CoStar Group (CSGP) 10-K risk factor changes: FY2021 vs FY2020

We compete against many other real estate information, [removed: analytics,] [added: analytics] and marketing service providers for business.

If clients cancel services or decide not to renew their subscription [removed: agreements,] [added: agreements] and we do not sell new services to our existing clients or attract new clients, then our renewal rate, net new sales and revenues may decline or fail to meet expectations.

Our future business and financial success will depend on our ability to continue to anticipate the needs of customers and potential [removed: customers,] [added: customers] and to successfully introduce new and upgraded [removed: services into the marketplace,] [added: services,] including services that make our marketplaces useful for users and attractive to advertisers.

The processes are [removed: costly,] [added: costly] and our efforts to develop, integrate and enhance our services may not be successful.

For example, to generate brand awareness and site traffic for our [removed: Apartments.com network of rental websites,] [added: marketplaces,] we [added: have and will continue to] invest significant resources in [removed: a] multi-channel marketing [removed: campaign.][added: campaigns.]

If [removed: the] [added: these] marketing [removed: campaign does] [added: campaigns do] not [removed: continue to] increase brand awareness, site traffic and/or revenues, the cost of [removed: the campaign] [added: these campaigns] could have an adverse effect on our financial results.

Pressure from competitors seeking to acquire a greater share of our advertisers’ overall marketing budget could adversely affect our pricing and margins, lower our [removed: revenue,] [added: revenue] and increase our research and development and marketing expenses.

*Our business and results of operations have been and [removed: will] [added: may] be, and our financial condition may be, impacted by the COVID-19 pandemic and such impact could be materially adverse and continue for an unknown period of time.* The [removed: global spread of] COVID-19 [added: pandemic] has created significant economic volatility, uncertainty and disruption around the world.

- [removed: the] [added: The] length and severity of the [removed: pandemic;][added: pandemic, including new variants;]

- [removed: our] [added: Our] clients’ ability to pay for our services and solutions and our ability to collect payment for services provided; [added: and]

- [removed: the] [added: The] pace and extent of economic recovery following the COVID-19 pandemic, including recovery in the real estate industry in [removed: particular;][added: particular.]

If cancellations, reductions of services and failures to pay [removed: increase] [added: increase,] and we are unable to offset the resulting decrease in [removed: revenue] [added: revenues] by increasing sales to new or existing customers, our revenues [removed: will] [added: may] decline [removed: and our profitability will be adversely affected.][added: or grow at lower rates.]

The real estate market may be adversely impacted by many different factors, including lower than expected job growth or job losses resulting in reduced real estate demand; [added: reduced real estate demand due to increased remote work policies;] rising interest rates and slowing transaction volumes due to the impact of the COVID-19 pandemic or otherwise that negatively impact investment returns; excessive speculative new construction in localized markets resulting in increased vacancy rates and diminished rent growth; and unanticipated disasters and other adverse events such as slowing of the growth in the working age population resulting in reduced demand for all types of real estate.

A downturn in the real estate market, including as a result of a decline in leasing activity and absorption rates may affect our ability to generate revenues and may lead to more cancellations by our [removed: current or future customers, either of which could cause our revenues or our revenue growth rate to decline and reduce our profitability.]

Consolidation, or other cost-cutting measures by our customers, may lead to cancellations of our information, analytics and online marketplace services by our customers, reduce the [added: number of our existing clients, reduce the size of our target market or increase our clients’ bargaining power, all of which could cause our revenues to decline and reduce our profitability.]

*We may be unable to increase awareness of our brands, including CoStar, LoopNet, Apartments.com, BizBuySell, LandsofAmerica, STR, [removed: Ten-X] [added: Ten-X, Homes.com] and Homesnap, which could adversely affect our business.* We rely heavily on our brands, which we believe are key assets of our company.

Awareness and differentiation of our brands are important for attracting and expanding the number of users of, and subscribers to, our online marketplaces, such as LoopNet, the Apartments.com network of rental websites, [added: our Homes.com and Homesnap residential marketplaces,] CoStar [removed: Showcase,] [added: Showcase] and the Land.com network of rural lands for-sale.

We expect to continue to invest [added: significantly] in sales and marketing in [removed: 2021] [added: 2022] as we seek to grow the numbers of [added: users of,] subscribers [removed: to,] [added: to] and advertisers on, our marketplaces.

*Our internal and external investments may place downward pressure on our operating margins.* To increase our revenue growth, we continue to invest in our business, including internal investments in product [added: and content] development to expand the breadth and depth of services we provide to our customers and external investments in sales and marketing to generate brand awareness.

Google, Bing, DuckDuckGo and other [removed: Internet] [added: internet] search engines drive traffic to our websites, including CoStar.com, the Apartments.com network of rental websites, the LoopNet.com network of commercial real estate websites, Ten-X.com, [added: our Homes.com and Homesnap residential marketplaces,] the BizBuySell.com network of business for-sale websites and the Land.com network of land for-sale websites.

Our websites have experienced fluctuations in search result rankings in the [removed: past,] [added: past] and we anticipate similar fluctuations will occur in the future.

If we experience a material reduction in the number of users directed to our websites through [removed: Internet] [added: internet] search engines or otherwise fail to maintain or increase traffic to our marketplaces, our ability to acquire additional subscribers or [removed: advertisers and deliver leads to and retain existing subscribers and advertisers could be adversely affected.]

*If real estate professionals or other advertisers reduce or cancel their advertising spending with us and we are unable to attract new advertisers, our operating results would be harmed.* Our marketplace businesses, including LoopNet, the Apartments.com network of rental websites, [added: our residential brands including Homes.com] and [added: Homesnap and] the Land.com network of rural lands for-sale, depend on advertising revenues generated primarily through sales to persons in the real estate industry, including property managers and owners and other advertisers.

For example, [added: in 2021,] the FTC [removed: recently] withheld approval for our proposed acquisition of RentPath, the purchase agreement was subsequently [removed: terminated,] [added: terminated] and we incurred a termination fee of $52 million.

For example, we may be unable to fully integrate [removed: STR, Ten-X] [added: Homesnap, Homes.com] and [removed: Homesnap] [added: BureauxLocaux] with CoStar when and as expected.

External factors, such as compliance with laws and [removed: regulations,] [added: regulations] and shifting market preferences, may also impact the successful integration of an acquired business.

Acquisitions could result in dilutive issuances of equity securities, the incurrence of [removed: debt,] [added: debt] and substantial amortization expenses of other intangible assets.

As a result of our acquisitions, we had approximately [removed: $2.7] [added: $2.8] billion of goodwill and intangibles as of December 31, [removed: 2020.][added: 2021.]

As a result, we are subject to a variety of state, [removed: national,] [added: national] and international laws and regulations that apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal data, including the Fair Credit Reporting Act, the General Data Protection Regulation [removed: (GDPR)] [added: ("GDPR")] and California Consumer Privacy Act [removed: (CCPA).][added: ("CCPA").]

The [removed: CCPA, which became effective on January 1, 2020,] [added: CCPA] expands the rights of California residents to access and require deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.

Any failure or alleged failure to comply with [removed: the rules arising from the GDPR and related national laws of EU member states or the U.K., CCPA and other] privacy or data protection laws [removed: adopted by other jurisdictions,] could lead to government enforcement actions and significant penalties against us, and [removed: could materially adversely affect our reputation, business, financial condition, cash flows and results of operations.]

*Cyberattacks and security vulnerabilities could result in serious harm to our reputation, [removed: business,] [added: business] and financial condition.* As stated above, our business involves the collection, storage, processing and transmission of customers’ personal data.

An increasing number of organizations, including large merchants, businesses, technology companies and financial institutions, as well as government institutions, have disclosed breaches of their information security systems, some of which have involved sophisticated and highly targeted attacks, including on their websites, mobile [removed: applications,] [added: applications] and infrastructure.

We expect that unauthorized parties will continue to attempt to gain access to [added: or disrupt] our systems or facilities through various means, including hacking into our systems or facilities or those of our customers or vendors, or attempting to fraudulently induce (for example, through spear phishing attacks or social engineering) our employees, customers, vendors or other users of our systems into disclosing user names, passwords, or other sensitive information, which may in turn be used to access our information technology systems.

Numerous and evolving cybersecurity threats, including advanced and persisting cyberattacks, phishing and social engineering schemes, could compromise the confidentiality, [removed: availability,] [added: availability] and integrity of the data in our systems.

*•*Interrupt our [removed: operations,][added: operations;]

- Result in our systems or services being [removed: unavailable,][added: unavailable;]

- Result in improper disclosures of [removed: data,][added: data;]

- Materially harm our reputation and [removed: brands,][added: brands;]

- Result in significant regulatory scrutiny and legal and financial [removed: exposure,][added: exposure;]

current or future customers, either of which could cause our revenues or our revenue growth rate to decline and reduce our profitability.

We may face additional challenges in hiring employees in an increasingly competitive job market.

advertisers and deliver leads to and retain existing subscribers and advertisers could be adversely affected.

Other states have adopted, or are considering enacting, similar laws.

could materially adversely affect our reputation, business, financial condition, cash flows and results of operations.

- Result in improper payments;

Similarly, we are regularly exposed to vulnerabilities in widely deployed third-party software that we use in the ordinary course of business, such as the recently identified Log4J vulnerability.

While this vulnerability did not have a material adverse effect on our operations, it and similar incidents require us to devote time and resources to remediation on a regular basis.

Notwithstanding our efforts, there can be no assurance that vulnerabilities in widely deployed software will not materially harm our business.

the SolarWinds cyberattack, could result in litigation and potential liability for us, damage our brand and reputation or otherwise harm our business.

*We are planning to undertake a large infrastructure project to build out our campus in Richmond, Virginia, the costs of which could impact our financial condition and results of operations.* In December 2021, we announced our plans to expand our research and technology center in Richmond, Virginia.

These plans will require significant capital expenditures over the next several years and our business plans may change.

Future changes in growth or fluctuations in cash flow may also negatively impact our ability to finance this project.

Additionally, actual capital expenditures could vary materially from our projected capital expenditures, which could negatively impact our business, operating results and financial condition.

If we are provided with any grants, tax credits, abatements or other incentives related to this expansion effort and do not meet requirements associated with those incentives, we may not be able to benefit from those incentives, which could cause the cost of the project to be significantly more than anticipated or significantly increase our taxes above what we currently expect.

We are currently considering financing options and may finance construction with cash on hand.

Use of cash on hand to finance construction would reduce the amount of cash available for other corporate uses and could also reduce our ability to meet our

scheduled debt service obligations or to meet the covenants required to borrow additional funds under our 2020 Credit Agreement.

Any of the foregoing may adversely affect our financial position and results of operations.

We experienced an increase in turnover as we returned nearly all our workforce to the office.

We may face additional challenges in retaining employees in an increasingly competitive job market.

In addition, from time to time, U.S. and foreign tax authorities, including state and local governments consider legislation that could increase our effective tax rate.

For example, the U.S. Congress has advanced a variety of tax legislation proposals, and while the final form of any legislation is uncertain, the current proposals, if enacted, could have a material effect on our effective tax rate.

The demand for office space could decrease significantly as businesses implement hybrid or all work from home arrangements in response to employee desire for more flexibility, which may lead to a downturn in the commercial real estate market.

A depressed commercial real estate market would have a negative impact on our core customer base, which could impact our customers’ ability to subscribe and pay for our services and reduce demand for our services.

Reduced demand and increased cancellations could cause our revenues or our revenue growth rates to decline and reduce our profitability.

If we or any one or more of these service providers fail to maintain adequate systems for authorization

The laws of certain countries do not protect proprietary rights to the same extent as the laws of the U. S. and,

The 2020 Credit Agreement allows the Company and the administrative agent under the 2020 Credit Agreement to amend the 2020 Credit Agreement to replace LIBOR with one or more Secured Overnight Financing Rate based rates or another alternative benchmark rate.

