction in C, do you think CoStar would have the ability to change its pricing around?

Speaker #5: Do you see this as a potential disruption to the CoStar Suite business? Thank you.

Speaker #3: Sure. I have, gosh, spent 40 years working with commercial real estate brokers. And I think that it is missing some of the personal relationship sales nature of a commercial real estate broker.

Andy Florance: Sure. I have, gosh, spent 40 years working with commercial real estate brokers, and, you know, I think that, I think that it is missing some of the personal relationship sales nature of a commercial real estate broker. These are really relationship people. I'm somewhat puzzled at the level of AI fear in that sector. For sure, there are high volumes of people in some of those commercial real estate service companies, which will be disintermediated by AI, but they're not the revenue driver relationship people. I don't think they're gonna go anywhere, and those are the core audience for our CoStar product.

Speaker #3: And so, these are really relationship people. And so, I'm somewhat puzzled at the level of AI fear in that sector. For sure, there are high volumes of people in some of those commercial real estate service companies which will be disseminated by AI.

Speaker #3: But they're not the revenue-driver relationship people. I don't think they're going to go anywhere. And those are the core audience for our CoStar product.

Andy Florance: The 500 people building models in the background, they may disappear, but they're typically not the property managers doing accounting, all that stuff. They're typically not the people buying seats. I think that there is the ability to retain comparable prices with seat reduction. We've done that in the past successfully during downturns. Certainly over the last 5 years, you saw a significant reduction in the number of people doing commercial real estate, yet we continued to grow revenues. I do think that there's resilience there. Remember that brokers only represent, at this point, about 30%, 33% of our revenue. The majority of our revenue is banks and owners and institutions and CMBSs and government agencies, many of whom are not on a seat license basis.

Speaker #3: The 500 people building models in the background—they may disappear—but they're typically not our property managers doing accounting and all this stuff. They're typically not the people buying seats.

Speaker #3: If I think that there is the ability to retain comparable prices with seat reduction, we've done that in the past successfully during downturns. So, certainly, over the last five years, you saw a significant reduction in the number of people doing commercial real estate.

Speaker #3: Yet we continue to grow revenues, so I do think that there's resilience there. And then remember that brokers only represent, at this point, about 30 to 33 percent of our revenue.

Speaker #3: The majority of our revenue is banks and owners and institutions and CMBSs and government agencies, many of whom are not on a seat license basis.

Chris Lown: Well, also add to that, all the investment we're making is actually more geared toward those exact customers. We should expect to continue to see that percentage decrease as those investments bear fruit.

Speaker #2: Well, and I'd also add to that, all the investment we're making is actually more geared toward those exact customers. And so we should expect to continue to see that percentage decrease as those investments bear fruit.

Speaker #3: But who will tomorrow's AI fear be?

Andy Florance: Who will tomorrow's AI fear be?

Speaker #5: Thank you, Andy. Chris, very helpful.

Peter Christiansen: Thank you, Andy, Chris. Very helpful.

Speaker #1: Thank you. Our next question comes from Curtis Nagel with Bank of America. You may proceed.

Operator: Thank you. Our next question comes from Curtis Nagle with Bank of America. You may proceed.

Speaker #2: You may proceed.

Speaker #6: Well, alright. Thanks very much. Chris, maybe just one for you. I wanted to follow up—just, I guess, trying to get the EBITDA guide for Commercial.

Curtis Nagle: All righty. Thanks very much. Chris, maybe just 1 for you, 1 as well. I think it's time to give the EBITDA guide for commercial. I think a slight decline on a $ basis to midpoint. Talk about some of the investments. I think the other thing, though, we'd love to get some help with is, I guess, could you disaggregate, you know, so how much of that is due to the replatforming of shared costs, right, from Homes.com over the past few years? I think some of that's going back to commercial. Any commentary there to kind of help bridge that would be helpful or anything else, you know, might have missed.

Speaker #6: I think a slight decline on a dollar basis at the midpoint. Talking about some of the investments, I think the other thing, though, we'd love to get some help with is, I guess, could you disaggregate how much of that is due to the replatforming of shared costs, right, from Homes.com over the past few years?

