CoStar Group Third Quarter 2018 Revenue Grows 23% and Net Income Increases 72% Year-over-Year
WASHINGTON, Oct. 23, 2018 /PRNewswire/ -- CoStar Group, Inc. (NASDAQ: CSGP), the leading provider of commercial real estate information, analytics and online marketplaces, announced today that revenue for the quarter ended September 30, 2018, was $306 million, an increase of 23% over revenue of $248 million for the third quarter of 2017.
Net income for the quarter ended September 30, 2018, increased $25 million to $59 million or $1.61 per diluted share compared to $34 million for the third quarter of 2017, an increase of 72%. Non-GAAP net income (defined below) for the quarter ended September 30, 2018, which excludes one-time costs associated with the acquisition of ForRent and other items, was $79 million or $2.16 per diluted share, an increase of $33 million or 70% versus the third quarter of 2017. Company-wide net new bookings were $40 million in the third quarter of 2018, an increase of 16% year-over-year.
"We achieved another excellent quarter of revenue growth, with exceptionally strong margin expansion," said Andrew C. Florance, Founder and Chief Executive Officer of CoStar Group. "We surpassed $300 million in revenue in the third quarter and generated $110 million of adjusted EBITDA – both high water marks for the Company. We are confidently on our way to surpassing our goal of 40% adjusted EBITDA margin for the fourth quarter of 2018. I am particularly pleased with our strong sales growth given our team's year-to-date focus on converting over 7,100 customers to the Apartments.com network."
Florance continued, "Our Multifamily team has done an excellent job successfully integrating ForRent. We completed the combination of the ForRent.com website with the CoStar database in September, making ForRent the fastest ILS integration we have ever done. Our combined ForRent and Apartments.com sales team will now focus on expanding our Apartments.com customer base in the months ahead."
Year 2017-2018 Quarterly Results - Unaudited | ||||||||||||||||||||||
(in millions, except per share data) | ||||||||||||||||||||||
2017 | 2018 | |||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | ||||||||||||||||
Revenues | $ | 227 | $ | 237 | $ | 248 | $ | 254 | $ | 274 | $ | 297 | $ | 306 | ||||||||
Net income | 22 | 22 | 34 | 44 | 52 | 44 | 59 | |||||||||||||||
Net income per share - diluted | 0.68 | 0.68 | 1.04 | 1.22 | 1.44 | 1.20 | 1.61 | |||||||||||||||
Weighted average outstanding shares - diluted | 32.6 | 32.7 | 32.8 | 36.1 | 36.4 | 36.5 | 36.5 | |||||||||||||||
EBITDA | 55 | 44 | 73 | 66 | 70 | 64 | 91 | |||||||||||||||
Adjusted EBITDA | 64 | 54 | 84 | 78 | 84 | 85 | 110 | |||||||||||||||
Non-GAAP net income | 34 | 28 | 46 | 45 | 60 | 60 | 79 | |||||||||||||||
Non-GAAP net income per share - diluted | 1.05 | 0.86 | 1.41 | 1.25 | 1.65 | 1.66 | 2.16 | |||||||||||||||
CoStar Suite revenue was $139 million in the third quarter of 2018, an increase of 19% compared to the third quarter of 2017. Multifamily revenue for the third quarter of 2018 was $105 million versus $72 million in the third quarter of 2017, an increase of 45%. Revenue by services can be found within the tables included in this release.
EBITDA (defined below) in the third quarter of 2018 was $91 million, compared to $73 million in the third quarter of 2017, an increase of 25%. Adjusted EBITDA (which excludes stock-based compensation, acquisition-related costs and other items as described below) was $110 million for the third quarter of 2018, an increase of 31% over adjusted EBITDA for the third quarter of 2017. Adjusted EBITDA margin for the third quarter of 2018 was 36%.
As of September 30, 2018, the Company had approximately $1,082 million in cash, cash equivalents and long-term investments, and no outstanding debt.
On October 12, 2018, the Company announced its acquisition of Realla Ltd., the UK's largest marketplace specializing in commercial property. "Across the world, marketing commercial properties is moving to digital marketplaces, away from wood-based products like magazines, flyers, and boards," said Florance. "Realla is the UK's most comprehensive commercial property digital marketplace - and when combined with the CoStar information solution it is expected to offer the best tools for marketing properties, valuations and facilitating transactions."