We may not be able to agree

- the availability of vaccines to our employees and clients;

- our ability to market, develop, provide, and train clients on the use of our services and solutions, including as a result of our employees or our clients’ employees working remotely, worker absenteeism or decreased productivity, quarantines, social distancing or other travel or health-related restrictions;

- increased costs of additional safety procedures and increased technology-related expenses to provide for business continuity; and

- increased cyber security risk, data accessibility concerns and susceptibility to communication disruptions because our employees and employees of our clients are working remotely.

We expect that cancellations or suspensions, reductions of services and failures to pay amounts due to us may increase at any time while the economic impact of the pandemic and the response to the pandemic impacts our customer base.

We compete against many other real estate information and marketing service providers for business.

As a business, we have experienced and may continue to experience challenges, including increased costs, as we have and continue to pivot our employees’ work locations and hours as deemed necessary to respond to COVID-19 to protect the health and well-being of our employees, customers and community.

Any actual or perceived failure to comply with government orders, rules, laws or regulations as a result of changes in our operations in response to COVID-19 could subject us to investigations, claims, fines and other penalties, which in turn could adversely affect our business.

number of our existing clients, reduce the size of our target market or increase our clients’ bargaining power, all of which could cause our revenues to decline and reduce our profitability.

If cancellations, reductions of services, and failures to pay increase, and we are unable to offset the resulting decrease in revenues by increasing sales to new or existing customers, our revenues may decline or grow at lower rates.

Following the end of the Brexit transition on December 31, 2020, the EU and U.K. agreed, as part of a wider trade deal, a further transitional period at least another four months, extendable to six months, during which personal data may flow freely from the European Economic Area (the “EEA”) to the U.K..

During that period, the European Commission is considering whether to make an “adequacy decision” in favor of the U.K., finding that the U.K. offers protection of personal data equivalent to the EEA, which will allow data to continue to flow freely between the EEA and the U.K. On February 19, 2021, the European Commission published draft adequacy decisions.

If no final adequacy decision is made in favor of the U.K. before the end of the further transitional period, because transfers of personal data between an EEA country and the U.K. will be transfers to a “third country”, we may be required to put in place additional mechanisms in place to enable transfers of data from EEA countries to the U.K. to ensure compliance with the GDPR.

pandemic.

For example, in December 2017, the United States enacted The Tax Cuts and Jobs Act (the "Tax Act"), and various provisions of the new law may adversely affect us.

Certain aspects of Tax Reform are unclear and may not be clarified for some time.

During 2018, the Department of the Treasury issued certain guidance in the form of notices and proposed regulations with respect to several provisions of the new legislation.

We expect that additional regulations or other guidance may be issued with respect to the Tax Act in subsequent years.

We continue to examine the impact this tax reform legislation may have on our business.

In addition, if federal, state, local or

foreign tax authorities change applicable tax laws or issue new guidance, including in response to the Tax Act, our overall taxes could increase, and our business, financial condition or results of operations may be adversely impacted.

Similarly, the value and utility of our other marketplaces, including the BizBuySell.com network of business for-sale websites, are also dependent on attracting and retaining listings.

managerial resources.

2023.

We may need or seek to negotiate with our lenders for an alternative rate.

Potential factors that could cause actual results to differ materially from those discussed in any forward-looking statements include, but are not limited to, those stated above in [added: under the heading “Cautionary Statement Concerning Forward-Looking Statements” and in] Item 1A.

under the [removed: headings “Risk Factors - Cautionary Statement Concerning Forward-Looking Statements” and] [added: heading] “Risk Factors,” as well as those described from time to time in our filings with the Securities and Exchange Commission.

[removed: *CoStar Suite®*.][added: *CoStar*]

*Information [removed: services*.][added: services*]

[removed: On October 22, 2019, we acquired STR and we now] [added: We] also provide [removed: STR’s complementary benchmarking and] analytics [removed: services to] [added: and benchmarking reports for] the hospitality industry.

We provide information services [removed: internationally,] [added: internationally] through our Grecam, Belbex and Thomas Daily businesses in France, Spain and Germany, respectively.

[removed: The] [added: Information services' revenue] growth rates [removed: of information services increased] [added: decreased] in [removed: 2020] [added: 2021] compared to [removed: 2019] [added: 2020] primarily due to the STR [removed: acquisition.][added: acquisition in 2019 which resulted in a full year of results in 2020.]

[removed: *Multifamily*.][added: *Multifamily*]

Apartments.comTM is part of our network of apartment marketing sites, which primarily includes ApartmentFinder®, ForRent.com®, ApartmentHomeLiving.comTM, [removed: Apartamentos.comTM, Westside Rentals,] [added: Apartamentos.comTM] and [removed: Off Campus Partners, LLC ("OCP").][added: Westside Rentals®.]

Our [removed: LoopNet.com] [added: LoopNet] network of commercial real estate websites offer subscription-based, online marketplace services that enable commercial property owners, landlords and real estate agents working on their behalf to advertise properties for sale or for lease and to submit detailed information about property listings.

Commercial real estate agents, buyers and tenants use the [removed: LoopNet.com] [added: LoopNet] network of online marketplace services to search for available property listings that meet their criteria.

[removed: On June 24, 2020, we acquired Ten-X,] [added: Our other marketplaces include Ten-X®,] an online auction platform for commercial real [removed: estate.][added: estate which was acquired on June 24, 2020.]

[added: On] December 22, 2020, we acquired [removed: Homesnap,] [added: Homesnap®,] an [removed: industry-leading] online and mobile software platform that provides [removed: user-friendly applications] [added: subscription-based access] to [removed: optimize] [added: applications that manage] residential real estate agent workflow and [removed: reinforce the agent-client relationship.][added: marketing campaigns delivered on third-party platforms.]

[removed: Our] [added: Also included is our] BizBuySell network, which includes BizQuest® and [removed: FindaFranchise,] [added: FindaFranchise] and our Land.com network of sites, which includes LandsofAmerica, LandAndFarm and [removed: LandWatch®, are also included in our commercial property and land service revenue.][added: LandWatch®.]

[removed: The] [added: While the impact of the] COVID-19 pandemic [added: continues to evolve, it] did not materially affect our consolidated financial statements [removed: for the year ended December 31, 2020.][added: during 2020 or 2021.]

We are closely and continually monitoring the impact of the COVID-19 pandemic on our business, employees, [removed: customers,] [added: customers] and communities.

We [added: continue to monitor the guidelines and mandates provided by governmental and health authorities and] plan to continue adapting our business operations when and as deemed appropriate to comply with these guidelines and mandates and to respond to changing circumstances.

Overall, the increased direct spend related to the COVID-19 pandemic, including office [removed: reconfiguration,] [added: reconfiguration to enable social distancing and employee hiring and retention programs,] has not been material to date and has had minimal impact on our financial position and operating [removed: results as these expenses have been generally offset by the cost savings described above.][added: results.]

Any [removed: expected] [added: anticipated] changes in financial [removed: results] [added: performance] discussed in this [removed: report, including any expected impact of COVID-19,] [added: report] are based on our current observations and experience and involve estimates and assumptions.

As the [added: future] extent and duration of the [removed: impacts from] [added: effects of the] COVID-19 [added: pandemic] remain unclear, our estimates and assumptions may evolve as conditions [removed: change.][added: change and actual results may vary.]

Due to the uncertainty associated with the COVID-19 [removed: pandemic,] [added: pandemic and any resulting economic impacts,] we will continue to monitor [removed: customer behavior] [added: these trends] and [removed: its impact] [added: the effect] on our results of operations.

See Note [removed: 3] [added: 11 and Note 15] in this Annual Report on Form 10-K for further [removed: discussion.][added: discussion of our equity and Senior Notes offerings in 2020 and the 2020 Credit Agreement.]

[removed: We] [added: The effects of the pandemic have not affected our ability to date to access funding on reasonably similar terms as were available to us prior to March 2020.We] strengthened our liquidity position through an equity offering of common stock in May 2020 and an offering of Senior Notes and amendment and restatement of our credit facility in early July 2020.

For the years ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018] [added: 2019,] our annualized net new bookings of subscription-based services on all contracts were approximately [removed: $184] [added: $217] million, [removed: $210] [added: $184] million and [removed: $169] [added: $210] million, respectively, calculated based on the annualized amount of change in our sales resulting from all new subscription-based contracts or [removed: upsales] [added: upgrades] on all existing subscription-based contracts, less [removed: write downs] [added: write-downs] and cancellations, for the period reported.

Net [added: new] bookings is considered a key indicator of future subscription revenue growth and is also used as a metric of [removed: salesforce] [added: sales force] productivity by [removed: management] [added: us] and investors.

For the [removed: years] [added: trailing twelve months] ended December 31, [removed: 2020, 2019] [added: 2021, 2020] and [removed: 2018,] [added: 2019,] our contract renewal [removed: rate] [added: rates] for existing CoStar [added: Group company-wide] subscription-based services [removed: on annual] [added: for] contracts [removed: was] [added: with a term of at least one year were] approximately [removed: 89%, 90%] [added: 92%, 89%] and [removed: 90%] [added: 90%,] respectively, [removed: and,] [added: and;] therefore, our cancellation [removed: rate] [added: rates] for those services [removed: was] [added: for the same periods were] approximately [removed: 11%, 10%,] [added: 8%, 11%] and 10%, respectively.

As a result, [removed: management also believes] [added: we believe] that the rate may be a reliable indicator of short-term and long-term [removed: performance.][added: performance absent extraordinary circumstances.]

Our trailing twelve-month contract renewal rate may decline [removed: if, among other reasons,] [added: as a result of] negative economic [removed: conditions lead to greater business failures and/or] [added: conditions,] consolidations among our clients, reductions in customer [removed: spending,] [added: spending] or decreases in our customer base.

We are committed to supporting, improving and enhancing our information, analytics and online marketplace solutions, including expanding and improving our offerings for our client base and site users, including property owners, property managers, buyers, commercial tenants and residential [removed: renters.][added: renters and buyers.]

We may reevaluate our priorities as the COVID-19 pandemic [added: and its economic impact] continues to evolve.

Our key priorities for [removed: 2021] [added: 2022] currently include:

We [removed: are working on integrating] [added: have integrated] the Ten-X platform with both [removed: LoopNet] [added: CoStar] and [removed: CoStar,] [added: LoopNet] to expand the audience for Ten-X auctions to include our [removed: online] commercial real estate users.

To increase [removed: exposure, we have upgraded LoopNet listings for] [added: exposure of] properties to be auctioned on [removed: Ten-X and] [added: Ten-X, we] are allocating banner space on both our CoStar and LoopNet sites [removed: to] [added: for advertising for] Ten-X [removed: to][added: properties.]

[removed: Our Homesnap team is] [added: We are also] creating new and improved tools to help agents promote their residential listings, connect with buyers and sellers and streamline their daily workflow.

- Continuing to invest in the [removed: LoopNet marketplace and the] Ten-X auction platform.

We [removed: are enhancing] [added: have enhanced] the content on LoopNet.com (including high-quality imagery), seeking targeted [removed: advertisements,] [added: advertisements and are] providing premium [removed: listing] [added: marketing] services (such as LoopNet Diamond, [removed: Platinum,] [added: Platinum] and Gold Ads) that increase a property listing’s exposure, and adding more content for premium listings to better meet the needs of a broader cross section of the commercial real estate industry.

We [removed: have started recruiting] [added: are continuing our plans to recruit] and [removed: developing] [added: develop] a dedicated [added: LoopNet] sales team to help support and grow the business.

To support the LoopNet [removed: marketplace,] [added: marketplaces,] we implemented training and incentive programs for our [added: existing] sales team to increase sales of LoopNet [removed: Ads,] [added: advertisements,] with a focus on brokers and property owners.

We [added: continue to execute our] plan to expand the Ten-X sales force [removed: during 2021] and focus on increasing the number of qualified bidders and the number of owners bringing properties to the site.

