Key Highlights

  • CoStar reported third-quarter revenue of $952 million, up 14% from $834 million.
  • Adjusted EBITDA doubled to $229 million from $114 million, above the $190 million to $210 million guide.
  • Adjusted EPS was $0.38 versus $0.23, and GAAP EPS was $0.18 versus a loss of $0.07.
  • 2026 adjusted EBITDA guidance rose to $820 million to $840 million, with revenue at $3.75 billion to $3.77 billion.
  • CoStar repurchased $668 million of shares in the first nine months and agreed to buy Vexcel for about $730 million.

CoStar Group Earnings: Why Did Adjusted EBITDA Double?

CoStar Group (NASDAQ:CSGP) reported third-quarter revenue of $952 million on Tuesday, October 27, up 14% from $834 million. Adjusted EBITDA doubled to $229 million from $114 million, a margin of about 24.1% against 13.7%, and came in well above the company's own guidance of $190 million to $210 million.

Adjusted EPS was $0.38 against $0.23 a year earlier, and as screened the estimate was $0.34, a surprise of 11.97%. GAAP net income was $74 million, or $0.18 per diluted share, compared with a loss of $31 million, or $0.07.

CoStar Group Segments: Where Did the Margin Gain Come From?

Residential revenue rose 23% to $460 million, and the segment's adjusted EBITDA swung to $49 million from a loss of $69 million. Commercial revenue grew 7% to $492 million, with CoStar at $344 million (up 8%), LoopNet at $89 million (up 13%) and other commercial products at $59 million (down 8%).

Commercial adjusted EBITDA was $180 million, roughly flat against $183 million, so the improvement came almost entirely from residential. Operating income was $84 million versus an operating loss of $51 million, helped by selling and marketing expense falling to $366 million from $418 million.

Net new bookings were $37 million. For nine months, revenue was $2,774 million, up from $2,347 million.

CoStar Group Guidance: What Does the Raised Outlook Imply?

For the fourth quarter, CoStar guided revenue to $976 million to $996 million, adjusted EBITDA to $275 million to $295 million, and adjusted EPS to $0.46 to $0.50. Residential adjusted EBITDA is guided at $98 million to $108 million.

For 2026, revenue is guided to $3.75 billion to $3.77 billion. Adjusted EBITDA is guided to $820 million to $840 million, up $30 million at the midpoint from July, with adjusted EPS of $1.38 to $1.41 and GAAP EPS of $0.56 to $0.60.

The company left its 2028 adjusted EBITDA target of $1.25 billion unchanged. Management said it is expanding margins as it exits a period of investment.

CoStar Group Next Steps: What Do Savings, Buybacks and Vexcel Change?

Management now expects about $150 million of cost savings this year versus original guidance, and an ongoing expense review has identified at least $200 million of further potential savings over 12 to 18 months without sacrificing revenue growth.

Share repurchases were $668 million for nine months versus $115 million a year earlier, while cash fell to $500 million from $1.63 billion at year-end and long-term debt was $994 million.

CoStar agreed to buy Vexcel for about $730 million in cash, with closing expected in the first quarter of 2027. Vexcel produced more than $140 million of revenue over the past twelve months, up more than 30%, at an adjusted EBITDA margin of about 20%, and CoStar expects accretion to adjusted EPS in the first full year.

Watch the fourth-quarter report for delivery against the $275 million to $295 million adjusted EBITDA range, the pace of the savings program, and Vexcel regulatory progress.