2018 Outlook"Given our very strong margin performance, we are confident we will exceed our goal of 40% adjusted EBITDA margin for the fourth quarter of 2018, and are raising our earnings guidance for the full year of 2018," stated Scott Wheeler, Chief Financial Officer of CoStar Group. "With another solid sales quarter and the majority of the ForRent integration complete, we can now confirm our previous revenue outlook around a tighter range for 2018."
The Company expects revenue in the range of $1.183 billion to $1.189 billion for the full year of 2018, reflecting revenue growth of 23% over full year 2017. We expect revenue for the fourth quarter of 2018 in the range of $307 million to $313 million, representing revenue growth of 22% over the fourth quarter of 2017 at the midpoint of the range.
The Company expects adjusted EBITDA in a range of $404 million to $408 million for the full year of 2018, an increase of $6 million at the midpoint and an adjusted EBITDA margin of 34%, up 500 basis points from 2017. For the fourth quarter of 2018, the Company expects adjusted EBITDA in a range of $125 million to $129 million and an adjusted EBITDA margin of 41%.
We expect full-year 2018 non-GAAP net income per diluted share in a range of $7.95 to $8.03 based on 36.5 million shares, an increase of $0.14 at the midpoint versus the previously provided outlook. For the fourth quarter of 2018, we expect non-GAAP net income per diluted share in a range of $2.48 to $2.56 based on 36.5 million shares. These ranges include a non-GAAP tax rate of 25%.
The preceding forward-looking statements reflect CoStar Group's expectations as of October 23, 2018, including forward-looking non-GAAP financial measures on a consolidated basis. Given the risk factors, uncertainties and assumptions discussed above, actual results may differ materially. Other than in publicly available statements, the Company does not intend to update its forward-looking statements until its next quarterly results announcement.
Reconciliation of EBITDA, adjusted EBITDA, non-GAAP net income and non-GAAP net income per diluted share and all of the disclosed non-GAAP financial measures to their GAAP basis results are shown in detail below, along with definitions for those terms. A reconciliation of forward-looking non-GAAP guidance to the most directly comparable GAAP measure, net income, can be found within the tables included in this release.
Non-GAAP Financial MeasuresFor information regarding the purpose for which management uses the non-GAAP financial measures disclosed in this release and why management believes they provide useful information to investors regarding the Company's financial condition and results of operations, please refer to the Company's latest periodic report.
EBITDA is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before (i) interest income and other income (expense) and loss on debt extinguishment, (ii) provision for income taxes, and (iii) depreciation and amortization.
Adjusted EBITDA is a non-GAAP financial measure that represents EBITDA before (i) stock-based compensation expense, (ii) acquisition and integration related costs, (iii) restructuring costs and related costs, and (iv) settlements and impairments incurred outside the Company's normal course of business.
Non-GAAP net income is a non-GAAP financial measure that represents GAAP net income attributable to CoStar Group before (i) amortization of acquired intangible assets, (ii) stock-based compensation expense, (iii) acquisition and integration related costs, (iv) restructuring costs (v) settlement and impairment costs, and (vi) loss on debt extinguishment. From this figure, we then subtract an assumed provision for income taxes to arrive at non-GAAP net income. In 2017, the company assumed a 38% tax rate, and in 2018 the company is assuming a 25% tax rate in order to approximate our statutory corporate tax rate excluding the impact of discrete items.
Non-GAAP net income per diluted share (also referred to as non-GAAP EPS) is a non-GAAP financial measure that represents non-GAAP net income divided by the number of diluted shares outstanding for the period. For periods with GAAP net losses and non-GAAP net income, the weighted-average outstanding shares used to calculate non-GAAP net income per share includes potentially dilutive securities that were excluded from the calculation of GAAP net income per share as the effect was anti-dilutive.
Earnings Conference CallManagement will conduct a conference call at 5:00 PM EDT on Tuesday, October 23, 2018 to discuss earnings results for the third quarter of 2018 and the Company's outlook. The audio portion of the conference call will be broadcast live over the Internet at www.costargroup.com/investors/stock-info. To join the conference call by telephone, please dial (800) 230-1059 (from the United States and Canada) or (612) 234-9959 (from all other countries) and refer to conference code 455388. An audio recording of the conference call will be available for replay approximately one hour after the call's completion and will remain available for a period of time following the call. To access the recorded conference call, please dial (800) 475-6701 (from the U.S. and Canada) or (320) 365-3844 (from all other countries) using access code 455388. The webcast replay will also be available in the Investors section of CoStar Group's website for a period of time following the call.