To generate brand awareness and site traffic for the LoopNet.com [removed: network and Ten-X,] [added: network,] we [removed: plan] [added: expect] to [removed: significantly increase our investment] [added: continue to incur costs] in [removed: marketing and utilize] a [removed: multi media] [added: multi-media] marketing campaign, reinforced with search engine optimization [removed: efforts.][added: efforts and will continue to work to determine the optimal level and focus of this marketing effort for future periods and may adjust the spend and focus as deemed appropriate.]

CoStar® is our subscription-based integrated platform for commercial real estate intelligence, which includes information about office, industrial, retail, multifamily and student housing properties, properties for sale, comparable sales, tenants, space available for lease, industry professionals and their business relationships, industry news and market and lease analytical capabilities.

CoStar's revenue growth rates increased in 2021 compared to 2020 as the average number of subscribers increased in 2021 compared to 2020 and we resumed annual price increases for contract renewals occurring in the third quarter of 2021 after a temporary suspension.

We expect CoStar revenue growth rates to increase in 2022 compared to 2021 as a result of signing up new subscribers, existing subscribers upgrading their subscriptions and the resumption of annual price increases.

STARTM reports are provided on a subscription basis, but we also provide one-time or ad hoc reports or analysis on a transaction-basis.

We expect information services revenue growth rates in 2022 to remain consistent with 2021.

Apartments.com also earns transaction-based revenue primarily from providing online tenant applications, including background and credit checks, and rental payment processing.

Apartments.com has continued to successfully increase traffic to its network of sites, year-over-year, resulting in increased leads to customers.

As leads per ad have increased, Apartments.com’s lower priced ad packages are generating more leads than top-level packages were generating approximately one year ago.

In addition, rental vacancy rates have declined relative to historical averages reducing demand for top-level packages.

As a result, customers began selecting lower-priced ad packages in the second half of 2021.

Consequently, net new bookings declined year-over-year in 2021 resulting in a decrease in the Multifamily revenue growth rates in 2021 compared to 2020.

We have implemented a revised pricing strategy to align prices at each product level with the value of the leads delivered.

We expect multifamily revenue growth rates in 2022 to decrease when compared to 2021 due to lower net new booking activity in 2021.

*LoopNet*

This product offering also includes Realla in the United Kingdom and BureauxLocaux in France which was acquired on October 1, 2021.

LoopNet's revenue growth rates decreased in 2021 when compared to 2020 as growth in the average price per listing declined in 2021 when compared to 2020.

We expect LoopNet revenue growth rates in 2022 to decrease when compared to 2021.

*Residential*

On May 24, 2021, we acquired Homes.com®, a residential advertising and marketing services company primarily operating through its portal, Homes.com.

We expect residential revenue for 2022 to decline when compared to 2021 due to the discontinuation of certain Homes.com products and services, which is expected to be partially offset by expected increases in sales of Homesnap products and services.

*Other Marketplaces*

Overall, revenues in other marketplaces increased during 2021 compared to 2020 primarily due to two additional quarters of Ten-X revenue included in 2021.

We expect other marketplaces revenue for 2022 to increase over 2021 as more properties are sold on Ten-X .

*Subscription-based Services*

The majority of our revenue is generated from service offerings which are distributed to our clients under subscription-based agreements that typically renew automatically and have a term of at least one year.

However, information regarding net new bookings is not comparable to, nor should it be substituted for, an analysis of our revenues over time.

Revenue from our subscription-based contracts was approximately 93%, 95% and 96% of total revenue for the years ended December 31, 2021, 2020 and 2019, respectively.

The decline in the percentage of our revenue from subscription-based contracts from 2019 to 2020 and from 2020 to 2021 was primarily due to the acquisitions of companies which contained a higher percentage of transaction-based revenue than our legacy businesses.

Revenue from our subscription-based contracts with a term of at least one year was approximately 77%, 80% and 82% of total revenue for the trailing twelve months ended December 31, 2021, 2020 and 2019, respectively.

The decline in the percentage of our revenue from subscription-based contracts from 2019 to 2020 and from 2020 to 2021 was primarily due to the acquisitions of companies which contained a higher percentage of transaction-based revenue than our legacy businesses, as well as, increases in our sales of shorter term advertising products.

Most of our workforce has been fully vaccinated against COVID-19 and, where permitted, has returned to the office.

We have resumed in-person marketing events and some business travel.

The global workforce has been operating in an extraordinary and mostly digital and remote manner as the world adapted during the COVID-19 pandemic.

During this time, many working adults moved to different locations and adjusted to a different way of living.

As we transitioned our employees back to the office, we experienced, and we expect to continue to experience, attrition among our workforce resulting in increased costs.

Continued attrition or the inability to replenish and grow our work force may result in work disruptions in the future.

It is currently unclear how the commercial real estate industry will ultimately be impacted by the COVID-19 pandemic as businesses formulate and execute plans for employees to return to the office, implement hybrid work arrangements – allowing work from the office or home, or switch to all work from home.

If the demand for office space decreases significantly, there could be a downturn in the commercial real estate market which may materially adversely affect many of our clients.

A depressed commercial real estate market would have a negative impact on our core customer base, which could impact our customers’ ability to subscribe and pay for our services and reduce demand for our services.

Reduced demand and increased cancellations could cause our revenues or our revenue growth rates to decline and reduce our profitability.

*Information and Analytics*

Our subscription-based information services consist primarily of CoStar Suite services.

CoStar Suite is sold as a platform of service offerings consisting of CoStar Property®, CoStar COMPS®, CoStar Market Analytics, CoStar Tenant®, CoStar Lease Comps and CoStar Public Record through our online and mobile applications.

Our integrated suite of online service offerings includes information about space available for lease, comparable sales information, information about properties for sale, tenant information, Internet marketing services, analytical capabilities, information for clients' websites, information about industry professionals and their business relationships, and industry news.

Our commercial real estate sales force is currently responsible for selling multiple product lines, including CoStar Suite and LoopNet.

Starting in late 2019, we shifted the focus of our sales force to sales of LoopNet Diamond, Platinum and Gold Ads.

As a result of this shift, as well as the continued impact of COVID-19 on our current and potential customer base, we saw a decline in CoStar Suite revenue growth rates in 2020 compared to 2019 growth rates and expect similar growth rates throughout 2021.

STR sells the majority of its services on a subscription basis, but also receives one-time or ad hoc transaction fee revenues.

The hospitality industry has been severely impacted by COVID-19, as a result, revenue for STR declined in the second quarter of 2020 and increased moderately during the remainder of the year.

We anticipate STR revenue and overall information services growth rates to moderate during 2021.

*Online Marketplaces*

During 2020, multifamily revenue growth rates generally continued to increase relative to 2019 revenue growth rates as tenants, property owners and landlords continued to transact in our digital environment.

*Commercial property and land*.

On

As part of our rebuild and launch of the LoopNet Diamond, Platinum and Gold Ads products during the fourth quarter of 2019, we shifted the focus of our commercial real estate sales force to LoopNet Ads.

As a result, the LoopNet revenue growth rate increased in the fourth quarter of 2019.

Growth was flat during the first half of 2020 as LoopNet.com sales volumes declined and cancellations increased as a result of COVID-19 and its impact on the commercial real estate industry.

During the second half of 2020, we saw an increase in sales and expect LoopNet revenue growth rates to continue at those levels in 2021.

Overall, revenues in commercial property and land increased during 2020 compared to 2019 primarily due to revenue from our newly acquired online auction platform, Ten-X and, to a lesser extent, revenue growth from LoopNet.com.

Overall, we expect an increase in the commercial property and land growth rates in 2021 compared to 2020 primarily due to the Homesnap acquisition and continued impact of the Ten-X acquisition.

A novel strain of coronavirus known as "COVID-19" was first identified in Wuhan, China in December 2019, and was subsequently declared a pandemic by the World Health Organization on March 11, 2020.

COVID-19 has surfaced in nearly all regions around the world and resulted in travel restrictions and business slowdowns or shutdowns in affected areas.

The full impact of the COVID-19 pandemic is unknown and is evolving as the pandemic continues.

To protect the health and safety of our employees and to help stop the spread of the disease, we shifted to a digital, remote workplace in mid-March 2020.

As of that time, nearly all of our employees began to work from home and continue to do so as of the date of this filing.

We have temporarily shifted certain employees’ job responsibilities so they can work from home and modified our in-person research and sales processes so that they can be conducted safely and in compliance with social distancing guidelines to protect our employees, our customers and our communities.

We believe our employees are operating at near normal levels of productivity in this digital environment.

We continue to monitor events related to the pandemic, as well as the guidelines and mandates provided by governmental and health authorities.

In connection with the shift to work from home, we incurred and may continue to incur expenses to help employees perform their jobs effectively and securely.

In preparation for an eventual return to work in the office, we have also incurred and expect to continue to incur expenses to help protect the health and safety of our employees and visitors.

In response to the COVID-19 pandemic, we have taken steps to manage our costs, including minimizing hiring to essential positions, restricting business travel and canceling in-person marketing events.

We expect to continue to minimize travel and restrict in-person marketing events during the first half of 2021.

As the situation evolves, we may implement additional cost reductions.

Current general economic conditions in the U.S. and the world as a result of the COVID-19 pandemic are negatively affecting business operations for our clients and are expected to result in business consolidations and, in certain circumstances, failures.

In general, customers are seeking to reduce expenses as a result of current economic conditions.

The extent and duration of any future continued weakening of the global economy is unknown.

There can be no assurance that any of the governmental or private sector initiatives designed to strengthen the U.S. and other economies will ultimately be successful or available to us and our customers, and, if successful, when the benefits will be available or seen.

Because of the rapidly evolving nature of the COVID-19 pandemic and responses to it by, and the impact on, global economies, our revenue or earnings forecasts may not prove to be accurate.

Our current observations and past experience and results may not be an indicator of ongoing trends or future results, and actual results could differ significantly from our estimates and expectations.

Our near-term revenues are relatively predictable as a result of our subscription-based business model; however, we expect that we will continue to experience the effects of the COVID-19 pandemic on our business, results of operations and overall

The functional currency for a majority of our operations is the local currency, with the exception of certain [removed: STR] international locations for which the functional currency is the British Pound.

For the years ended December 31, [removed: 2020] [added: 2021] and December 31, [removed: 2019,] [added: 2020,] revenues denominated in foreign currencies were approximately [removed: 5%] [added: 4%] and [removed: 4%,] [added: 5%,] respectively, of total revenue.

For the years ended December 31, [removed: 2020] [added: 2021] and December 31, [removed: 2019,] [added: 2020,] our revenues would have decreased by approximately [removed: $8] [added: $7] million and [removed: $6 million] [added: $8 million, respectively,] if the U.S. dollar exchange rate used strengthened by 10%.

For the years ended December 31, [removed: 2020] [added: 2021] and December 31, [removed: 2019,] [added: 2020,] our revenues would have increased by approximately [removed: $8] [added: $7] million and [removed: $6 million] [added: $8 million, respectively,] if the U.S. dollar exchange rate used weakened by 10%.

As of December 31, [removed: 2020,] [added: 2021,] accumulated other comprehensive loss included a loss from foreign currency translation adjustments of approximately [removed: $0.9] [added: $5.8] million.

We do not believe we have material exposure to market risks associated with changes in interest rates related to cash equivalent securities held as of December 31, [removed: 2020.][added: 2021.]

As of December 31, [removed: 2020,] [added: 2021,] we had $3.8 billion of cash, cash equivalents and restricted cash.

Changes in interest rates would not have a material impact to our current interest and debt financing expense, as all [added: of] our borrowings except for our credit facility are fixed rate, and [added: no amounts were outstanding under] our credit facility [removed: is currently undrawn] as of December 31, [removed: 2020.][added: 2021.]

See Note 11 [removed: of the Notes] to [removed: Consolidated Financial Statements] [added: the accompanying consolidated financial statements] included in this Annual Report on Form 10-K regarding our 2020 Credit Agreement.

