Real estate data provider CoStar Group (NASDAQ: CSGP) reported Q3 2026 results topping the market’s revenue expectations, with sales up 14.1% year on year to $952 million. The company expects next quarter’s revenue to be around $986 million, close to analysts’ estimates. Its non-GAAP profit of $0.38 per share was 12% above analysts’ consensus estimates.
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CoStar (CSGP) Q3 2026 highlights:
- Revenue $952 million vs S&P analysts’ estimates of $946 million (14.1% year-on-year growth, 0.6% beat)
- Adjusted EPS $0.38 vs S&P analysts’ estimates of $0.34 (12% beat)
- Adjusted EBITDA $229 million vs analyst estimates of $206.8 million (24.1% margin, 10.8% beat)
- Revenue guidance $986 million at the midpoint for Q4 2026, roughly in line with what analysts were expecting
- Adjusted EPS guidance Management raised its full-year adjusted EPS guidance to $1.40 at the midpoint, a 3% increase
- EBITDA guidance $830 million at the midpoint for the full year, above analyst estimates of $813.7 million
- Operating margin 8.8%, up from -6.1% in the same quarter last year
- Market capitalization $11.16 billion
StockStory’s take
CoStar's third quarter was marked by a negative market response, despite revenue and non-GAAP profit surpassing Wall Street's expectations. Management attributed the disconnect to slower-than-anticipated net new bookings, which they linked primarily to economic headwinds and a reduction in sales force capacity. CEO Andy Florance acknowledged, “Our annualized net new bookings were below our expectations, coming in at $37 million for the third quarter.” He further cited workforce and recruiting challenges in scaling the sales team as a critical factor impacting growth across key product lines.
Looking forward, management’s guidance is shaped by a renewed emphasis on expanding the sales force and extracting cost efficiencies. CEO Andy Florance emphasized plans to decentralize sales recruiting, invest in experienced field representatives, and incentivize sales management to drive headcount growth. CFO Robin Rossmann reaffirmed the company’s commitment to margin expansion, stating, “We expect to use the efficiencies to both improve margins and invest to grow revenue.” While CoStar is increasing investment in its core platforms and international markets, management cautioned that the pace of bookings recovery will be closely tied to the execution of these sales and operational initiatives.
Key insights from management’s remarks
Management discussed how operational efficiencies, product investments, and sales capacity shaped quarterly performance, while recent acquisitions and new product launches are expected to influence future results.
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Sales force constraints: A reduction in sales staff, especially among less-experienced inside sales teams, impeded the company’s ability to reach new prospects and slowed net new bookings. Management identified this as a major factor behind lower-than-expected bookings growth, particularly for Apartments.com and Homes.com.
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Cost optimization efforts: CoStar conducted a deep review of expenses, identifying roughly $200 million in additional cost-saving opportunities across procurement, technology, marketing, and organizational structure. CFO Robin Rossmann highlighted that these savings should enable both improved margins and reinvestment in growth areas.
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AI-driven product enhancements: The company launched an AI-based research process within CoStar Tenant that leverages proprietary data and field research, aiming to significantly increase the productivity and accuracy of tenant information updates. Management believes this technology can allow annual updates to all tenant locations, improving product differentiation.
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International expansion momentum: CoStar’s international business, including launches in France and upcoming entry into Australia, continued to grow, with notable adoption among leading brokerages and strong renewal rates in Canada and the UK. The company is also preparing to integrate products across regions to drive further scale.
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Recent acquisitions and integration: The acquisition of Zonda extended CoStar’s reach into the homebuilder analytics segment, while the announced purchase of Vexcel, a provider of high-resolution aerial imagery, is expected to enhance proprietary data capabilities and open new cross-selling opportunities. Management noted that Vexcel’s data, combined with AI, could accelerate market coverage and reduce operational costs.
Drivers of future performance
CoStar’s near-term outlook hinges on sales force expansion, cost discipline, and the integration of new data and technology assets.
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Sales force expansion: Management is prioritizing the hiring of experienced field sales representatives in key cities and decentralizing recruiting to boost bookings growth. CEO Andy Florance stated that expanding the field sales team is “how we get in front of more agents” and sees this as essential to unlocking untapped demand across key platforms.
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Margin improvement from efficiencies: The company expects significant margin expansion by realizing $200 million in additional cost savings over the next 12 to 18 months, with a focus on organizational streamlining, procurement, and integration synergies. CFO Robin Rossmann indicated that these savings will support both improved profitability and selective reinvestment in revenue drivers.
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Product and technology investments: CoStar is investing in AI-powered tools, international platform launches, and integrating new acquisitions like Vexcel and Zonda. Management believes these initiatives will drive product differentiation and open new revenue streams, but cautioned that the timing of bookings reacceleration will depend on successful execution and broader market conditions.
Catalysts in upcoming quarters
In the coming quarters, the StockStory team is monitoring (1) progress on rebuilding and decentralizing the sales force, particularly in major city hubs, (2) realization of identified cost savings and their impact on margins, and (3) traction from new product launches and integration of acquisitions like Vexcel and Zonda. Execution on international expansion and AI-driven platform improvements will also be closely watched as potential drivers of bookings and revenue growth.
CoStar currently trades at $27.72, down from $32.01 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free).
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