Costar Group, Homes.com Surge In Q1 — Ceo Welcomes End Of Activist ‘distraction’

CoStar Group delivered its 60th consecutive quarter of double-digit revenue growth in the first three months of 2026, posting results at the high end of guidance and raising its profit outlook for the year.

The online real estate marketplace operator reported $897 million in revenue for the quarter ended March 31 — up 23% from $732 million a year earlier.

Net income reached $3 million compared with a net loss of $15 million in the prior-year period.

Adjusted net income rose 49% to $94 million, while adjusted EBITDA doubled to $132 million, exceeding midpoint of guidance by 26%.

CEO Andrew Florance opened a Q1 earnings call by addressing activist investor efforts that had aimed for leadership change and a pivot away from Homes.com.

“[The activist campaign] over the last year did weigh heavily on Homes.com sales and potential partnerships,” he said. “Real estate leaders were reading a steady drumbeat of negative coverage. Nonetheless, we made durable progress through it.

“With that distraction now behind us, we can now apply even more focused energy to accelerating Homes.com revenue and the revenue in every other business in the portfolio.”

Third Point, the activist investor pushing for change, sold its CoStar shares in early April.

Homes.com shows strong ROI, pricing power

Homes.com revenue grew 58% to $26 million in the first quarter, with agent subscribers surging to 35,175.

Net new bookings for the division reached $11 million, and the March annual revenue run-rate hit $106 million — up 92% year over year.

The company provided new data on member performance, analyzing the first 11,400 Homes.com subscribers.

On average, a subscriber earned $36,400 more in commissions in their first year as a member against an average annual subscription cost of $3,400 — an 11-fold return on investment.

Agents who had earned $50,000 or less in the prior year saw their average commissions jump from $26,000 to $82,000 after joining, the company said.

“Based on these results, we will raise subscription fees for new customers on May 1 and evaluate measured potential renewal increases,” Florance said.

Organic traffic to Homes.com rose 119% in the first quarter compared with the prior-year period.

The company’s new Homes AI application — launched in February — drove user engagement sharply higher, according to Florance. In April, time on-site for AI users reached 18 minutes versus four minutes and 32 seconds for non-AI users.

“Put plainly, when consumers experience Homes AI, they spend roughly four times longer than they do on conventional residential search,” Florance said. “This is precisely the dynamic that precedes meaningful consumer share shift and is exactly the proof point we expected our AI investment to produce.”

Residential segment nears profitability

Total residential revenue reached $425 million in the quarter, up 32% year-over-year, with organic growth of 13%.

The residential segment’s adjusted EBITDA improved by $56 million, and management expects the segment to reach profitability in the second quarter of 2026.

Apartments.com generated $312 million in revenue, up 10% for the 15th consecutive quarter of double-digit growth.

The platform delivered 220 million visits, 370,000 tours, and 300,000 applications submitted directly on the site. The monthly renewal rate held at 99%.

CoStar also launched Smart Search — a natural language feature — and the first AI-powered voice search in multifamily marketplaces on Apartments.com.

Florance said renters who use SmartSearch spend 94% more time on-site and view 63% more listings.

Company raises full-year expectations

For the full year 2026, CoStar reaffirmed revenue guidance of $3.78 billion to $3.82 billion — representing approximately 17% growth at the midpoint.

The company raised adjusted EBITDA guidance to a range of $780 million to $820 million.

“The outperformance in adjusted EBITDA was primarily due to lower personnel costs and cost-saving efforts as we continue to find efficiencies from AI, personnel and other expense initiatives,” said Chief Financial Officer Christian Lown.

The company repurchased 11.4 million shares for $505 million in the quarter and plans $700 million in total repurchases for 2026.

Florance closed the call with an emphatic assessment of the company’s trajectory.

“The data this quarter across [commercial real estate], across [Apartments.com], and especially across Homes.com confirms one thing: the strategy is working,” he said. “I have never been more confident in our plan to deliver double-digit revenue growth and significant earnings expansion through 2030 and beyond.”