Speaker #6: I think some of that's going back to commercial. Any commentary there to kind of help bridge that would be helpful, or anything else I might have missed?

Speaker #2: Yeah, no, it's a great question. So obviously, again, first thing—and again, we're sort of apples to oranges a little bit—about the old commercial.

Chris Lown: No, it's a great question. Obviously, again, first thing, and again, we're sort of apples, oranges, a little bit about the old commercial. There was taking out apartments. Apartments was a very attractive margin business. That's A. B, we brought into this business inorganic companies in Matterport and Domain, and those have an impact on that margin, which we expect will grow back after we get through 2026. In their first full year, will have an impact. From an organic perspective, margin perspective, when we look at this, the margin's roughly similar as with 2025. Even with all this investment, it's roughly flat.

Speaker #2: There was taking out apartments, apartments was a very attractive margin business. That's a B, we brought into this business inorganic companies in Matterport and Domain.

Speaker #2: And those have an impact on that margin, which we expect will grow back after we get through '26. But in their first full year, we'll have an impact.

Speaker #2: From an organic perspective, margin perspective, when we look at this, the margin's roughly similar—as even with all this investment, it's roughly flat. And so what you really see is a little bit more of the inorganic side having the biggest impact on that margin.

Chris Lown: What you really see is a little bit more of the inorganic side having the biggest impact on that margin in that period of time.

Speaker #2: In that period of time.

Speaker #6: Okay, I'll keep it to one. Thank you.

Curtis Nagle: Okay. I'll keep it to one. Thank you.

Speaker #1: Thank you. Our next question comes from Andrew Boone with Citizens. You may proceed.

Operator: Thank you. Our next question comes from Andrew Boone with Citizens. You may proceed.

Speaker #6: Thanks so much for taking the question. Andy, I'd love to hear about early results from Homes AI. Can you help connect this, though, in terms of the model?

Andrew Boone: Thanks so much for taking the question. Andy, I'd love to hear about early results from Homes AI. Can you help connect this, though, in terms of the model? Like, what are you expecting in terms of retention or driving more traffic? How do you do that within the context of marketing spend and a newer product where you have to drive awareness? Thanks so much.

Speaker #6: What are you expecting in terms of retention or driving more traffic? How do you do that within the context of marketing spend on a newer product where you have to drive awareness?

Speaker #6: Thanks so much.

Speaker #3: Okay. So in terms of marketing spend, we're shifting from top-of-funnel brand awareness to much more specific product feature marketing. Over the next week or two, you'll see all that shifting to product functionality.

Andy Florance: Okay. In terms of marketing spend, we're shifting from top-of-funnel brand awareness to much more specific product feature marketing. Over the next week or two, you'll see all that shifting to product functionality. The product functionality is so remarkable and so compelling that we wanna basically simplify the marketing and highlight what it actually does, because when people see it and use it's compelling. We are shifting some of our marketing budget closer to lower funnel, things like SEM, just because at this point, with the number of clients we've got, we want to deliver lead results, and you're seeing that with a 187% year-over-year lead growth with Homes.com members. The biggest impact here is engagement.

Speaker #3: The product functionality is so remarkable, and so compelling, that we want to basically simplify the marketing and highlight what it actually does. Because when people see it and use it, it's compelling.

Speaker #3: We are shifting some of our marketing budget closer to lower funnel, things like SEM, just because at this point, with the number of clients we've got, we want to deliver lead results.

Speaker #3: And you're seeing that with 187% year-over-year lead growth with Homes.com members. The biggest impact here is engagement. As I mentioned, the engagement with the product goes up four to seven times when you're using the Homes AI interface.

Andy Florance: As I mentioned, the engagement with the product goes up 4 to 7 times when you're using the Homes AI interface. I believe that it's gonna be something that 1 year from now, people are not gonna be able to imagine the old way of interfacing with a website. It shifts a lot more time and attention in the search process from offline to online, and it has dramatic appeal even when you're out physically in the market. When you're driving around, and you can ask questions about the neighborhood and like, Are there any houses that have sold right around here, and where are they? And the phone actually guides you to it, you can drive over.

