CoStar Group Inc reports Q2 2026 revenue of $925 million, an 18% increase, driven by a 33% surge in residential revenue. Adjusted EBITDA reaches $184 million. (158)
CoStar Group Inc. reported Q2 2026 revenue of $925 million, an 18% increase year-over-year and in line with guidance. The growth was propelled primarily by a 33% surge in residential revenue, marking a significant recovery for the company's Homes.com platform, which is now expected to gain momentum despite ongoing competitive pressures.
Key Takeaways
- Residential revenue increased 33% year-over-year to $444 million, contributing significantly to overall growth.
- Adjusted EBITDA reached $184 million, a margin of 20%, reflecting a 900 basis point improvement year-over-year.
- Net new bookings were $69 million, though this was down 26% year-over-year, raising concerns about future revenue growth.
- Matterport subscription revenue grew 16% year-over-year, indicating continued strength in this product line.
- Share repurchases totaled 2.4 million shares for $82.1 million in Q2, with a total of 13.75 million shares repurchased in 2026.
Revenue Growth Fueled by Residential Segment
CoStar's total revenue increased 18% year-over-year to $925 million, with the residential segment generating $444 million. This segment's robust growth was driven by strong performance from Homes.com, which reported a significant rise in user engagement metrics—average session duration increased by 52% year-over-year, and unique visitors rose significantly. The renewed focus on enhancing the platform's user experience is paying dividends, with management noting that Homes.com has become a major traffic driver for the overall portfolio.
| Metric | Q2 2026 | YoY Change |
|---|---|---|
| Total Revenue | $925M | +18% |
| Residential Revenue | $444M | +33% |
| Adjusted EBITDA | $184M | +900 bps margin increase |
Adjusted EBITDA Surpasses Expectations
CoStar achieved an adjusted EBITDA of $184 million in Q2, representing a 20% margin, up from 11% a year earlier. This notable increase is attributed to strategic expense management and operational efficiencies implemented across the organization. The company successfully reduced personnel costs and improved productivity, particularly in its sales force, contributing to a more favorable cost structure relative to revenue growth.
Management emphasized that these operational improvements have set a new baseline for expenses, allowing the company to navigate market pressures effectively. The focus on optimizing the sales force, particularly through the transition to a more field-oriented approach, is expected to enhance productivity and drive future profitability.
Guidance Revision Reflects Strategic Focus
Management revised its full-year revenue guidance to a range of $3.715 billion to $3.755 billion, reflecting a 15% increase at the midpoint. This adjustment, while indicating a modest slowdown compared to initial expectations, underscores CoStar's commitment to driving long-term profitability through operational efficiencies rather than chasing short-term revenue growth. The commercial revenue guidance now anticipates a 9% year-over-year increase, while residential revenue is expected to rise by 22%.
For Q3 2026, the company projects revenue between $935 million and $945 million, with adjusted EBITDA anticipated to range from $190 million to $210 million. The revised guidance highlights a cautious yet positive outlook as management balances growth with sustainable profitability initiatives.
Analyst Q&A Reveals Market Sentiment
During the analyst Q&A, concerns were raised regarding the 26% year-over-year decline in net new bookings, particularly in the context of Homes.com. Analysts queried management on whether the decrease was due to competitive pressures or a strategic decision to optimize for profitability. Management acknowledged the softness but highlighted ongoing improvements being made to the sales force and the anticipated impact of new advertising offerings, such as depth advertising, which aims to enhance revenue from existing customers.
Additionally, management confirmed that while there are macroeconomic pressures affecting pricing in the multifamily rental market, the company's lead-to-lease conversion rates remain strong at approximately 2.5 times that of competitors, providing confidence in maintaining pricing integrity going forward.
Frequently Asked Questions
Did CoStar Group Inc beat earnings estimates in Q2 2026?
Yes, CoStar Group's adjusted EBITDA of $184 million exceeded analyst expectations, reflecting a strong operational performance.
How did residential revenue perform compared to expectations?
Residential revenue grew 33% year-over-year to $444 million, outperforming expectations and significantly contributing to overall revenue growth.
What are the primary drivers of the revised revenue guidance for 2026?
The revised guidance reflects strategic decisions made to focus on profitability, particularly in the Homes.com and commercial segments, while adjusting for competitive pressures and market conditions.
How is CoStar Group managing costs amid revenue growth?
The company has implemented proactive expense management strategies, focusing on optimizing personnel costs and improving operational efficiencies, which have significantly boosted its adjusted EBITDA margin.
What is the outlook for net new bookings moving forward?
While net new bookings declined year-over-year, management expressed confidence in the future growth of Homes.com and the effectiveness of their sales force optimization strategies to improve bookings in subsequent quarters.
CoStar Group's focus on enhancing its residential offerings and managing operational costs positions it well for continued growth, but the company must navigate competitive pressures to sustain momentum.
This analysis is based on public earnings call materials and is not investment advice.