We had approximately [removed: $2.7] [added: $2.8] billion of goodwill and intangible assets as of December 31, [removed: 2020.][added: 2021.]

As of December 31, [removed: 2020,] [added: 2021,] we believe our intangible assets will be recoverable; however, changes in the economy, the business in which we operate and our own relative performance could change the assumptions used to evaluate intangible asset recoverability.

In this report, the words “we,” “our,” “us,” [removed: “CoStar”] [added: “CoStar Group”] or the “Company” refer to CoStar Group, Inc. and its direct and indirect wholly owned subsidiaries.

CoStar Group, Inc., a Delaware corporation, founded in 1987, is [removed: the number one] [added: a leading] provider of [removed: information, analytics and] online [removed: marketplaces to the commercial] real estate [removed: industry] [added: marketplaces, information and analytics] in the United States (“U.S.”) and United Kingdom (“U.K.”) based on the fact that we [removed: offer the most comprehensive commercial real estate database available; have the largest research department in the industry;] own and operate leading online marketplaces for commercial real estate and apartment listings in the [removed: U.S.] [added: U.S.,] based on the numbers of unique visitors and site visits per month; [removed: and] provide more information, analytics and marketing services than any of our [removed: competitors.][added: competitors; offer the most comprehensive commercial real estate database available; and have the largest commercial real estate research department in the industry.]

With our recent [removed: acquisition] [added: acquisitions] of Homesnap, Inc., (“Homesnap”) [added: and Homes Group, LLC (“Homes.com”)] we also offer [removed: an] online [removed: mobile software platform] [added: platforms that manage workflow and marketing] for residential real estate agents and [removed: brokers.][added: brokers and provide residential property listings for homebuyers.]

[removed: On June 24, 2020, we acquired] Ten-X [removed: Holding Company, Inc. and its subsidiaries ("Ten-X"), which operate] [added: operates] an online auction platform for commercial real estate.

See Notes 5 and 9 to the accompanying Notes to the Consolidated Financial Statements included in Part IV of this Annual Report on Form 10-K for further discussion of [removed: the Homesnap acquisition.][added: these acquisitions.]

Our standardized platform includes the most comprehensive proprietary database of commercial real estate information in the industry; the largest research department in the [added: commercial real estate] industry; proprietary data collection, information management and quality control systems; a large in-house product development team; a broad suite of web-based information, analytics and online marketplace services; a large team of analysts and economists; and a large, diverse base of clients.

Our database has been developed and enhanced for more than 30 years by a research department that makes [removed: thousands of] daily database updates.

In addition to our internal efforts to grow the database, we have obtained and assimilated a [removed: significant] number of proprietary databases.

We deliver our comprehensive commercial real estate information content to our [removed: U.S.] [added: North American] and European customers primarily via an integrated [removed: suite] [added: solution] of online service offerings that includes information about space available for-lease, [removed: comparable sales]

[added: comparable sales] information, information about properties for-sale, tenant information, [removed: Internet] [added: internet] marketing services, analytical capabilities, information for clients’ websites, information about industry professionals and their business relationships, data integration and industry news.

We also operate complementary online marketplaces for commercial [added: and residential] real estate listings and apartment rentals, as well as a commercial real estate auction platform.

Information about our revenues, long-lived assets and total assets derived from and located in foreign countries is included in Notes 2, 3 and 14 of the Notes to [added: the] Consolidated Financial Statements included in this Annual Report on Form 10-K.

Revenues; net income before interest and other income (expense), income taxes, depreciation and amortization (“EBITDA”); and total assets and liabilities for each of our segments are set forth in Notes 3 and 14 [added: of the Notes] to [removed: our consolidated financial statements.][added: the Consolidated Financial Statements.]

Our primary brands include CoStar*®*, [removed: LoopNet*®*,] Apartments.comTM, [added: LoopNet*®*,] STR*®*, Ten-X*®*, [removed: BizBuySell*®,*] [added: BizBuySell*®,*] LandsofAmericaTM, [added: Homes.com*®*.,] and [removed: HomeSnap®, which] [added: Homesnap*®* Our services] are accessible via the [removed: Internet] [added: internet] and through our mobile applications.

CoStar [removed: Suite*®*] is [removed: sold as a platform of service offerings consisting of CoStar Property Professional®, CoStar COMPS Professional® and CoStar Tenant®, and is] our largest service offering in our North America and International operating segments.

[removed: LoopNet*®*] [added: LoopNet] is the flagship brand in our network of commercial real estate marketing sites, which also includes [removed: Cityfeet.com and Showcase.com.][added: CityFeet.com®, Showcase.com®.]

Our LoopNet online marketplace enables commercial property owners, [removed: landlords,] [added: landlords] and [added: real estate] brokers [added: working on their behalf] to advertise properties for-sale or for-lease and to submit detailed information about property listings.

Commercial real estate [removed: agents, buyers, investors,] [added: brokers, buyers] and tenants use LoopNet extensively to search for available property listings that meet their criteria.

The LoopNet network leverages CoStar’s commercial real estate database to provide in-depth and accurate information across all commercial property types, including office, industrial, retail, [removed: restaurant, shopping center,] multifamily, specialty, health care, hospitality, sports and entertainment, [removed: land,] [added: land] and [removed: residential income.][added: residential.]

[removed: Apartments.comTM] [added: Apartments.com] is the flagship brand in our network of apartment marketing sites, which also includes ApartmentFinder.comTM, ForRent.com®, ApartmentHomeLiving.comTM, WestsideRentals.com*®*, AFTER55.com®, CorporateHousing.comTM, ForRentUniversity.com®, Apartamentos.comTM, which is our apartment-listing site offered exclusively in Spanish, and [removed: OffCampusPartners.com,] [added: Off Campus Partners,] which provides student housing marketplace content and powers off campus housing sites for many universities across the U.S. Our apartment marketing network of subscription-based [added: advertising] services [removed: offers renters a searchable database of apartment listings and] provides property owners, professional property management companies and landlords with [removed: an] [added: a comprehensive] advertising [removed: destination.][added: destination for their available rental units and offers renters a platform for searching for available rentals.]

Our apartment marketing network draws on and leverages [removed: CoStar’s] [added: our] multifamily database, which contains detailed information on apartment properties and is designed to meet renter preferences and demands, in order to drive traffic to those sites and attract advertisers who prefer to advertise on heavily trafficked apartment websites.

Our network of apartment marketing sites provides a comprehensive selection of rentals, information on actual availabilities and [removed: rents,] [added: rents] and in-depth data on neighborhoods, including restaurants, nightlife, history, schools and other facts important to renters.

To help renters find the information that meets their needs, [removed: we have] [added: our] sites [removed: that] also offer innovative search tools such as the PolygonTM Search tool, which allow renters to specifically define the area in which they want to find an apartment and Plan Commute tools, which allow renters to search property listings that meet their transportation needs.

We also offer complementary services to the rental industry, including the ability for renters to apply for rentals [removed: online,] [added: online] and for landlords to receive applications, screen [removed: tenants,] [added: tenants] and process rental payments and lease renewals.

Our [removed: BizBuySell] [added: BizBuySell®] services, which include BizQuest® and FindaFranchise, provide an online marketplace for businesses and franchises for-sale.

Our LandsofAmerica services, which include [removed: LandAndFarm] [added: LandAndFarm*®*] and [removed: LandWatch®,] [added: LandWatch.com®,] provide an online marketplace for rural lands for-sale and are also accessible via our Land.com domain.

We also provide other services that complement those offered [removed: through] [added: by] our primary brands.

These [removed: include] [added: include:] real estate and lease management [added: technology] solutions, lease administration, [removed: lease accounting] [added: transaction] and [removed: abstraction services,] [added: project management and lease accounting,] through our CoStar Real Estate Manager service offerings; market research, consulting and analysis, portfolio and debt [removed: analysis,] [added: analysis] and management and reporting [added: capabilities through our CoStar Investment Analysis and CoStar Risk Analytics service offerings; and benchmarking and analytics for the hospitality industry through our STR offerings.]

Our services are typically distributed to our clients under subscription-based license agreements that [added: typically] renew automatically, a majority of which have a term of at least one year.

To encourage clients to use our services regularly, we generally charge a fixed monthly amount for our subscription-based services rather than charging fees based on actual [removed: system] [added: platform] usage or number of paid clicks.

Depending on the type of service, contract rates are generally based on the number of sites, number of users, organization size, the client's business focus, [removed: geography,] the [added: client's geographic location, the] number and types of services to which a client subscribes, the number of properties a client advertises and the prominence and placement of a client's advertised properties in the search results.

[removed: Auction transaction] [added: Our transaction-based services primarily consist of auction] fees from our [removed: newly acquired] [added: Ten-X] online auction [removed: platform, Ten-X,] [added: platform for commercial real estate, which] are generally [removed: charged upon the successful closure of an auction] [added: calculated] as a percentage of the [removed: winning buyer's offer] [added: final sales] price for the commercial real estate property [removed: sold.][added: sold and recognized as revenue upon the successful closure of an auction.]

We generally see higher sales of Apartments.com listing services during the peak summer rental season and higher CoStar [removed: Suite] sales towards the end of the year, however sales fluctuate from year-to-year and revenue is not generally seasonal because our services are typically sold on a subscription basis.

We are committed to supporting, improving and enhancing our information, analytics and online marketplace solutions, including expanding and improving our offerings for property owners, property managers, brokers, agents, buyers, commercial tenants and residential [removed: renters.][added: renters and homebuyers.]

We expect to continue our software development efforts to improve existing services, introduce new services, integrate and cross-sell [removed: services,] [added: services] and expand and develop supporting technologies for our research, sales and marketing organizations.

[removed: The decision to eliminate or phase out a service offering may also ultimately] result in increased revenues and earnings from sales of other services we offer in lieu of the eliminated or phased out services.

[removed: We are beginning to incorporate recently acquired Emporis commercial real estate data and images into CoStar, and our Homesnap] [added: Our residential] team is creating new and improved tools to help agents promote their residential listings, connect with buyers and sellers and streamline their daily workflow.

We have invested in the expansion and development of our field sales force to support the growth and expansion of our company and our service [removed: offerings,] [added: offering] and plan to continue to invest in, evaluate and strategically position our sales force as [removed: the Company continues] [added: we continue] to develop and grow.

[removed: Specifically,] [added: In addition,] we continue to invest in marketing our services, as well as in our research operations to support continued growth of our information and analytics offerings to meet the growing content needs of our clients.

We plan to continue to utilize [removed: a] multi-channel marketing [removed: campaign] [added: campaigns] and to work to determine the optimal level of marketing [removed: investment] [added: investments] for our services for future periods.

Our most recent strategic acquisitions include Homesnap*®* (acquired in December 2020); Homes.com*®* (acquired in May 2021) and Comreal Info, a French *société par actions simplifiée* ("BureauxLocaux"), the owner and operator of BureauxLocaux, a commercial real estate digital marketplace, in France (acquired in October 2021).

The acquisitions of Homes.com and Homesnap enabled us to expand our offerings to the residential for sale market.

Homes.com is a homes for sale listings site.

Homesnap also receives transaction-based revenue for short-term advertising delivered on third-party platforms.

In October 2021, Homesnap reached an agreement to create, maintain and market a consumer-facing search website and mobile app for the Real Estate Board of New York's Residential Listing Service.

Homesnap will provide a custom version of its platform, branded as Citysnap™, specifically for the five boroughs of New York City.

Our platform provides brokers, sellers, and buyers access to data-driven technology and marketing tools to expand market visibility and decrease time to close.

The platform allows brokers and sellers to onboard assets, evaluate the results of complimentary marketing campaigns and follow up on pre-qualified leads.

Buyers can search for properties that meet their investment goals and are given access to market analysis and due diligence documents.

On May 24, 2021, we acquired Homes.com.

On October 1, 2021, we acquired Comreal Info, the owner and operator of BureauxLocaux, a leading commercial real estate digital marketplace in France.

