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oStar’s Q3 results show continued revenue strength but a sharp reversal in profitability. Revenue rose to $834 million, a 20 % increase from a year earlier and the 58th straight quarter of double‑digit growth. Gross profit climbed to $661.4 million, up from $613.5 million in Q2. However, the company posted a net‑income loss of $31 million, compared with a $53 million profit a year ago. Adjusted EBITDA, however, improved to $114.6 million from $76 million, and the firm now projects full‑year 2025 adjusted EBITDA of $415–$425 million, up $40 million from prior guidance. For Q4, adjusted EBITDA is expected near $150 million.
Cash and cash equivalents fell to $1.94 billion, down sharply from $4.68 billion at the end of 2024, largely due to acquisitions and a share‑repurchase program. Website traffic on the Homes.com network, which includes Apartments.com, averaged 115 million unique visitors per month in Q3, up from 111 million in Q2.
The company’s earnings dip is largely attributed to continued investment in technology, marketing and sales. CEO Andy Florance highlighted a 92 % YoY jump in net new bookings to $84 million, driven by an expanded Homes.com sales team—now 500 employees with an additional 150 in pre‑production. CoStar plans to grow the Matterport sales force from about 30 reps to 200 by the end of 2026. Florance emphasized that real‑estate portals should focus on marketing rather than iBuying or lead diversion.
CoStar is also doubling down on artificial intelligence. Half of Homes.com’s software development is now AI‑centric, with new features aimed at unlocking significant value. In October, the platform launched an AI‑powered Smart Search that lets users find homes via natural language, and earlier in the summer it introduced Community Boost to support home‑builder memberships.
The firm remains active on the litigation front. It filed a copyright infringement suit against Zillow in July, and in October it was sued by the California Regional Multiple Listing Service—a case that was quickly settled. Zillow has removed CoStar’s Matterport tours from its site, alleging altered media‑rights terms; CoStar disputes the claim, accusing Zillow of misrepresenting its own terms. Florance also criticized Zillow’s legal troubles, noting an “unprecedented wave of lawsuits” that he believes the market underestimates.
In summary, CoStar’s Q3 shows robust revenue growth but a loss of profitability due to heavy investment in tech, marketing and sales expansion. The company’s outlook remains positive, with higher adjusted EBITDA guidance and continued focus on AI and portal marketing, while it navigates ongoing legal challenges with competitors.