Speaker #3: I believe that it's going to be something that, a year from now, people are not going to be able to imagine the old way of interfacing with a website.

Speaker #3: It shifts a lot more time and attention in the search process from offline to online. And it has dramatic appeal even when you're out physically in the market.

Speaker #3: So when you're driving around, you can ask questions about the neighborhood, like, 'Are there any houses that have sold right around here, and where are they?'

Speaker #3: And the phone actually guides you to it, and you can drive over. Or, I was talking to a commercial residential broker the other day, and he said, 'Yeah, I was on my way to a listing presentation, which I had not prepared for.'

Andy Florance: I was talking to a residential broker the other day, and he said, Yeah, I was on my way to a listing presentation, which I had not prepared for, and as I was driving over to the listing presentation, I got my whole briefing and my CMA and everything from Homes.com, talking as I was on my way. It's a tool that's gonna be adopted or is being adopted by both the agents and by the consumers. It's a much deeper experience than a filter and a result.

Speaker #3: And as I was driving over to the listing presentation, I got my whole briefing and my CMA and everything from Homes.com talking as I was on my way.

Speaker #3: So, it's a tool that's going to be adopted, or is being adopted, by both the agents and the consumers. And it's a much deeper experience than a filter and a result.

Speaker #3: One of the things I thought was kind of interesting, we have—I think we've had—we've reached out to 18,000 of our clients over the last week or so with Homes AI.

Speaker #3: And we use artificial intelligence to sort of map what the conversations are and what we're hearing. I think an odd element of this is that it is extracting agents from relying on the MLS as their primary information tool.

Speaker #3: We're getting a lot of folks saying, 'Gosh, this is a lot easier to use than the MLS.' But I hope that answers the question, if I may.

Chris Lown: If I may.

Andy Florance: Yeah.

Chris Lown: Add two additional points. Remember, that they, that AI agent will remember who you are, what school zone you wanna be in, how many kids you have, if you like a house that's in the sunshine more than or has a view. The, the learning of it and the results that you will get as a user are just gonna exponentially get better, and it'll know you as well as you know yourself or your spouse knows you. I think that's a really important point. It's not like you go every time, and it's a, it's a clean slate. It's building its knowledge and understanding to help you on your journey and provide you even better results, which, by the way, ends up being a much better lead for our subscribers, right?

Speaker #3: Add two additional points. Remember that that AI agent will remember who you are, what school zone you want to be in, how many kids you have, if you like a house that it's in the sunshine more than or has a view.

Speaker #3: So the learning of it, and the results that you will get as a user, are just going to exponentially get better. And it'll know you as well as you know yourself, or as well as your spouse knows you.

Speaker #3: So I think that's a really important point. It's not like you go every time and it's a clean slate. It's building. It's knowledge and understanding to help you on your journey and provide you even better results, which, by the way, ends up being a much better lead for our subscribers, right?

Speaker #3: And that handoff, they have a lot more information. So I think that's really important. Now, also take that into Apartments.com. Say you own a building.

Chris Lown: That handoff, they will have a lot more information. I think that's really important. Also take that into Apartments.com. Say you own a building. You have people working in your building who are leasing agents or people who help. You are now gonna have hundreds of AI leasing agents who are gonna be following these customers, understanding they may spend more time on a two-bedroom versus a one-bedroom, so they're really more interested in a two bedroom. They really want a view of the pool. They really, you know, wanna be on the corner, on the outside, et cetera. Again, this... The learning and the capability is going to be hugely beneficial and important to our customers, which is going to be almost irreplaceable. I think it's just this multitude of growth.

Speaker #3: You have people working in your building who are leasing agents or people who help. You are now going to have hundreds of AI leasing agents who are going to be following these customers, understanding they may spend more time on a two-bedroom versus a one-bedroom.

Speaker #3: So, they're really more interested in a two-bedroom. They really want a view of the pool. They really want to be on the corner, on the outside, etc.

Speaker #3: So again, the learning and the capability is going to be hugely beneficial and important to our customers, which is going to be almost irreplaceable.