We plan to continue to invest in our business and our services, evaluate strategic growth opportunities and pursue our key priorities as described below in Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations, while we continue to monitor the economic impacts of the COVID-19 pandemic and manage our response.

We reevaluate our priorities on a regular basis and may reevaluate our priorities as the COVID-19 pandemic continues to evolve.

The decision to eliminate or phase out a service offering may also ultimately

We believe that consumers expect accurate, actionable and comprehensive homes for sale information in a platform that allows collaboration between homebuyers and agents.

Our residential websites include homebuyer-focused features like the ability to filter search results according to various criteria (e.g., home features, view and lot type), review rankings of nearby schools and tools to educate consumers on the home buying process.

We plan to develop original, media rich content of neighborhoods, schools, parks and condominium buildings' amenities and common areas to supplement information in agent listings.

We are designing tools to facilitate collaboration between homebuyers and agents.

and position them on digital maps.

We plan to leverage our capabilities developed from our extensive commercial real estate research efforts to produce original, media rich content of neighborhoods, schools, parks and condominium buildings' amenities and common areas for our residential products using professional photographers and fleets of drones to conduct aerial research of residential real estate.

Our core services are delivered from multiple data centers and cloud-based computing platforms to

support uninterrupted service for our customers and are continually monitored to ensure fast and reliable customer access, to protect against unauthorized intrusions and to detect vulnerabilities.

Over time, we have enhanced and expanded, and we expect to continue to enhance and expand, our existing information, analytics and online marketplace services.

CoStar is our subscription-based integrated platform for commercial real estate intelligence, which includes information about office, industrial, retail, multifamily, hospitality and student housing properties, properties for sale, comparable sales, tenants, space available for lease, industry professionals and their business relationships, industry news and market and lease analytical capabilities.

vacancy, rental rates, construction, investment sales activity and overall economic conditions that affect commercial real estate markets.

We provide real estate and lease management technology solutions, including lease administration, lease accounting and abstraction services, through our CoStar Real Estate Manager® service offerings, as well as portfolio and debt analysis, management and reporting capabilities through our CoStar Investment Analysis and CoStar Risk Analytics® service offerings.

We also provide benchmarking and analytics for the hospitality industry both on a subscription basis and an ad hoc basis.

We earn revenue on ad hoc transactions as reports or data are delivered to the customer.

We provide information services internationally, through our Grecam, Belbex and Thomas Daily businesses in France, Spain and Germany, respectively.

*LoopNet*

Our LoopNet network of commercial real estate websites offer subscription-based online marketplace services that enable commercial property owners, landlords and real estate brokers working on their behalf to advertise properties for sale or for lease and to submit detailed information about property listings.

Commercial real estate brokers, buyers and tenants use the LoopNet network of online marketplace services to search for available property listings that meet their criteria.

Our international subscription-based online marketplaces are Realla in the United Kingdom and BureauxLocaux in France, which was acquired on October 1, 2021.

These marketplaces provide listings of commercial property for rent and for sale across the United Kingdom and France ranging from traditional offices, serviced offices, co-working spaces, hot-desks, retail locations, industrial units, leisure, hotels and warehousing.

*Residential*

*Homes.com* is a residential advertising and marketing services company that we acquired on May 24, 2021, primarily operating through its portal, Homes.com.

*Homesnap* is an online and mobile software platform that provides subscription-based access to applications that manage residential real estate agent workflow and marketing campaigns delivered on third-party platforms.

Homesnap also receives transaction-based revenue for short-term advertising delivered on third-party platforms.

*Other Marketplaces*

On October 22, 2019, we acquired STR, Inc. and STR Global, Ltd. (together with STR, Inc., "STR"), which provides benchmarking and analytics for the hospitality industry.

On October 26, 2020, we acquired Emporis GmbH, a Germany-based provider of international commercial real estate data and images, and on December 22, 2020, we acquired Homesnap.

Our subscription-based services consist primarily of CoStar Suite*®* services, which include information, analytics and online marketplace services offered to the commercial real estate industry and related professionals.

We are consolidating STR data and services with CoStar Suite to create an integrated platform, which is expected to allow us to create valuable new and improved tools for industry participants.

We are also working on integrating the Ten-X platform into both LoopNet and CoStar, to expand the audience for Ten-X auctions to include our online commercial real estate users.

capabilities through our CoStar Investment Analysis and CoStar Risk Analytics service offerings; and benchmarking and analytics for the hospitality industry through our STR offerings.

Most recently, on June 24, 2020, we acquired Ten-X, which operates an online auction platform for commercial real estate; on October 26, 2020, we acquired Emporis GmbH, a Germany-based provider of international commercial real estate data and images, which we subsequently merged into another of our German subsidiaries; and on December 22, 2020, we acquired Homesnap, which operates an online mobile software platform for residential real estate agents and brokers.

We are consolidating STR hospitality data and benchmarking and analytics services with CoStar Suite to create an integrated platform.

We expect that the combination of STR's and CoStar's offerings will allow us to create valuable new and improved tools for commercial real estate industry participants.

We plan to drive international expansion, in part, through STR's global operations and to apply STR's benchmarking expertise to other commercial real estate segments we serve.

We are working on integrating the Ten-X platform into both the LoopNet and CoStar service offerings, to expand the audience for Ten-X auctions to include our online commercial real estate users.

To increase exposure, we have upgraded LoopNet listings for properties to be auctioned on Ten-X and are allocating banner space on both our CoStar and LoopNet sites to Ten-X to cross-market our services.

Starting in 2019 and continuing throughout 2020, we increased our investment in Apartments.com marketing.

To support our continued expansion and development, in 2020 we completed a public equity offering, a Senior Notes offering and the refinancing of our revolving credit facility.

For additional discussion of our public equity offering, Senior Notes offering and refinancing of our revolving credit facility, please see "Management's Discussion and Analysis of Financial Condition and Results of Operations“—Overview—Development, Investments and Expansion" and Notes 11 and 15 to the accompanying Notes to the Consolidated Financial Statements included in Part IV of this Annual Report on Form 10-K.

As part of the process, researchers use to update records in our database, researchers develop cooperative relationships with industry professionals that allow them to gather useful information.

features of properties.

CoStar's core services are served from multiple data centers to support uninterrupted service for our customers.

CoStar’s services are continually monitored in an effort to ensure our customers fast and reliable access.

Information and Analytics

CoStar Property provides subscribers with powerful map-based search & reporting capabilities.

In addition, CoStar Lease Comps

provides subscribers the ability to analyze this combined lease dataset from an aggregate analytic perspective and generate various reports.

- *CoStar Public Record* is CoStar’s newest commercial real estate servicing offering.

*STAR Report* is STR’s data analytics report.

Online Marketplaces

*Commercial Property and Land*

We are working on integrating the Ten-X platform into both LoopNet and CoStar services, to expand the audience for Ten-X auctions to include our online commercial real estate users.

Our professionals utilize the Internet and remote presentation tools to convey the multiple solutions we offer.

In response to the COVID-19 pandemic, our entire sales force has been equipped to operate remotely.

Our initiatives to partner with brokers to provide value to property owners allowed us to successfully position LoopNet Ads as a valuable marketing solution for a property owner’s major risk, namely, the cost of vacant space and the resulting negative impact on valuation of the property or portfolio, a risk that has been significantly magnified as a result of the COVID-19 pandemic.

Additionally, we worked closely with clients to help them navigate the unprecedented challenges brought on by the COVID-19 pandemic through relevant training initiatives and curated webinars.

During the fourth quarter of 2020, we began establishing a dedicated LoopNet sales division.

Both our field sales and LoopNet sales teams will continue to sell LoopNet solutions.

We seek to make our services essential to our clients’ businesses.

We plan to continue to utilize these marketing methods to generate brand awareness and site traffic, and will continue to work to determine the optimal level of marketing investment for our services for future periods.

News has always been a valuable part of CoStar's core subscription offering.

CoStar's award-winning news teams report on the latest deals and developments across our markets, keeping subscribers informed and driving higher usage in our core product.

In 2020, we enhanced our offerings, including producing a series of special reports on the impact of the COVID-19 pandemic on the commercial real estate industry and working with our analyst team, added weekly video updates and periodic webinars to discuss key changes to national and local markets.

We merged STR's Hotel News Now news service into CoStar News, giving CoStar subscribers direct access to STR's hospitality news and analysis, while expanding the real estate audience for STR.

Currently, and from time to time, we are involved in litigation incidental to the conduct of our business, including, among others, the legal actions discussed under “Contingencies” in Note 13 “Commitments and Contingencies” to our [added: Consolidated] Financial [removed: Statements.][added: Statements and related Notes.]

For the fiscal year ended December 31, [removed: 2020][added: 2021]

[removed: ][added: ]

See the definitions of “large accelerated filer,” “accelerated [removed: filer”,] [added: filer,”] “smaller reporting company,” and "emerging growth company" in Rule 12b-2 of the Exchange Act.

[added: Indicate by check mark whether] the [added: registrant has filed a report on and attestation to its management’s assessment of the] effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. [added: 7262(b)) by the registered public accounting firm that prepared or issued its audit report.]

As of June 30, [removed: 2020] [added: 2021,] the aggregate market value of the common stock (based upon the closing price of the stock on the Nasdaq Global Select Market) of the registrant held by non-affiliates was approximately [removed: $24.6] [added: $28.7] billion.

As of February [removed: 19, 2021, 39,410,441] [added: 18, 2022, 394,987,704] shares of common stock were outstanding.

Portions of the registrant’s definitive proxy statement, which is expected to be filed with the Securities and Exchange Commission within 120 days after the end of the registrant’s fiscal year ended December 31, [removed: 2020,] [added: 2021] are incorporated by reference into Part III of this Report.

| Item 1. | | | [removed: [Business](#i8ff0b374c9a74ea5b124a69f1182bece_16)] [added: [Business](#i674069b223524e4c81840572761696f1_16)] | | | [removed: [5](#i8ff0b374c9a74ea5b124a69f1182bece_16)] [added: [4](#i674069b223524e4c81840572761696f1_16)] | | |

| Item 1A. | | | [Risk [removed: Factors](#i8ff0b374c9a74ea5b124a69f1182bece_19)] [added: Factors](#i674069b223524e4c81840572761696f1_19)] | | | [removed: [19](#i8ff0b374c9a74ea5b124a69f1182bece_19)] [added: [18](#i674069b223524e4c81840572761696f1_19)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#i8ff0b374c9a74ea5b124a69f1182bece_22)] [added: Comments](#i674069b223524e4c81840572761696f1_22)] | | | [removed: [30](#i8ff0b374c9a74ea5b124a69f1182bece_22)] [added: [29](#i674069b223524e4c81840572761696f1_22)] | | |