CoStar Group, Inc. | ||||||||||||||||
Condensed Consolidated Statements of Operations - Unaudited | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Three Months EndedSeptember 30, | Nine Months EndedSeptember 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Revenues | $ | 305,525 | $ | 247,533 | $ | 876,261 | $ | 711,239 | ||||||||
Cost of revenues | 72,072 | 55,483 | 201,685 | 162,102 | ||||||||||||
Gross profit | 233,453 | 192,050 | 674,576 | 549,137 | ||||||||||||
Operating expenses: | ||||||||||||||||
Selling and marketing (excluding customer base amortization) | 89,251 | 72,705 | 290,706 | 240,833 | ||||||||||||
Software development | 26,173 | 21,536 | 75,357 | 67,054 | ||||||||||||
General and administrative | 39,012 | 35,998 | 117,658 | 104,550 | ||||||||||||
Customer base amortization | 8,329 | 4,298 | 22,948 | 13,642 | ||||||||||||
162,765 | 134,537 | 506,669 | 426,079 | |||||||||||||
Income from operations | 70,688 | 57,513 | 167,907 | 123,058 | ||||||||||||
Interest and other income | 3,035 | 555 | 8,674 | 1,589 | ||||||||||||
Interest and other expense | (717) | (2,901) | (2,135) | (8,280) | ||||||||||||
Income before income taxes | 73,006 | 55,167 | 174,446 | 116,367 | ||||||||||||
Income tax expense | 14,247 | 20,990 | 19,621 | 37,876 | ||||||||||||
Net income | $ | 58,759 | $ | 34,177 | $ | 154,825 | $ | 78,491 | ||||||||
Net income per share - basic | $ | 1.63 | $ | 1.05 | $ | 4.30 | $ | 2.42 | ||||||||
Net income per share - diluted | $ | 1.61 | $ | 1.04 | $ | 4.25 | $ | 2.40 | ||||||||
Weighted average outstanding shares - basic | 36,129 | 32,444 | 36,032 | 32,375 | ||||||||||||
Weighted average outstanding shares - diluted | 36,518 | 32,814 | 36,439 | 32,705 | ||||||||||||
CoStar Group, Inc. | ||||||||||||||||
Reconciliation of Non-GAAP Financial Measures - Unaudited | ||||||||||||||||
(in thousands, except per share data) | ||||||||||||||||
Reconciliation of Net Income to Non-GAAP Net Income | ||||||||||||||||
Three Months EndedSeptember 30, | Nine Months EndedSeptember 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 58,759 | $ | 34,177 | $ | 154,825 | $ | 78,491 | ||||||||
Income tax expense | 14,247 | 20,990 | 19,621 | 37,876 | ||||||||||||
Income before income taxes | 73,006 | 55,167 | 174,446 | 116,367 | ||||||||||||
Amortization of acquired intangible assets | 13,639 | 8,498 | 38,190 | 28,731 | ||||||||||||
Stock-based compensation expense | 8,953 | 9,743 | 30,593 | 29,203 | ||||||||||||
Acquisition and integration related costs | 7,171 | 1,224 | 20,199 | 1,996 | ||||||||||||
Restructuring and related costs
| 2,314 | — | 2,314 | — | ||||||||||||
Settlements and impairments | — | — | — | (760) | ||||||||||||
Non-GAAP income before income taxes | 105,083 | 74,632 | 265,742 | 175,537 | ||||||||||||
Assumed rate for income tax expense * | 25 | % | 38 | % | 25 | % | 38 | % | ||||||||
Assumed provision for income tax expense | (26,271) | (28,360) | (66,436) | (66,704) | ||||||||||||
Non-GAAP net income | $ | 78,812 | $ | 46,272 | $ | 199,306 | $ | 108,833 | ||||||||
Net income per share - diluted | $ | 1.61 | $ | 1.04 | $ | 4.25 | $ | 2.40 | ||||||||
Non-GAAP net income per share - diluted | $ | 2.16 | $ | 1.41 | $ | 5.47 | $ | 3.33 | ||||||||
Weighted average outstanding shares - basic | 36,129 | 32,444 | 36,032 | 32,375 | ||||||||||||
Weighted average outstanding shares - diluted | 36,518 | 32,814 | 36,439 | 32,705 | ||||||||||||