Speaker #3: So I think it's just this multiple of growth. And once people realize it, once our subscribers and our customers get that and understand that, it's just going to make such a better relationship with our customers and a better experience for them.

Chris Lown: Once people realize that, once our subscribers and our customers get that and understand that, it's just going to make such a better relationship with our customers and a better experience for them.

Speaker #3: And the plan is to integrate all the platforms on this. So when Chris talks about the fact that we remember who the consumer is, who the shopper is, or what their interests are, and where they work and where they play and what their needs are for education, that is persistent across Apartments.com, across CoStar, and will even be persistent across Alumna.

Andy Florance: The plan is to integrate all the platforms on this. When Chris talks about the fact that we remember who the consumer is, what the shopper is, or what their interests are and where they work and where they play, and, you know, what their needs are for education, that is persistent across Apartments.com, across CoStar, and will even be persistent across Illumna and eventually Homes.com and BizBuySell. It, it's really quite powerful. Then our goal and our plan is to have the interface back to the lister, whether they be a property manager, real estate owner, real estate agent, it's consistent. You'll have one sort of lead dashboard listing management tool in AI that has much higher quality leads across all these platforms.

Speaker #3: And eventually, Homes and BizBuySell. So, it's really quite powerful. And then our goal and our plan is to have the interface back to the lister, whether they be a property manager, real estate owner, real estate agent—it's consistent.

Speaker #3: And you'll have one sort of lead dashboard listing management tool in AI that has much higher quality leads across all these platforms. And as someone who manages billions of these visits across many, many sites, many, many hundreds of thousands, millions of leads, agents really struggle with managing the leads they get off these sites.

Andy Florance: As someone who manages billions of these visits across many sites, you know, hundreds of thousands, millions of leads, agents really struggle with managing the leads they get off these sites. I mean, the best of them respond to 50%, 60% of the leads in a timely fashion. The tools we are building here will dramatically change that equation and make it much more efficient for them to be able to handle these. I think we're far away from your original question. I'll shut up.

Speaker #3: I mean, the best of them respond to 50, 60 percent of the leads in a timely fashion. The tools we're going to build here, are building here, will dramatically change that equation and make it much more efficient for them to be able to handle these.

Speaker #3: But I think we're far, far away from your original question, so I'll shut up.

Speaker #1: Thank you.

Chris Lown: Thank you.

Speaker #2: Thank you. Our next question comes from Scott Wertel with Wolfe Research. You may proceed.

Operator: Thank you. Our next question comes from Scott Wurtzel with Wolfe Research. You may proceed.

Speaker #4: Hey, thanks for taking my questions, guys. Just wanted to follow up from the bookings question at the beginning and was wondering if you can give any kind of commentary around Apartments and Homes.com bookings from the quarter. If it's not numbers, any sort of directional qualitative commentary relative to last quarter would be great.

Scott Wurtzel: Hey, thanks for taking my questions, guys. Just wanted to follow up from the bookings question at the beginning and wondering if you can give any kind of commentary around ApartmentsandHomes.com bookings from the quarter. If it's, you know, not numbers, any sort of directional, qualitative commentary relative to last quarter would be great. Thanks.

Speaker #4: Thanks.

Speaker #1: Yeah, you know, we get a lot of requests for a lot of information, etc. And I think what we feel is, we provide a new disclosure and new disclosure with new segments.

Chris Lown: Yeah, you know, we get a lot of requests for a lot of different information, et cetera. I think what we feel is we provided new disclosure, a new disclosure with new segments, and we've given you, again, the second highest net new bookings number in the company ever since 2015. The guidance is, like I said, I think Homes.com and Apartments.com, we still feel great about the businesses and the trajectory we're on. We'll leave it at that.

Speaker #1: And we've given you, again, the second highest net new bookings number in the company ever since 2015. And so the guidance is that, like I said, I think Homes.com and Apartments.com—we still feel very, we feel great about the businesses and the trajectory we're on.

Speaker #1: And we'll leave it at that.

Speaker #4: Thanks, guys.

Scott Wurtzel: Thanks, guys.

Speaker #2: Thank you. Our next question comes from Greg Huber with Huber Research Partners. You may proceed.

