CoStar posted disappointing results in its earnings report.
Shares of CoStar Group (CSGP -9.14%), the leading commercial real estate listing platform, were falling after the company delivered disappointing results in its third-quarter earnings report today.
As a result, the stock was down 9.1% as of 11:08 a.m. ET on the news.
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CoStar’s growth isn’t enough
CoStar reported 11% revenue growth to $692.6 million, though that was short of the consensus at $696.1 million.
The performance marked its 54th consecutive quarter of double-digit revenue. The company said Apartments.com and CoStar both delivered solid results.
Average monthly unique visitors across the business jumped 28% to 163 million, but growth on the bottom line was a problem.
Adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) came in at $76 million, down from $112 million in the quarter a year ago, as the company stepped up sales and marketing spending. CoStar reported adjusted earnings per share of $0.22, down from $0.30 in the quarter a year ago, though that beat the analyst consensus at $0.16.
Still, CFO Chris Lown said, “This quarter, we delivered strong revenue growth and adjusted EBITDA growth.”
Separately, the company also announced that it would acquire Visual Lease, a software platform for lease management and accounting used by more than 1,500 organizations.
What’s next for CoStar Group?
Looking ahead, CoStar said it expects full-year revenue of $2.72 billion-$2.73 billion, representing 11% growth, but below the consensus at $2.74 billion. It sees that growth rate slowing down to 9% in the fourth quarter to reach revenue of $693 million-$703 million, which was below the analyst consensus at $713.9 million.
It also gave underwhelming guidance on the bottom line, calling for adjusted EPS of $0.21-$0.23, which was below estimates at $0.24.
Given that forecast, which implies the end of its double-digit revenue growth streak, it’s not surprising to see the stock falling today.
Jeremy Bowman has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends CoStar Group. The Motley Fool has a disclosure policy.
