CoStar Earnings: Although Pricey, Matterport Acquisition Is a Home Run From a Strategic Perspective

Wide-moat-rated CoStar's first-quarter results were in line with our expectations as the firm reported non-GAAP EPS of $0.10, down 65% on a year-over-year basis compared with $0.29 per share in the first quarter of 2023. The year-over-year decline was expected and was largely due to the company's aggressive investments in the residential business. Management expects 2024 revenue to be in the $2.76 billion-$2.77 billion range, which represents year-over-year growth of around 13%. The firm has said that 2024 will mark the peak in the investment cycle for the residential business and that earnings should rebound strongly in 2025 as residential-related marketing investments recede and the firm starts to monetize Homes.com. We do not plan to change our $80 per share fair value estimate for the firm.