Operator: Thank you. Our next question comes from Craig Huber with Huber Research Partners. You may proceed.

Craig Huber: Great. Thank you. I wanted to ask about Apartments.com. It sounds like you think, given the metrics you talked about, that Apartments.com revenue this new year will accelerate. Maybe talk a little bit more about that if that's the case. What are you expecting for margins for Apartments.com for this year? Flat or down slightly, maybe some extra marketing expenses? How should we think about how margins will play out there? Thank you.

Speaker #5: Great, thank you. I wanted to ask about Apartments.com. It sounds like you think, given the metrics you talked about, that Apartments.com revenue this new year will accelerate. Maybe talk a little bit more about that, if that's the case.

Speaker #5: And what are you expecting for margins for Apartments.com for this year? Flatter or down slightly if maybe some extra marketing expenses? How should we think about how margins will play out there?

Speaker #5: Thank you.

Speaker #1: Yeah, yeah. So we're not giving specific margins for any business, etc. I think what you can hold stock in is Andy's comments around how our business is performing versus what we can see publicly versus our number two competitor, which is significantly behind ours.

Chris Lown: Yeah, we're not giving specific margins for any business, et cetera. I think what you can hold stock in is Andy's comments around how our business is performing versus what we can see publicly versus our number two competitor, which is significantly behind ours. We're excited about what we're seeing and the opportunity. We're excited about bringing AI. Like I said, it was and continues to be one of our most attractive businesses. Andy's talked historically, there's been a little more invested in marketing, but that's just because we had sweated that equity down over a period of time, and so there was a little bit more marketing. You know, this isn't a meaningful amount, so we feel as good today about Apartments.com as we have been in the recent past.

Speaker #1: We're excited about what we're seeing in the opportunity. We're excited about bringing AI, like I said, it was one of our it was and continues to be one of our most attractive businesses.

Speaker #1: Andy's talked historically. There's been a little more invested in marketing, but that's just because we had sweated that equity down over a period of time.

Speaker #1: And so there was a little bit more marketing, but this isn't a meaningful amount. So we feel as good today about Apartments.com as we have been in the recent past.

Speaker #3: I do not see any increase in marketing Apartments.com that I'm aware of. It's basically as predictable as it has been in the past. And what I was trying to communicate is I do believe there's a little bit of smoke and mirrors occurring in the industry with the apartment space.

Andy Florance: I do not see any increase in marketing Apartments.com that I'm aware of. It's basically predictable as it has been in the past. What I was trying to communicate is, I do believe there's a little bit of smoke and mirrors occurring in the industry with the apartment space, and that we actually are in a much stronger position than the market realizes. There's been some acquisition activity in competitors that are going to create some tough comparables year-over-year, and it's going to be tough to retain some of the acquired revenue, I believe. You can already see that in our ability to take significant share from some of the folks that have been picked up or, you know, synthetically acquired.

Speaker #3: And that we actually are in a much stronger position than the market realizes. So, there's been some acquisition activity in competitors. They're going to create some tough comparables year over year.

Speaker #3: And it's going to be tough to retain some of the acquired revenue, I believe. And you can already see that in our ability to take significant share from some of the folks that have been picked up or synthetically acquired.

Speaker #3: And in a way, to me, this is Groundhog Day. We've competed so many times against some of the same players who fail repeatedly and recapitalize.

Andy Florance: In a way, to me, this is Groundhog Day. We've competed against so many times against some of the same players who fail repeatedly and recapitalize, and then we compete again very successfully. I just wanted to communicate in my remarks that I believe that Apartments.com is an incredibly strong franchise with continued strength, that will become clearer and clearer, over the quarters to come.

Speaker #3: And then we compete again very successfully. So I just wanted to communicate my remarks that I believe that Apartments.com is an incredibly strong franchise, with continued strength that will become clearer and clearer over the quarters to come.

Speaker #4: Thank you.

Craig Huber: Thank you.

Speaker #2: Thank you. Our next question comes from Jeff Silver with BMO Capital Markets. You may proceed.