* A 25% and 38% tax rate is assumed for 2018 and 2017, respectively, which approximates our statutory corporate tax rate. | ||||||||||||||||
Reconciliation of Net Income to EBITDA and Adjusted EBITDA | ||||||||||||||||
Three Months EndedSeptember 30, | Nine Months EndedSeptember 30, | |||||||||||||||
2018 | 2017 | 2018 | 2017 | |||||||||||||
Net income | $ | 58,759 | $ | 34,177 | $ | 154,825 | $ | 78,491 | ||||||||
Amortization of acquired intangible assets in cost of revenues | 5,310 | 4,200 | 15,242 | 15,089 | ||||||||||||
Amortization of acquired intangible assets in operating expenses | 8,329 | 4,298 | 22,948 | 13,642 | ||||||||||||
Depreciation and other amortization | 6,794 | 6,621 | 19,810 | 19,546 | ||||||||||||
Interest and other income | (3,035) | (555) | (8,674) | (1,589) | ||||||||||||
Interest and other expense | 717 | 2,901 | 2,135 | 8,280 | ||||||||||||
Income tax expense | 14,247 | 20,990 | 19,621 | 37,876 | ||||||||||||
EBITDA | $ | 91,121 | $ | 72,632 | $ | 225,907 | $ | 171,335 | ||||||||
Stock-based compensation expense | 8,953 | 9,743 | 30,593 | 29,203 | ||||||||||||
Acquisition and integration related costs | 7,171 | 1,224 | 20,199 | 1,996 | ||||||||||||
Settlements and impairments | — | — | — | (760) | ||||||||||||
Restructuring and related costs | 2,314 | — | 2,314 | — | ||||||||||||
Adjusted EBITDA | $ | 109,559 | $ | 83,599 | $ | 279,013 | $ | 201,774 | ||||||||
CoStar Group, Inc. | ||||||||
Condensed Consolidated Balance Sheets | ||||||||
(in thousands) | ||||||||
September 30, 2018 | December 31, 2017 | |||||||
(Unaudited) | ||||||||
ASSETS | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ | 1,071,786 | $ | 1,211,463 | ||||
Accounts receivable, less allowance for doubtful accounts of approximately $5,668 and $6,469 as of September 30, 2018 and December 31, 2017, respectively | 82,279 | 60,900 | ||||||
Prepaid expenses and other current assets | 25,203 | 15,572 | ||||||
Total current assets | 1,179,268 | 1,287,935 | ||||||
Long-term investments | 10,070 | 10,070 | ||||||
Deferred income taxes, net | 2,679 | 5,431 | ||||||
Property and equipment, net | 81,937 | 84,496 | ||||||
Goodwill | 1,548,976 | 1,283,457 | ||||||
Intangible assets, net | 285,958 | 182,892 | ||||||
Deferred commission costs, net | 76,062 | — | ||||||
Deposits and other assets | 7,394 | 6,179 | ||||||
Income tax receivable | 14,878 | 12,981 | ||||||
Total assets | $ | 3,207,222 | $ | 2,873,441 | ||||
LIABILITIES AND STOCKHOLDERS' EQUITY | ||||||||
Current liabilities: | ||||||||
Accounts payable | $ | 10,114 | $ | 9,262 | ||||
Accrued wages and commissions | 50,483 | 54,104 | ||||||
Accrued expenses | 33,500 | 22,193 | ||||||
Deferred gain on the sale of building | 2,523 | 2,523 | ||||||
Income taxes payable | 1,269 | 8,166 | ||||||
Deferred rent | 5,386 | 4,732 | ||||||
Deferred revenue | 50,195 | 45,686 | ||||||
Total current liabilities | 153,470 | 146,666 | ||||||
Deferred gain on the sale of building | 14,299 | 16,192 | ||||||
Deferred rent | 31,146 | 33,909 | ||||||
Deferred income taxes, net | 64,865 | 12,070 | ||||||
Income taxes payable | 15,128 | 13,354 | ||||||
Total liabilities | 278,908 | 222,191 | ||||||
Total stockholders' equity | 2,928,314 | 2,651,250 | ||||||
Total liabilities and stockholders' equity | $ | 3,207,222 | $ | 2,873,441 | ||||
CoStar Group, Inc. | |||||||
Condensed Consolidated Statements of Cash Flows - Unaudited | |||||||
(in thousands, unaudited) | |||||||
Nine Months EndedSeptember 30, | |||||||
2018 | 2017 | ||||||
