CoStar Group reported earnings per share that exceeded expectations for the second quarter of 2026. Despite beating EPS estimates, the company’s shares sank in after-hours trading following the earnings call.
Management attributed the market reaction to Ten-X restructuring, which resulted in a $7 million year-to-date cost reduction, and a reduction in the Homes.com inside sales force. The company stated it is shifting focus from raw revenue growth to achieving long-term EBITDA targets.
Financial performance and guidance
CoStar’s adjusted EBITDA more than doubled year-over-year to $184 million, achieving a 20% margin. Commercial revenue grew by 8%, while CoStar Debt Solutions saw a 96% increase in net new monthly bookings.
The residential segment reached positive adjusted EBITDA for the first time since the 2024 launch of Homes.com, driven by a 33% increase in revenue. For the full year 2026, the company revised its revenue guidance to a range of $3.715 billion to $3.755 billion.
Operational changes and strategy
As part of its Ten-X restructuring and efficiency measures, CoStar reduced the headcount of its Homes.com inside sales team by approximately 39%. The company noted that field sales representatives demonstrate approximately twice the productivity of inside sales reps. This shift aims to focus resources on field teams in major metropolitan areas.
The company also reported that June 2026 was the third-highest gross sales month in Apartments.com history. CoStar stated it refuses to match competitor discounts, citing superior return on investment and lead quality for property owners.
Corporate developments and outlook
Robin Rossmann has succeeded Chris Lown as Chief Financial Officer, following Lown’s departure to Allstate. Additionally, the company delivered a new consolidated headquarters in Richmond, designed to scale capacity to 4,000 employees.
Looking ahead, CoStar expects the majority of future Homes.com revenue to be driven by the upcoming launch of Platinum advertising. The company is confident in future bookings due to upcoming product launches and a more efficient field sales model. The company anticipates closing the Zonda acquisition in the second half of 2026.
CoStar plans to expand into Australia in late 2026 and anticipates delivering the next-generation Matterport 4 camera in late 2027. The company is also divesting non-core software assets in Australia to focus on core residential and commercial objectives by the end of 2026.
Regarding technology, management stated that AI initiatives are generating more cost savings through labor efficiencies than they cost in token consumption. CoStar uses optimization engines to seek the best token pricing and expects AI to lower research and data collection costs.
The broader U.S. multifamily market remains stressed with elevated supply and widespread concessions. CoStar also noted ongoing litigation against Zillow regarding alleged unauthorized use of CoStar-owned photographs and antitrust concerns.