Operator: Thank you. Our next question comes from Jeff Silber with BMO Capital Markets. You may proceed.

Speaker #4: Thanks so much. Appreciate you squeezing me in. You talk a lot about the investments that you're doing in the different businesses, and I think we get that.

George Tong: Thanks so much. Appreciate you squeezing me in. You talk a lot about the investments that you're doing in the different businesses, I think we get that. Beyond that, can you just remind us what your capital allocation priorities are? I'm specifically interested, if you're going to continue to do M&A, what you think you're missing in the portfolio, either from a product or geographic segment? Thanks.

Speaker #4: Beyond that, can you just remind us what your capital allocation priorities are? And I'm specifically interested if you're going to continue to do M&A—what you think you're missing in the portfolio, either from a product or geographic segment.

Speaker #4: Thanks.

Speaker #1: Well, so listen, I think from a capital allocation, we obviously went through a capital allocation process. I think we all—it was a great experience.

Chris Lown: Well, listen, I think from a capital allocation, we obviously went through a capital allocation process. I think it was a great experience. Obviously, what came out of that was a buyback program. You know, we looked at buybacks as a percentage of free cash flow and how to think about that going forward. I'll let Andy opine on sort of what he may see as opportunities for us within an M&A perspective. I would say, you know, our ability to acquire companies and generate not only significant synergies from expense savings, also accelerating growth is really incredible in this company. I'll give it to Andy, if he sees what opportunities he thinks about.

Speaker #1: Obviously, what came out of that was a buyback program. We looked at buybacks as a percentage of free cash flow and how to think about that going forward.

Speaker #1: I'll let Andy opine on what he may see as opportunities for us within an M&A perspective. But I would say our ability to acquire and realize significant synergies from expense savings while also accelerating growth is really incredible in this company.

Speaker #1: But I'll give it to Andy if he sees what opportunities he thinks about.

Speaker #3: Yeah, so from a capital allocation perspective, I love the concept that we're pursuing—having fewer shares today than we did two years ago, and retiring shares and having good capital discipline there.

Andy Florance: Yeah. From a capital allocation perspective, I love the concept that we're pursuing having fewer shares today than we did two years ago and retiring shares and having good capital discipline there. I like the fact that we did the Matterport acquisition with a little bit of share dilution, but we actually retire those shares at a more favorable cost point in hopefully going forward. I hope you get the sense that we have an incredible amount of innovation going on here. We have a lot of intellectual firepower building really transformative products across the board both in the commercial and the residential side. We have a lot on our plate right now, and we want to focus on the things we've got on our plate.

Speaker #3: And I like the fact that we did the Matterport acquisition with a little bit of share dilution, but we actually retire those shares at a more favorable cost point, hopefully, going forward.

Speaker #3: And, but I hope you get the sense that we have an incredible amount of innovation going on here. We have a lot of intellectual firepower building really transformative products across the board.

Speaker #3: Both on the commercial and the residential side, we have a lot on our plate right now. And we want to focus on the things we've got on our plate.

Speaker #3: Now, having said that, there are a lot of interesting acquisition opportunities. But we have so much going on organically right now that that is a priority.

Speaker #3: And the business generates a lot of cash. We believe it will generate a lot of cash and give us the ability to approach what we want to approach at the time we want to approach it.

Speaker #3: We're not going to comment on any specific things, but there are dozens, if not a hundred, opportunities out there.

Speaker #1: Yeah. And just to add a finer point to that, cash generation—with the completion of the Richmond campus and also our building in Arlington—you're actually going to see real acceleration of cash flow in '27 and really into '28.

Chris Lown: Yeah, just to add a finer point to that cash generation. With the completion of the Richmond campus and also our building in Arlington, you're actually going to see real acceleration of cash flow in 2027 and really into 2028. I'd also highlight one thing that we've talked about historically. Don't forget, we built the Richmond campus, and we acquired the Arlington building, and they're on our balance sheet. When, and we expect this to happen, when rates come down and cap rates come down, there is a release of capital that we would expect to see. An additional increase as a result of those sell leaseback processes for those two buildings. We're excited about the cash generation we're going to accelerate over the next three years.