Operating activities: | |||||||
Net income | $ | 154,825 | $ | 78,491 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 58,000 | 48,277 | |||||
Amortization of deferred commissions costs | 36,242 | — | |||||
Amortization of debt issuance costs | 657 | 2,157 | |||||
Stock-based compensation expense | 30,593 | 29,203 | |||||
Deferred income tax expense, net | 7,644 | 6,087 | |||||
Bad debt expense | 4,519 | 3,992 | |||||
Changes in operating assets and liabilities, net of acquisitions: | |||||||
Accounts receivable | (19,038) | (15,809) | |||||
Prepaid expenses and other current assets | (2,952) | (3,561) | |||||
Deferred commissions | (41,421) | — | |||||
Deposits and other assets | (1,396) | (3,387) | |||||
Accounts payable and other liabilities | (13,443) | 11,888 | |||||
Deferred revenue | 6,454 | 5,969 | |||||
Net cash provided by operating activities | 220,684 | 163,307 | |||||
Investing activities: | |||||||
Purchases of property and equipment and other assets | (21,801) | (19,754) | |||||
Cash paid for acquisitions, net of cash acquired | (340,074) | (47,767) | |||||
Net cash used in investing activities | (361,875) | (67,521) | |||||
Financing activities: | |||||||
Payments of long-term debt | — | (35,000) | |||||
Payments of debt issuance costs | — | (643) | |||||
Repurchase of restricted stock to satisfy tax withholding obligations | (23,666) | (14,309) | |||||
Proceeds from exercise of stock options and employee stock purchase plan | 25,768 | 9,058 | |||||
Net cash provided by (used in) financing activities | 2,102 | (40,894) | |||||
Effect of foreign currency exchange rates on cash and cash equivalents | (588) | 880 | |||||
Net (decrease) increase in cash and cash equivalents | (139,677) | 55,772 | |||||
Cash and cash equivalents at the beginning of period | 1,211,463 | 567,223 | |||||
Cash and cash equivalents at the end of period | $ | 1,071,786 | $ | 622,995 | |||
CoStar Group, Inc. | |||||||||||||||||||||||
Disaggregated Revenues - Unaudited | |||||||||||||||||||||||
(in thousands) | |||||||||||||||||||||||
Three Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
North America | International | Total | North America | International | Total | ||||||||||||||||||
Information and analytics | |||||||||||||||||||||||
CoStar Suite | $ | 132,700 | $ | 6,384 | $ | 139,084 | $ | 111,452 | $ | 5,862 | $ | 117,314 | |||||||||||
Information services | 15,310 | 2,225 | 17,535 | 16,582 | 2,134 | 18,716 | |||||||||||||||||
Online marketplaces | |||||||||||||||||||||||
Multifamily | 104,778 | — | 104,778 | 72,257 | — | 72,257 | |||||||||||||||||
Commercial property and land | 44,128 | — | 44,128 | 39,246 | — | 39,246 | |||||||||||||||||
Total revenues | $ | 296,916 | $ | 8,609 | $ | 305,525 | $ | 239,537 | $ | 7,996 | $ | 247,533 | |||||||||||
Nine Months Ended September 30, | |||||||||||||||||||||||
2018 | 2017 | ||||||||||||||||||||||
North America | International | Total | North America | International | Total | ||||||||||||||||||
Information and analytics | |||||||||||||||||||||||
CoStar Suite | $ | 383,876 | $ | 19,381 | $ | 403,257 | $ | 324,713 | $ | 16,374 | $ | 341,087 | |||||||||||
Information services | 41,544 | 6,881 | 48,425 | 49,203 | 6,161 | 55,364 | |||||||||||||||||
Online marketplaces | |||||||||||||||||||||||
Multifamily | 297,254 | — | 297,254 | 204,324 | — | 204,324 | |||||||||||||||||
Commercial property and land | 127,325 | — | 127,325 | 110,464 | — | 110,464 | |||||||||||||||||
