CoStar Group reported a strong first quarter of 2024, with its revenue of $656 million marking a 12% increase from the $584 million figure it posted in first-quarter 2023.
But the company posted a net profit of only $7 million, significantly less than in previous quarters. This dip can be partly attributed to the recent acquisition of 3D scanning company Matterport, as well as the costs associated with the Homes.com marketing campaign during the Super Bowl LVIII broadcast in February.
On Monday, CoStar CEO Andy Florance announced the purchase of Matterport’s outstanding shares for $5.50 each, representing a value of $2.1 billion. Through the terms of the deal, stockholders will get $2.75 per share in cash and $2.75 in shares of CoStar Group. During CoStar’s earnings call on Tuesday, Florance insisted that consumers and advertisers prefer a real estate portal with digital twins.
“We intend to add Matterport as one of the benefits of the Homes.com membership,” Florance said. “We believe adding 3D digital twins for Homes.com will increase the leads we deliver, increase customer satisfaction, increase renewal rates, increase sales and increase site traffic further.”
The integration of Matterport to Homes.com will allow homebuyers to view properties online, helping agents to provide even more value to their clients.
Florance also discussed the successful launch of the monetization of Homes.com memberships on Feb. 11. In the first quarter, the sales team for Homes.com generated nearly $40 million in net new bookings.
“This is by far the strongest sales launch of any product in the company’s history, and we are raising our sales and revenue forecast for Homes.com for the full year 2024,” Florance said.
In March, Homes.com reached 156 million monthly unique visitors, according to Google Analytics, fueling the fight for listing portal supremacy between Homes.com and Zillow.
“We believe that Homes.com is now one of two most heavily trafficked residential marketplace portals in the U.S.,” Florance said.
While CoStar Group’s overall revenue grew 12% year over year in the first quarter, Apartments.com topped 20% revenue growth for the fifth consecutive quarter, while CoStar saw 11% revenue growth. Both Apartments.com and CoStar surpassed $250 million in revenue in the first quarter.
Florance expressed confidence in CoStar’s business model, particularly in light of the recent commission lawsuit settlement by the National Association of Realtors. He believes in the success of Homes.com because it focuses on selling homes and building brands for both agents and brokerage firms. Florence criticized the lead diversion model used by other listing portals, stating that it could become “stressed.”
“With recent legal settlements in the real estate industry, we believe that the portals that rely on the lead diversion model could become stressed,’ Florance said.“We are increasingly confident in our ability to build out the No. 1 residential real estate marketplace in terms of traffic, revenue and profitability in the years ahead.”