| Item 2. | | | [removed: [Properties](#i8ff0b374c9a74ea5b124a69f1182bece_25)] [added: [Properties](#i674069b223524e4c81840572761696f1_25)] | | | [removed: [30](#i8ff0b374c9a74ea5b124a69f1182bece_25)] [added: [29](#i674069b223524e4c81840572761696f1_25)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#i8ff0b374c9a74ea5b124a69f1182bece_28)] [added: Proceedings](#i674069b223524e4c81840572761696f1_28)] | | | [removed: [30](#i8ff0b374c9a74ea5b124a69f1182bece_28)] [added: [29](#i674069b223524e4c81840572761696f1_28)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#i8ff0b374c9a74ea5b124a69f1182bece_31)] [added: Disclosures](#i674069b223524e4c81840572761696f1_31)] | | | [removed: [30](#i8ff0b374c9a74ea5b124a69f1182bece_31)] [added: [29](#i674069b223524e4c81840572761696f1_31)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i8ff0b374c9a74ea5b124a69f1182bece_37)] [added: Securities](#i674069b223524e4c81840572761696f1_37)] | | | [removed: [31](#i8ff0b374c9a74ea5b124a69f1182bece_37)] [added: [30](#i674069b223524e4c81840572761696f1_37)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i8ff0b374c9a74ea5b124a69f1182bece_43)] [added: Operations](#i674069b223524e4c81840572761696f1_43)] | | | [removed: [34](#i8ff0b374c9a74ea5b124a69f1182bece_43)] [added: [33](#i674069b223524e4c81840572761696f1_43)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#i8ff0b374c9a74ea5b124a69f1182bece_88)] [added: Risk](#i674069b223524e4c81840572761696f1_73)] | | | [removed: [50](#i8ff0b374c9a74ea5b124a69f1182bece_88)] [added: [46](#i674069b223524e4c81840572761696f1_73)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#i8ff0b374c9a74ea5b124a69f1182bece_91)] [added: Data](#i674069b223524e4c81840572761696f1_76)] | | | [removed: [51](#i8ff0b374c9a74ea5b124a69f1182bece_91)] [added: [47](#i674069b223524e4c81840572761696f1_76)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i8ff0b374c9a74ea5b124a69f1182bece_94)] [added: Disclosure](#i674069b223524e4c81840572761696f1_79)] | | | [removed: [51](#i8ff0b374c9a74ea5b124a69f1182bece_94)] [added: [47](#i674069b223524e4c81840572761696f1_79)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#i8ff0b374c9a74ea5b124a69f1182bece_97)] [added: Procedures](#i674069b223524e4c81840572761696f1_82)] | | | [removed: [51](#i8ff0b374c9a74ea5b124a69f1182bece_97)] [added: [47](#i674069b223524e4c81840572761696f1_82)] | | |

| Item 9B. | | | [Other [removed: Information](#i8ff0b374c9a74ea5b124a69f1182bece_100)] [added: Information](#i674069b223524e4c81840572761696f1_85)] | | | [removed: [52](#i8ff0b374c9a74ea5b124a69f1182bece_100)] [added: [48](#i674069b223524e4c81840572761696f1_85)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#i8ff0b374c9a74ea5b124a69f1182bece_106)] [added: Governance](#i674069b223524e4c81840572761696f1_91)] | | | [removed: [52](#i8ff0b374c9a74ea5b124a69f1182bece_106)] [added: [48](#i674069b223524e4c81840572761696f1_91)] | | |

| Item 11. | | | [Executive [removed: Compensation](#i8ff0b374c9a74ea5b124a69f1182bece_109)] [added: Compensation](#i674069b223524e4c81840572761696f1_94)] | | | [removed: [52](#i8ff0b374c9a74ea5b124a69f1182bece_109)] [added: [48](#i674069b223524e4c81840572761696f1_94)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i8ff0b374c9a74ea5b124a69f1182bece_112)] [added: Matters](#i674069b223524e4c81840572761696f1_97)] | | | [removed: [52](#i8ff0b374c9a74ea5b124a69f1182bece_112)] [added: [48](#i674069b223524e4c81840572761696f1_97)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#i8ff0b374c9a74ea5b124a69f1182bece_115)] [added: Independence](#i674069b223524e4c81840572761696f1_100)] | | | [removed: [52](#i8ff0b374c9a74ea5b124a69f1182bece_115)] [added: [49](#i674069b223524e4c81840572761696f1_100)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#i8ff0b374c9a74ea5b124a69f1182bece_118)] [added: Services](#i674069b223524e4c81840572761696f1_103)] | | | [removed: [52](#i8ff0b374c9a74ea5b124a69f1182bece_118)] [added: [49](#i674069b223524e4c81840572761696f1_103)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#i8ff0b374c9a74ea5b124a69f1182bece_124)] [added: Schedules](#i674069b223524e4c81840572761696f1_109)] | | | [removed: [54](#i8ff0b374c9a74ea5b124a69f1182bece_124)] [added: [50](#i674069b223524e4c81840572761696f1_109)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#i8ff0b374c9a74ea5b124a69f1182bece_130)] [added: Summary](#i674069b223524e4c81840572761696f1_112)] | | | [removed: [57](#i8ff0b374c9a74ea5b124a69f1182bece_130)] [added: [53](#i674069b223524e4c81840572761696f1_112)] | | |

| | | | [Index to Consolidated Financial [removed: Statements](#i8ff0b374c9a74ea5b124a69f1182bece_136)] [added: Statements](#i674069b223524e4c81840572761696f1_118)] | | | [removed: [F-](#i8ff0b374c9a74ea5b124a69f1182bece_136)[1](#i8ff0b374c9a74ea5b124a69f1182bece_136)] [added: [F-](#i674069b223524e4c81840572761696f1_118)[1](#i674069b223524e4c81840572761696f1_118)] | | |

Forward-looking statements include information that is not purely historic fact and include, without limitation, statements concerning our financial outlook for [removed: 2021] [added: 2022] and beyond, our possible or assumed future results of operations [removed: generally,] [added: generally] and other statements and information regarding assumptions or expectations about our revenues, revenue growth rates, gross margin percentage, net income, net income per share, fully diluted net income per share, EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-generally accepted accounting principles (“GAAP”) net income, non-GAAP net income per share, weighted-average outstanding shares, cash flow from operating activities, operating costs, capital and other expenditures, the current and future impacts of COVID-19 on our operations, our actions in response to the COVID-19 pandemic, key priorities for [removed: 2021,] [added: 2022,] trends in customer behavior, legal proceedings and claims, legal costs, effective tax rate, [removed: pending acquisitions,] [added: product development and release,] the anticipated benefits of completed or proposed acquisitions, the anticipated timing of acquisition closings and integrations, the anticipated benefits of cross-selling efforts, [removed: product development and release,] geographic and product expansion, planned service enhancements, [added: expansion and development of our sales forces,] planned sales and marketing activities and investments, [added: investments in residential marketplace services and our residential marketplace strategy,] the impact or results of sales and marketing initiatives, product integrations, elimination and de-emphasizing of services, net new sales, contract renewal rates, use of proceeds from equity and debt offerings, the use of proceeds of any draws under our $750 million credit facility (the “2020 Credit Agreement”), expectations regarding our compliance with financial and restrictive covenants in the 2020 Credit Agreement, employee relations, management’s plans, goals and objectives for future operations, [removed: deferral of tax payments,] sources and adequacy of [removed: liquidity,] [added: liquidity] and growth and markets for our stock.

Sections of this Report which contain forward-looking statements include “Business,” “Risk Factors,” “Properties,” “Legal Proceedings,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Quantitative and Qualitative Disclosures About Market Risk,” “Controls and Procedures” and the [added: Consolidated] Financial Statements and related Notes.

The following important factors, in addition to those discussed or referred to under the heading “Risk Factors,” and other unforeseen events or circumstances, could affect our future results and could cause those results or other outcomes to differ materially from those expressed or implied in our forward-looking statements: the effects of and uncertainty surrounding the COVID-19 pandemic, including the [removed: length] [added: duration] and [removed: severity] [added: magnitude] of the [removed: economic downturn associated with the] COVID-19 pandemic, including [added: the emergence of new strains, such as "Delta," "Omicron" and future variants,] disruption of the international and national economy and credit markets; actions taken by governments, businesses and individuals in response to the COVID-19 pandemic such as office and other workplace closures, worker absenteeism or decreased productivity, quarantines, mass-transit disruptions or other travel or health-related restrictions; how quickly economies, including the real estate industry in particular, recover after the COVID-19 pandemic subsides; real estate market conditions; general economic conditions, both domestic and international, including the impacts of [removed: “Brexit”] [added: any international conflicts] and uncertainty from the expected discontinuance of LIBOR and the transition to any other interest rate benchmarks; our ability to identify, acquire and integrate additional acquisition candidates; our ability to realize the expected benefits, cost savings or other synergies from acquisitions, including [removed: STR, Ten-X] [added: Homesnap] and [removed: Homesnap,] [added: Homes.com,] on a timely basis or at all; our ability to combine acquired businesses successfully or in a timely and cost-efficient manner; business disruption relating to integration of acquired businesses or other business initiatives; the risk that expected investments in acquired businesses, or the timing of any such investments, may change or may not produce the expected results; our ability to transition acquired service platforms to our model in a timely manner or at all; changes and developments in business plans or operations; theft of any personally identifiable information we, or the businesses that we acquire, maintain, store or process; any actual or perceived failure to comply with privacy or data protection laws, regulations or standards; any disruption of our systems, including due to any cyberattack or other similar event; the amount of investment for sales and marketing and our ability to realize a return on investments in sales and marketing; our ability to effectively and strategically combine, eliminate or de-emphasize service offerings; reductions in revenues as a result of service changes; the time and resources required to develop upgraded or new services and to expand service offerings; changes or consolidations within the real estate industry; customer retention; our ability to attract new clients and to sell additional services to existing clients; our ability to develop, successfully introduce and cross-sell new products or upgraded services in [removed: U.S.] [added: the United States (“U.S.”)] and foreign markets; our ability to attract consumers to our online marketplaces; our ability to increase traffic on our network of sites; the success of our marketing campaigns in generating brand awareness and site traffic; our ability to protect and defend our intellectual property, including against unauthorized or unlicensed use of our services; competition; foreign currency fluctuations; global credit market conditions affecting investments; our ability to continue to expand successfully, timely and in a cost-efficient manner, including internationally; our ability to effectively penetrate and gain acceptance in new sectors and geographies; our ability to control costs; litigation or government investigations in which we become involved; changes in accounting policies or practices; release of new and upgraded services or entry into new markets by us or our competitors; data quality; expansion, growth, development or reorganization of our sales force; employee retention, including retention of employees of acquired businesses; [removed: technical]

[added: technical] problems with our services; managerial execution; changes in relationships with real estate agents, brokers, owners, property managers and other strategic partners; legal and regulatory issues, including any actual or perceived failure to comply with [removed: United States (“U.S.”).][added: U.S. or international laws, rules or regulations; successful adoption of and training on our services; and the availability of capital.]

| Item 6. | | | [Reserved](#i674069b223524e4c81840572761696f1_18141941860449) | | | [32](#i674069b223524e4c81840572761696f1_18141941860449) | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent Inspections](#i674069b223524e4c81840572761696f1_17592186046633) | | | [48](#i674069b223524e4c81840572761696f1_85) | | |

| | | | [Signatures](#i674069b223524e4c81840572761696f1_115) | | | [54](#i674069b223524e4c81840572761696f1_115) | | |

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of

7262(b)) by the registered public accounting firm that prepared or issued its audit report.

| Item 6. | | | [Selected Financial Data](#i8ff0b374c9a74ea5b124a69f1182bece_40) | | | [33](#i8ff0b374c9a74ea5b124a69f1182bece_40) | | |

| | | | [Signatures](#i8ff0b374c9a74ea5b124a69f1182bece_133) | | | [58](#i8ff0b374c9a74ea5b124a69f1182bece_133) | | |

or international laws, rules or regulations; successful adoption of and training on our services; and the availability of capital.

Our headquarters is located at 1331 L Street, NW, in downtown Washington, DC, where we occupy approximately 169,093 square feet of office space, with a lease that expires [added: on] May 31, 2025 (with two 5-year renewal options).

We also operate [added: certain of] our [removed: research] [added: research, development and sales] functions out of [added: additional] leased office spaces in Richmond, Virginia; San Diego, California; and Atlanta, Georgia.

We own a building in Richmond, Virginia, located at 501 S 5th Street, where we occupy 276,695 square feet and lease out 33,912 square feet to another tenant.

This location houses research, development and sales functions.

Our common stock is traded on the Nasdaq Global Select Market under the symbol “CSGP.” As of January 31, [removed: 2021,] [added: 2022,] there were [removed: 1,751] [added: 1,819] holders of record of our common stock.

*Recent Issues of Unregistered Securities.* We did not issue any unregistered securities during the year ended December 31, [removed: 2020.][added: 2021.]