Speaker #1: I'd also highlight one thing that we've talked about historically. Don't forget, we built the Richmond campus, and we acquired the Arlington building. And they're on our balance sheet.

Speaker #1: And when—and we expect this to happen when rates come down and cap rates come down—there is a release of capital that we would expect to see.

Speaker #1: So, an additional increase as a result of those sale-leaseback processes for those two buildings. So we're excited about the cash generation we're going to accelerate over the next three years.

Speaker #2: Thank you. Our next question comes from Jason Huss with Wells Fargo. You may proceed.

Operator: Thank you. Our next question comes from Jason Haas with Wells Fargo. You may proceed.

Speaker #5: Hi, this is Jimmy Yuan for Jason Huss. Thanks for fitting me in. You guys are guiding to negative $45 million of EBITDA in one quarter for the Ready segment and positive $105 million for the full year at the midpoint.

Kimin On: Hi, this is Kimin On for Jason Haas. Thanks for fitting me in.

Chris Lown: Absolutely.

Speaker #5: I just want to better understand the timing of the profitability improvement through the year for Ready, as well as the key drivers behind it.

Speaker #5: Thank you.

Speaker #1: Well, we talked about the marketing aspect, which is really front-loaded in the first quarter and, to a lesser extent, the second quarter. So that is a meaningful part of that acceleration.

Chris Lown: Well, we talked about the marketing aspect, which is really front-loaded in Q1 and to a less extent, Q2. That is a meaningful part of that acceleration and the underlying growth and revenue across both businesses, Apartments and Homes, both on a relatively fixed cost basis. That drives that acceleration over the 2026 period.

Speaker #1: And the underlying growth and revenue, both across both businesses—apartments and homes—are both on relatively fixed cost bases. And so that drives that acceleration.

Speaker #1: Over the 2026 period.

Speaker #5: Thank you.

Kimin On: Thank you.

Speaker #2: Thank you. Our next question comes from George Tong with Goldman Sachs. You may proceed.

Operator: Thank you. Our next question comes from George Tong with Goldman Sachs. You may proceed.

Speaker #4: Hi. Thanks. Good afternoon. You might hi. You mentioned domain revenue came well ahead of expectations in four Q. And Matterport's also contributing inorganically. Can you outline what M&A contributions you expect for 2026 and what organic growth rates for commercial and residential are being embedded in the full year guide?

Jeff Silber: Hi, thanks. Good afternoon.

Chris Lown: Hi, George.

Jeff Silber: Hi. You mentioned Domain revenue came well ahead of expectations in Q4. Matterport's also contributing inorganically. Can you outline what M&A contributions you expect for 2026, and what organic growth rates for commercial and residential are being embedded in the full year guide?

Speaker #1: No, George, I don't have those numbers in front of me, but let me come back to you. I know what you're saying. Let me come back to you.

Chris Lown: No, I, George, I don't have those numbers in front of me, but let me come back to you. I know what you're saying. Let me come back to you. As far as additional M&A, all you've really affect is the full year impact of the acquisitions we made in 2025 into 2026, right? That impact, but we obviously aren't in the midst of any M&A activity or closing anything that we're aware of.

Speaker #1: As far as additional M&A, what you really have to factor in is the full-year impact of the acquisitions we made in '25 into '26.

Speaker #1: Right, that impact. But we obviously are not in the midst of any M&A activity or closing anything that we're aware of.

Speaker #2: Thank you. Our next question comes from Nick Jones with BNP Paribas. You may proceed.

Operator: Thank you. Our next question comes from Nick Jones with BNP Paribas. You may proceed.

Speaker #6: Great. Thanks for taking the questions. I guess maybe going back to CoSTAR suite and the modes you have there, I guess, can you speak to maybe how you're using AI to maybe enhance the modes or build.

Andy Florance: Great. Thanks for taking the questions. I guess, maybe going back to CoStar Suite and the moats you have there. I guess, can you speak to maybe how you're using AI to maybe enhance the moats or build out.

Q4 2025 CoStar Group Inc Earnings Call

Request a DemoDemo

CSGP

CoStar Group

Earnings