Total revenues | $ | 849,999 | $ | 26,262 | $ | 876,261 | $ | 688,704 | $ | 22,535 | $ | 711,239 | |||||||||||
CoStar Group, Inc. | |||||||||||||||
Results of Segments - Unaudited | |||||||||||||||
(in thousands) | |||||||||||||||
Three Months EndedSeptember 30, | Nine Months EndedSeptember 30, | ||||||||||||||
2018 | 2017 | 2018 | 2017 | ||||||||||||
EBITDA | |||||||||||||||
North America | $ | 94,088 | $ | 72,267 | $ | 229,905 | $ | 170,064 | |||||||
International | (2,967) | 365 | (3,998) | 1,271 | |||||||||||
Total EBITDA | $ | 91,121 | $ | 72,632 | $ | 225,907 | $ | 171,335 | |||||||
CoStar Group, Inc.Reconciliation of Non-GAAP Financial Measures with 2017-2018 Quarterly Results - Unaudited | |||||||||||||||||||||||
(in millions, except per share data) | |||||||||||||||||||||||
Reconciliation of Net Income to Non-GAAP Net Income | |||||||||||||||||||||||
2017 | 2018 | ||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||
Net income | $ | 22.1 | $ | 22.2 | $ | 34.2 | $ | 44.2 | $ | 52.2 | $ | 43.8 | $ | 58.8 | |||||||||
Income tax expense | 13.3 | 3.6 | 21.0 | 4.5 | 3.5 | 1.9 | 14.2 | ||||||||||||||||
Income before income taxes | 35.4 | 25.8 | 55.2 | 48.7 | 55.7 | 45.7 | 73.0 | ||||||||||||||||
Amortization of acquired intangible assets | 10.9 | 9.3 | 8.5 | 8.7 | 10.4 | 14.1 | 13.6 | ||||||||||||||||
Stock-based compensation expense | 9.4 | 10.1 | 9.7 | 9.8 | 10.4 | 11.2 | 9.0 | ||||||||||||||||
Acquisition and integration related costs | 0.4 | 0.4 | 1.2 | 2.0 | 3.5 | 9.5 | 7.2 | ||||||||||||||||
Restructuring and related costs | — | — | — | — | — | — | 2.3 | ||||||||||||||||
Settlements and impairments | (0.8) | — | — | — | — | — | — | ||||||||||||||||
Loss on debt extinguishment | — | — | — | 3.8 | — | — | — | ||||||||||||||||
Non-GAAP income before income taxes | 55.3 | 45.6 | 74.6 | 73.0 | 80.1 | 80.6 | 105.1 | ||||||||||||||||
Assumed rate for income tax expense * | 38 | % | 38 | % | 38 | % | 38 | % | 25 | % | 25 | % | 25 | % | |||||||||
Assumed provision for income tax expense | (21.0) | (17.3) | (28.4) | (27.7) | (20.0) | (20.1) | (26.3) | ||||||||||||||||
Non-GAAP net income | $ | 34.3 | $ | 28.3 | $ | 46.3 | $ | 45.2 | $ | 60.1 | $ | 60.4 | $ | 78.8 | |||||||||
Non-GAAP net income per share - diluted | $ | 1.05 | $ | 0.86 | $ | 1.41 | $ | 1.25 | $ | 1.65 | $ | 1.66 | $ | 2.16 | |||||||||
Weighted average outstanding shares - basic | 32.3 | 32.4 | 32.4 | 35.7 | 35.9 | 36.1 | 36.1 | ||||||||||||||||
Weighted average outstanding shares - diluted | 32.6 | 32.7 | 32.8 | 36.1 | 36.4 | 36.5 | 36.5 | ||||||||||||||||
* A 25% and 38% tax rate is assumed for 2018 and 2017, respectively, which approximates our statutory corporate tax rate. | |||||||||||||||||||||||
Reconciliation of Net Income to EBITDA and Adjusted EBITDA | |||||||||||||||||||||||
2017 | 2018 | ||||||||||||||||||||||
Q1 | Q2 | Q3 | Q4 | Q1 | Q2 | Q3 | |||||||||||||||||
Net income | $ | 22.1 | $ | 22.2 | $ | 34.2 | $ | 44.2 | $ | 52.2 | $ | 43.8 | $ | 58.8 | |||||||||
Amortization of acquired intangible assets | 10.9 | 9.3 | 8.5 | 8.7 | 10.4 | 14.1 | 13.6 | ||||||||||||||||
Depreciation and other amortization | 6.4 | 6.5 | 6.6 | 6.7 | 6.6 | 6.4 | 6.8 | ||||||||||||||||
Interest and other income | (0.4) | (0.6) | (0.6) | (2.5) | (3.0) | (2.6) | (3.0) | ||||||||||||||||
Interest and other expense | 2.7 | 2.7 | 2.9 | 0.7 | 0.7 | 0.7 | 0.7 | ||||||||||||||||
Loss on debt extinguishment | — | — | — | 3.8 | — | — | — | ||||||||||||||||