*Issuer Purchases of Equity Securities.* The following table is a summary of our repurchases of common stock during each of the three months in the quarter ended December 31, [removed: 2020:][added: 2021:]

| Month, [removed: 2020] [added: 2021] | | | | | | Total Number of Shares Purchased [added: (1)] | | | | | | | | | Average Price Paid per Share | | | | | | Total Number of Shares Purchased as Part of Publicly Announced Plans or Programs | | | | | | Maximum Number of Shares that May Yet Be Purchased Under the Plans or Programs | | |

The comparison covers the period beginning December 31, [removed: 2015,] [added: 2016] and ending on December 31, [removed: 2020,] [added: 2021,] and assumes the reinvestment of any dividends.

[removed: ][added: ]

| Company / Index | | | | | | [removed: 12/31/15] [added: 12/31/16] | | | | | | [removed: 12/31/16] [added: 12/31/17] | | | | | | [removed: 12/31/17] [added: 12/31/18] | | | | | | [removed: 12/31/18] [added: 12/31/19] | | | | | | [removed: 12/31/19] [added: 12/31/20] | | | | | | [removed: 12/31/20] [added: 12/31/21] | | |

| October 1 through 31 | | | | | | 17,085 | | | | | | | | | $ | 86.26 | | | | | — | | | | | | — | | |

| November 1 through 30 | | | | | | 19,238 | | | | | | | | | 85.73 | | | | | | — | | | | | | — | | |

| December 1 through 31 | | | | | | 5,766 | | | | | | | | | 78.21 | | | | | | — | | | | | | — | | |

| Total | | | | | | 42,089 | | | | | | | | | $ | 85.18 | | | | | — | | | | | | — | | |

| _____________________ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| CoStar Group, Inc. | | | | | | $ | 100 | | | | | $ | 157.54 | | | | | $ | 178.97 | | | | | $ | 317.42 | | | | | $ | 490.36 | | | | | $ | 419.28 | |

| S&P 500 Index | | | | | | 100 | | | | | | 121.83 | | | | | | 116.49 | | | | | | 153.17 | | | | | | 181.35 | | | | | | 233.41 | | |

| S&P 500 Internet Services & Infrastructure Index | | | | | | 100 | | | | | | 140.75 | | | | | | 128.85 | | | | | | 173.25 | | | | | | 201.12 | | | | | | 230.57 | | |

| October 1 through 31 | | | | | | 1,724 | | | | | | | | | $ | 848.63 | | | | | — | | | | | | — | | |

| November 1 through 30 | | | | | | 2,097 | | | | | | | | | 835.61 | | | | | | — | | | | | | — | | |

| December 1 through 31 | | | | | | 967 | | | | | | | | | 879.64 | | | | | | — | | | | | | — | | |

| Total | | | | | | 4,788 | | | (1) | | | | | | $ | 849.19 | | | | | — | | | | | | — | | |

| __________________________________________ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| CoStar Group, Inc. | | | | | | $ | 100 | | | | | $ | 91.19 | | | | | $ | 143.67 | | | | | $ | 163.21 | | | | | $ | 289.47 | | | | | $ | 447.18 | |

| S&P 500 Index | | | | | | 100 | | | | | | 111.96 | | | | | | 136.40 | | | | | | 130.42 | | | | | | 171.49 | | | | | | 203.04 | | |

| S&P 500 Internet Services & Infrastructure Index | | | | | | 100 | | | | | | 105.18 | | | | | | 148.04 | | | | | | 135.52 | | | | | | 182.22 | | | | | | 211.53 | | |

| __________________________ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

Selected Financial Data

(in thousands, except per share data)

The following table provides selected consolidated financial data for the five years ended December 31, 2020.

The consolidated statements of operations data shown below for each of the three years ended December 31, 2020, 2019 and 2018 and the consolidated balance sheet data as of December 31, 2020 and 2019 are derived from audited consolidated financial statements that are included in this report.

The consolidated statements of operations data for each of the years ended 2017 and 2016 and the consolidated balance sheet data as of December 31, 2018, 2017 and 2016 shown below are derived from audited consolidated financial statements for those years that are not included in this report.

Information about prior period acquisitions and the adoption of recent accounting pronouncements that may affect the comparability of the selected financial information presented below are included in "Item 1.

Business" and Note 2 to the Notes to the Consolidated Financial Statements included in Part IV of this Annual Report on Form 10-K.

The total assets and total long-term liabilities reported in the consolidated balance sheet data have been reclassified to conform to our current presentation as a result of the retrospective application of the authoritative guidance to simplify the presentation of debt issuance costs.

The following data should be read in conjunction with “Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Item 8.

Financial Statements and Supplementary Data,” and the other information contained elsewhere in this Annual Report on Form 10-K.

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Consolidated Statements of Operations Data: | | | 2016 | | | | | | 2017 | | | | | | 2018 | | | | | | 2019 | | | | | | 2020 | | |

| Revenues | | | $ | 837,630 | | | | | $ | 965,230 | | | | | $ | 1,191,832 | | | | | $ | 1,399,719 | | | | | $ | 1,659,019 | |

| Cost of revenues | | | 173,814 | | | | | | 220,403 | | | | | | 269,933 | | | | | | 289,239 | | | | | | 308,968 | | |

| Gross profit | | | 663,816 | | | | | | 744,827 | | | | | | 921,899 | | | | | | 1,110,480 | | | | | | 1,350,051 | | |

| Operating expenses | | | 518,911 | | | | | | 571,011 | | | | | | 648,335 | | | | | | 746,933 | | | | | | 1,060,849 | | |

| Income from operations | | | 144,905 | | | | | | 173,816 | | | | | | 273,564 | | | | | | 363,547 | | | | | | 289,202 | | |

| Interest (expense) income | | | (9,244) | | | | | | (5,669) | | | | | | 10,539 | | | | | | 16,742 | | | | | | (17,395) | | |

| Other (expense) income | | | 1,001 | | | | | | (3,089) | | | | | | (88) | | | | | | 10,660 | | | | | | (827) | | |

| Income before income taxes | | | 136,662 | | | | | | 165,058 | | | | | | 284,015 | | | | | | 390,949 | | | | | | 270,980 | | |

| Income tax expense | | | 51,591 | | | | | | 42,363 | | | | | | 45,681 | | | | | | 75,986 | | | | | | 43,852 | | |

| Net income | | | $ | 85,071 | | | | | $ | 122,695 | | | | | $ | 238,334 | | | | | $ | 314,963 | | | | | $ | 227,128 | |

| Net income per share — basic | | | $ | 2.64 | | | | | $ | 3.70 | | | | | $ | 6.61 | | | | | $ | 8.67 | | | | | $ | 5.97 | |

| Net income per share — diluted | | | $ | 2.62 | | | | | $ | 3.66 | | | | | $ | 6.54 | | | | | $ | 8.60 | | | | | $ | 5.93 | |

| Weighted average shares outstanding — basic | | | 32,167 | | | | | | 33,200 | | | | | | 36,058 | | | | | | 36,310 | | | | | | 38,073 | | |

| Weighted average shares outstanding — diluted | | | 32,436 | | | | | | 33,559 | | | | | | 36,448 | | | | | | 36,630 | | | | | | 38,326 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| | | | As of December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Consolidated Balance Sheet Data: | | | 2016 | | | | | | 2017 | | | | | | 2018 | | | | | | 2019 | | | | | | 2020 | | |

| Cash, cash equivalents and long-term investments | | | $ | 577,175 | | | | | $ | 1,221,533 | | | | | $ | 1,110,486 | | | | | $ | 1,080,801 | | | | | $ | 3,755,912 | |

| Working capital | | | 472,545 | | | | | | 1,141,269 | | | | | | 1,059,139 | | | | | | 992,109 | | | | | | 3,557,662 | | |

| Total assets | | | 2,185,063 | | | | | | 2,873,441 | | | | | | 3,312,957 | | | | | | 3,853,986 | | | | | | 6,915,420 | | |

| Total long-term liabilities | | | 375,904 | | | | | | 75,525 | | | | | | 136,856 | | | | | | 241,337 | | | | | | 1,209,211 | | |

| Stockholders’ equity | | | 1,654,213 | | | | | | 2,651,250 | | | | | | 3,021,942 | | | | | | 3,405,593 | | | | | | 5,375,359 | | |

Financial Statements meeting the requirements of Regulation [removed: S-X] [added: S-X, including reports of Independent Registered Public Accounting Firm Ernst & Young LLP,] are set forth beginning at page F-1.

Supplementary data is set forth in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” under the caption “Consolidated Results of [removed: Operations” and “Consolidated Quarterly Results of] Operations.”

We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the [added: Securities] Exchange Act [added: of 1934] is recorded, processed, summarized and reported, within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow for timely decisions regarding required disclosure.

[removed: We] [added: As of December 31, 2021, we] carried out an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and our Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the fiscal year.

Based on the foregoing, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective [added: as of December 31, 2021] and were operating at a reasonable assurance [removed: level as of December 31, 2020.][added: level.]

This implementation is expected to continue beyond [removed: 2021.][added: 2022.]

Other than the implementation of a new financial system noted above, there have been no changes in our internal control over financial reporting during [removed: our most recent fiscal year] [added: the quarter ended December 31, 2021] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management of CoStar [added: Group] is responsible for establishing and maintaining adequate internal control over financial reporting and for the assessment of the effectiveness of internal control over financial reporting.

In connection with the preparation of the Company's annual financial statements, management of the Company has undertaken an assessment of the effectiveness of the Company’s internal control over financial reporting as of December 31, [added: 2021 based on criteria established in Internal Control – Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“the COSO Framework”).]

Based on this assessment, management has concluded that the Company's internal control over financial reporting was effective as of December 31, [removed: 2020.][added: 2021.]

As permitted by the Securities and Exchange Commission, we have elected to exclude the internal controls of these acquisitions that have not been integrated into our existing processes and controls from our assessment of the effectiveness of internal control over financial reporting as of December 31, [removed: 2020.][added: 2021.]

The excluded aggregate financial position of [removed: Homesnap] [added: Homes.com] and [removed: Ten-X] [added: BureauxLocaux] collectively represented less than 1% of our total assets as of December 31, [removed: 2020,] [added: 2021,] and less than [removed: 2%] [added: 1%] of our revenues and total operating costs for the year then ended.

We will include the internal controls of [removed: Homesnap] [added: Homes.com] and [removed: Ten-X] [added: BureauxLocaux] in our assessment of the effectiveness of our internal control over financial reporting as of December 31, [removed: 2021.][added: 2022.]

We continue to monitor and assess the effects of the COVID-19 pandemic and our response to the pandemic on our internal controls so we can take appropriate actions to minimize any impact on the design and operating effectiveness.

On May 24, 2021 and October 1, 2021 we completed the acquisitions of Homes Group, LLC ("Homes.com") and Comreal Info SAS ("BureauxLocaux"), respectively.

2020 based on criteria established in Internal Control – Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway Commission (“the COSO Framework”).

On December 22, 2020 and June 24, 2020, we completed the acquisitions of Homesnap and Ten-X, respectively.

PART III

Not applicable.

PART III

CoStar [added: Group] has adopted a Code of Conduct for its directors.

In addition, CoStar [added: Group] has adopted a separate Code of Conduct for its officers and employees, including its principal executive, financial and accounting officers, or persons performing similar functions.

We intend to disclose future amendments to certain provisions of our Codes, or waivers of such provisions granted to executive officers and directors, as required by the Security of Exchange [removed: ("SEC')] [added: ("SEC")] rules on the [added: Company's] website within four business days following the date of such amendment or waiver.

The remaining information required by this Item is incorporated by reference to our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under the captions “Nominees for the Board of Directors,” “Nominees’ Business Experience, Qualifications and Directorships,” “Executive Officers and Key Employees,” “Board Meetings and Committees,” and "Delinquent Section 16(a) Reports."

The information required by this Item is incorporated by reference to our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under the captions “Compensation Discussion and Analysis,” “Executive Compensation Tables and Discussion,” “Narratives to Summary Compensation Table and Grants of Plan-Based Awards Table,” “Director Compensation,” “Compensation Committee Interlocks and Insider Participation,” and “Compensation Committee Report.”

