CoStar Group (CSGP) Stephens 26th Annual Investment Conference | NASH2024 summary

Residential strategy and market positioning

• Expansion into residential real estate is seen as a natural evolution, leveraging data and cross-platform synergies from previous acquisitions like LoopNet and Apartments.com.

• The focus is on empowering seller's agents with leads and marketing tools, diverging from the buyer-lead model dominant in the U.S.

• The "your listing, your lead" model aims to give listing agents direct access to leads, aligning with successful international models.

• Regulatory changes in MLS rules could create opportunities for unique content and direct brokerage relationships.

• Significant investment in Homes.com ($900M in 2024) is allocated 60% to marketing and 40% to content, technology, and sales.

Execution, investment, and operational pivots

• Early sales efforts were broad, but have since been refined to target agents with active listings, improving retention and value delivery.

• Marketing and sales strategies have evolved, including hiring experienced leaders and revamping messaging to emphasize agent value.

• Brand awareness for Homes.com has grown rapidly, with unaided awareness rising from 4% to 33% in eight months.

• The company expects a $900M spend on Homes.com again next year, with a focus on building a fully ramped sales force and resonant marketing.

• Results from these investments are expected to become clear by the second quarter of next year, with key performance indicators tied to agent productivity and revenue growth.

Core business performance and growth levers

• Core commercial platforms like CoStar Suite and Apartments.com experienced sales force distraction but are now refocused for growth.

• The commercial real estate market remains challenging, but signs of bottoming and capital redeployment are emerging.

• Institutional clients now represent two-thirds of CoStar revenue, with new products for lenders and owners expanding the addressable market.

• Lender and owner products are under 10% penetrated, offering significant runway for growth.

• The company continues to innovate with new modules and pricing strategies, even in a difficult market.