Income tax expense | 13.3 | 3.6 | 21.0 | 4.5 | 3.5 | 1.9 | 14.2 | ||||||||||||||||
EBITDA | $ | 55.0 | $ | 43.7 | $ | 72.6 | $ | 66.0 | $ | 70.4 | $ | 64.3 | $ | 91.1 | |||||||||
Stock-based compensation expense | 9.4 | 10.1 | 9.7 | 9.8 | 10.4 | 11.2 | 9.0 | ||||||||||||||||
Acquisition and integration related costs | 0.4 | 0.4 | 1.2 | 2.0 | 3.5 | 9.5 | 7.2 | ||||||||||||||||
Restructuring and related costs | — | — | — | — | — | — | 2.3 | ||||||||||||||||
Settlements and impairments | (0.8) | — | — | — | — | — | — | ||||||||||||||||
Adjusted EBITDA | $ | 63.9 | $ | 54.3 | $ | 83.6 | $ | 77.9 | $ | 84.4 | $ | 85.1 | $109.6 | ||||||||||
CoStar Group, Inc. | |||||||||||||||
Reconciliation of Forward-Looking Guidance - Unaudited | |||||||||||||||
(in thousands, except per share data) | |||||||||||||||
Reconciliation of Forward-Looking Guidance, Net Income to Non-GAAP Net Income | |||||||||||||||
Guidance Range | Guidance Range | ||||||||||||||
For the Three Months | For the Twelve Months | ||||||||||||||
Ended December 31, 2018 | Ended December 31, 2018 | ||||||||||||||
Low | High | Low | High | ||||||||||||
Net income | $ | 72,000 | $ | 77,000 | $ | 227,000 | $ | 232,000 | |||||||
Income tax expense | 22,000 | 24,000 | 42,000 | 44,000 | |||||||||||
Income before income taxes | 94,000 | 101,000 | 269,000 | 276,000 | |||||||||||
Amortization of acquired intangible assets | 13,000 | 13,000 | 51,000 | 51,000 | |||||||||||
Stock-based compensation expense | 12,000 | 10,000 | 43,000 | 41,000 | |||||||||||
Acquisition and integration related costs | 2,000 | 1,000 | 22,000 | 21,000 | |||||||||||
Restructuring and related costs | — | — | 2,000 | 2,000 | |||||||||||
Non-GAAP income before income taxes | 121,000 | 125,000 | 387,000 | 391,000 | |||||||||||
Assumed rate for income tax expense * | 25 | % | 25 | % | 25 | % | 25 | % | |||||||
Assumed provision for income tax expense | (30,300) | (31,300) | (97,000) | (98,000) | |||||||||||
Non-GAAP net income | $ | 90,700 | $ | 93,700 | $ | 290,000 | $ | 293,000 | |||||||
Net income per share - diluted | $ | 1.97 | $ | 2.10 | $ | 6.22 | $ | 6.36 | |||||||
Non-GAAP net income per share - diluted | $ | 2.48 | $ | 2.56 | $ | 7.95 | $ | 8.03 | |||||||
Weighted average outstanding shares - diluted | 36,600 | 36,600 | 36,500 | 36,500 | |||||||||||
* A 25% tax rate is assumed, which approximates our statutory corporate tax rate. | |||||||||||||||
Reconciliation of Forward-Looking Guidance, Net Income to Adjusted EBITDA | |||||||||||||||
Guidance Range | Guidance Range | ||||||||||||||
For the Three Months | For the Twelve Months | ||||||||||||||
Ended December 31, 2018 | Ended December 31, 2018 | ||||||||||||||
Low | High | Low | High | ||||||||||||
Net income | $ | 72,000 | $ | 77,000 | $ | 227,000 | $ | 232,000 | |||||||
Amortization of acquired intangible assets | 13,000 | 13,000 | 51,000 | 51,000 | |||||||||||
Depreciation and other amortization | 6,000 | 6,000 | 26,000 | 26,000 | |||||||||||
Interest and other expense, net | (2,000) | (2,000) | (9,000) | (9,000) | |||||||||||
Income tax expense | 22,000 | 24,000 | 42,000 | 44,000 | |||||||||||
Stock-based compensation expense | 12,000 | 10,000 | 43,000 | 41,000 | |||||||||||
Acquisition and integration related costs | 2,000 | 1,000 | 22,000 | 21,000 | |||||||||||
Restructuring and related costs | — | — | 2,000 | 2,000 | |||||||||||
Adjusted EBITDA | $ | 125,000 | $ | 129,000 | $ | 404,000 | $ | 408,000 | |||||||
About CoStar Group, Inc.
CoStar Group, Inc. (NASDAQ: CSGP) is the leading provider of commercial real estate information, analytics and online marketplaces. Founded in 1987, CoStar conducts expansive, ongoing research to produce and maintain the largest and most comprehensive database of commercial real estate information. Our suite of online services enables clients to analyze, interpret and gain unmatched insight on commercial property values, market conditions and current availabilities. LoopNet is the most heavily trafficked commercial real estate marketplace online with approximately 5 million monthly unique visitors per month. Realla is the UK's most comprehensive commercial property digital marketplace. Apartments.com, ApartmentFinder.com, ForRent.com, ApartmentHomeLiving.com, Westside Rentals, AFTER55.com, CorporateHousing.com, ForRentUniversity.com and Apartamentos.com form the premier online apartment resource for renters seeking great apartment homes and provide property managers and owners a proven platform for marketing their properties. CoStar Group's websites attracted an average of approximately 45 million unique monthly visitors in aggregate in the third quarter of 2018. Headquartered in Washington, DC, CoStar maintains offices throughout the U.S. and in Europe and Canada with a staff of over 3,600 worldwide, including the industry's largest professional research organization. For more information, visit www.costargroup.com.
This news release contains "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. Such statements include, but are not limited to, statements about CoStar Group's financial expectations, the Company's plans, objectives, expectations and intentions and other statements including words such as "hope," "anticipate," "may," "believe," "expect," "intend," "will," "should," "plan," "estimate," "predict," "continue" and "potential" or the negative of these terms or other comparable terminology. Such statements are based upon the current beliefs and expectations of management of CoStar Group and are subject to significant risks and uncertainties. Actual results may differ materially from the results anticipated in the forward-looking statements. The following factors, among others, could cause or contribute to such differences: the risk that the trends stated or implied by this release cannot or will not be sustained at the current pace, including trends related to revenue, net income, non-GAAP net income, EBITDA, adjusted EBITDA, margin expansion, and sales; the risk that the Company is unable to sustain current revenue and earnings growth rates or increase them; the risk that the Company is unable to achieve or exceed its stated goal of 40% adjusted EBITDA margin for the fourth quarter 2018; the likelihood that the Company's adjusted EBITDA margin will fluctuate in the future; the risk that the Company is unable to expand its Apartments.com customer base in the months ahead; the risk that the Company's revenue and earnings do not fall within the guidance provided for the full year of 2018; the risk that revenues for the fourth quarter and full year 2018 will not be as stated in this press release; the risk that net income for the fourth quarter and full year 2018 will not be as stated in this press release; the risk that adjusted EBITDA and adjusted EBITDA margin for the fourth quarter and full year 2018 will not be as stated in this press release; the risk that non-GAAP net income and non-GAAP net income per diluted share for the fourth quarter and full year 2018 will not be as stated in this press release; the risk that the tax rate estimates stated in this press release are incorrect or may change; the risk that the Realla business may not be combined successfully or in a timely and cost-efficient manner; the risk that the combination does not produce the expected results or benefits, including the best tools for marketing properties, valuations and facilitating transactions; the risk that business disruption relating to the Realla acquisition may be greater than expected; and the risk that the combination and integration of Realla will disrupt CoStar's operations or result in the loss of customers or key employees. Additional factors that could cause results to differ materially from those anticipated in the forward-looking statements can be found in CoStar's Annual Report on Form 10-K for the year ended December 31, 2017, and CoStar's Quarterly Report on Form 10-Q for the quarter ended June 30, 2018, each of which is filed with the SEC, including in the "Risk Factors" section of those filings, and the Company's other filings with the SEC available at the SEC's website (www.sec.gov). CoStar assumes no obligation to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.
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SOURCE CoStar Group, Inc.