The information required by this Item is incorporated by reference to our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under the captions “Equity Compensation Plan Information” and “Stock Ownership Information.”

The information required by this Item is incorporated by reference to our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under the captions “Certain Relationships and Related Transactions” and “Corporate Governance Matters.”

The information required by this Item is incorporated by reference to our Proxy Statement for our [removed: 2021] [added: 2022] annual meeting of stockholders under the caption “Ratification of the Appointment of Independent Registered Public Accounting Firm.”

The table below details the activity of the allowance for doubtful accounts and sales credits (1) for the [removed: years] [added: year] ended December 31, 2019 [removed: and 2018] (in thousands):

See Note 4 for a description of changes in the allowance for credit losses for the [removed: year] [added: years] ended December 31, [added: 2021 and] 2020.

| [removed: [3.1](http://www.sec.gov/Archives/edgar/data/1057352/000105735213000041/amended-restatedcertofincx.htm)] [added: [3.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735221000074/ex31-fourtharcharter.htm)] | | | | | | [removed: Third] [added: Fourth] Amended and Restated Certificate of Incorporation (Incorporated by reference to Exhibit 3.1 to the Registrant's Current Report on Form 8-K filed with the Commission on June [removed: 6, 2013).] [added: 7, 2021).] | | |

| [removed: [4.2](http://www.sec.gov/ix?doc=/Archives/edgar/data/1057352/000105735220000036/csgp20191231-10k.htm)] [added: [4.2](https://www.sec.gov/Archives/edgar/data/1057352/000105735222000027/csgp-ex4220211231.htm)] | | | | | | Description of the Registrant's Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934 [removed: (Incorporated by reference to Exhibit 4.2 to the Registrant’s Annual Report on Form 10-K filed with the Commission on February 26, 2020).] [added: (filed herewith).] | | |

| [removed: *[10.21](http://www.sec.gov/Archives/edgar/data/1057352/000105735215000072/espp-amendedandrestatedtoi.htm)] [added: *[10.21](https://www.sec.gov/Archives/edgar/data/1057352/000105735221000080/secondaresppplanasapproved.htm)] | | | | | | [removed: CoStar Group, Inc.] [added: Second] Amended and Restated Employee Stock Purchase Plan (Incorporated by reference to Exhibit 4.4 to the Registrant’s Registration Statement on Form S-8 filed with the Commission on [removed: September 14, 2015).] [added: July 28, 2021).] | | |

| [removed: [10.28](http://www.sec.gov/Archives/edgar/data/1057352/000105735220000021/a151075452616rushmore-.htm)] [added: [10.28](http://www.sec.gov/Archives/edgar/data/1057352/000114036120015295/ex10_1.htm)] | | | | | | [removed: Asset Purchase] [added: Second Amended and Restated Credit] Agreement, dated as of [removed: the Petition Date (on or about February 12, 2020),] [added: July 1, 2020, by and] among [removed: CSGP Holdings, LLC,] CoStar Group, [removed: Inc. (solely for] [added: Inc., as borrower, CoStar Realty Information, Inc., as co-borrower,] the [removed: specified purposes), RentPath Holdings, Inc.] [added: lenders party thereto] and [removed: the other Sellers named therein] [added: Bank of America, N.A., as administrative agent] (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on [removed: February 13, 2020).] [added: July 1, 2020)] | | |

| [removed: [21.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735221000032/csgp-ex21120201231.htm)] [added: [21.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735222000027/csgp-ex21120211231.htm)] | | | | | | Subsidiaries of the Registrant (filed herewith). | | |

| [removed: [23.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735221000032/csgp-ex23120201231.htm)] [added: [23.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735222000027/csgp-ex23120211231.htm)] | | | | | | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith). | | |

| [removed: [31.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735221000032/csgp-ex31120201231.htm)] [added: [31.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735222000027/csgp-ex31120211231.htm)] | | | | | | Certification of Principal Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | | |

| [removed: [31.2](https://www.sec.gov/Archives/edgar/data/1057352/000105735221000032/csgp-ex31220201231.htm)] [added: [31.2](https://www.sec.gov/Archives/edgar/data/1057352/000105735222000027/csgp-ex31220211231.htm)] | | | | | | Certification of Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 (filed herewith). | | |

| [removed: [32.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735221000032/csgp-ex32120201231.htm)] [added: [32.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735222000027/csgp-ex32120211231.htm)] | | | | | | Certification of Principal Executive Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | | |

| [removed: [32.2](https://www.sec.gov/Archives/edgar/data/1057352/000105735221000032/csgp-ex32220201231.htm)] [added: [32.2](https://www.sec.gov/Archives/edgar/data/1057352/000105735222000027/csgp-ex32220211231.htm)] | | | | | | Certification of Principal Financial Officer pursuant to 18 U.S.C. Sec. 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (furnished herewith). | | |

| 101.INS | | | | | | The following financial statements from the Company’s Annual Report on Form 10-K for the year ended December 31, [removed: 2020,] [added: 2021,] formatted in Inline XBRL: (i) Consolidated Statements of Operations; (ii) Consolidated Statements of Comprehensive Income; (iii) Consolidated Balance Sheets; (iv) Consolidated Statements of Cash Flows; and (v) Notes to Consolidated Financial Statements, tagged as blocks of text and including detailed tags. | | |

| 101.SCH | | | | | | [added: Inline] XBRL Taxonomy Extension Schema Document. | | |

| 101.CAL | | | | | | [added: Inline] XBRL Taxonomy Extension Calculation Linkbase Document. | | |

| 101.DEF | | | | | | [added: Inline] XBRL Taxonomy Extension Definition Linkbase Document. | | |

| 101.LAB | | | | | | [added: Inline] XBRL Taxonomy Extension Label Linkbase Document. | | |

| 101.PRE | | | | | | [added: Inline] XBRL Taxonomy Extension Presentation Linkbase Document. | | |

| 104 | | | | | | The cover page from the Registrant's Annual Report on Form 10-K for the year ended December 31, [removed: 2020,] [added: 2021,] formatted in Inline XBRL (included as Exhibit 101). | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Year ended December 31, 2018 | | | | | | $ | 6,469 | | | | | $ | 6,542 | | | | | | | | | | | $ | 7,302 | | | | | $ | 5,709 | |

| [10.29](http://www.sec.gov/Archives/edgar/data/1057352/000105735220000080/mergeragreement-projec.htm) | | | | | | Agreement and Plan of Merger, dated as of May 13, 2020, by and among Ten-X Holding Company, Inc., CoStar Realty Information, Inc., Crescendo Sub, Inc., and Thomas H. Lee Equity Fund VII, L.P., solely in its capacity as representative thereunder (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on May 14, 2020) | | |

| [10.30](http://www.sec.gov/Archives/edgar/data/1057352/000114036120015295/ex10_1.htm) | | | | | | Second Amended and Restated Credit Agreement, dated as of July 1, 2020, by and among CoStar Group, Inc., as borrower, CoStar Realty Information, Inc., as co-borrower, the lenders party thereto and Bank of America, N.A., as administrative agent (Incorporated by reference to Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed with the Commission on July 1, 2020) | | |

| February [removed: 24, 2021] [added: 23, 2022] | | | | | | Andrew C. Florance | | |

| /s/ Michael R. Klein | | | | | | Chairman of the Board | | | | | | February [removed: 24, 2021] [added: 23, 2022] | | |

| /s/ Andrew C. Florance | | | | | | Chief Executive Officer and | | | | | | February [removed: 24, 2021] [added: 23, 2022] | | |

| /s/ Scott T. Wheeler | | | | | | Chief Financial Officer | | | | | | February [removed: 24, 2021] [added: 23, 2022] | | |

| /s/ Michael J. Glosserman | | | | | | Director | | | | | | February [removed: 24, 2021] [added: 23, 2022] | | |

| /s/ John W. Hill | | | | | | Director | | | | | | February [removed: 24, 2021] [added: 23, 2022] | | |

| /s/ Laura Cox Kaplan | | | | | | Director | | | | | | February [removed: 24, 2021] [added: 23, 2022] | | |

| /s/ Christopher J. Nassetta | | | | | | Director | | | | | | February [removed: 24, 2021] [added: 23, 2022] | | |

| /s/ Louise S. Sams | | | | | | Director | | | | | | February [removed: 24, 2021] [added: 23, 2022] | | |

| /s/ Robert W. Musslewhite | | | | | | Director | | | | | | February [removed: 24, 2021] [added: 23, 2022] | | |

| Reports of Independent Registered Public Accounting Firm [added: (PCAOB ID Number 42)] | | | [removed: [F-](#i8ff0b374c9a74ea5b124a69f1182bece_139)[2](#i8ff0b374c9a74ea5b124a69f1182bece_139)] [added: [F-](#i674069b223524e4c81840572761696f1_121)[2](#i674069b223524e4c81840572761696f1_121)] | | |

| Consolidated Statements of Operations | | | [removed: [F-](#i8ff0b374c9a74ea5b124a69f1182bece_142)[6](#i8ff0b374c9a74ea5b124a69f1182bece_142)] [added: [F-](#i674069b223524e4c81840572761696f1_124)[6](#i674069b223524e4c81840572761696f1_124)] | | |

| Consolidated Statements of Comprehensive Income | | | [removed: [F-](#i8ff0b374c9a74ea5b124a69f1182bece_145)[7](#i8ff0b374c9a74ea5b124a69f1182bece_145)] [added: [F-](#i674069b223524e4c81840572761696f1_127)[7](#i674069b223524e4c81840572761696f1_127)] | | |

| Consolidated Balance Sheets | | | [removed: [F-](#i8ff0b374c9a74ea5b124a69f1182bece_148)[8](#i8ff0b374c9a74ea5b124a69f1182bece_148)] [added: [F-](#i674069b223524e4c81840572761696f1_130)[8](#i674069b223524e4c81840572761696f1_130)] | | |

| Consolidated Statements of Changes in Stockholders’ Equity | | | [removed: [F-](#i8ff0b374c9a74ea5b124a69f1182bece_154)[9](#i8ff0b374c9a74ea5b124a69f1182bece_154)] [added: [F-](#i674069b223524e4c81840572761696f1_136)[9](#i674069b223524e4c81840572761696f1_136)] | | |

| Consolidated Statements of Cash Flows | | | [removed: [F-](#i8ff0b374c9a74ea5b124a69f1182bece_157)[10](#i8ff0b374c9a74ea5b124a69f1182bece_157)] [added: [F-](#i674069b223524e4c81840572761696f1_139)[10](#i674069b223524e4c81840572761696f1_139)] | | |

| Notes to Consolidated Financial Statements | | | [removed: [F-](#i8ff0b374c9a74ea5b124a69f1182bece_160)[11](#i8ff0b374c9a74ea5b124a69f1182bece_160)] [added: [F-](#i674069b223524e4c81840572761696f1_142)[11](#i674069b223524e4c81840572761696f1_142)] | | |

We have audited the accompanying consolidated balance sheets of CoStar Group, Inc. (the Company) as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of operations, comprehensive income, [removed: change] [added: changes] in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”).

In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2020,] [added: 2021,] in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework), and our report dated February [removed: 24, 2021] [added: 23, 2022] expressed an unqualified opinion thereon.

| | | | | | | [removed: *Valuation] [added: Valuation] of Acquired Intangible [removed: Assets*] [added: Assets of Homes.com] | | |

| *Description of the Matter* | | | | | | As described in Note 5 to the consolidated financial statements, during the year ended December 31, [removed: 2020,] [added: 2021,] the Company completed the acquisition of [removed: Ten-X Holding Company, Inc. ("Ten-X")] [added: Homes Group, LLC. (“Homes.com”)] for [removed: $187.7] [added: $152] million in cash. The Company’s accounting for the acquisition included determining the fair value of the acquired intangible assets, [removed: including] [added: with] customer [removed: relationships] [added: base ($32 million) and trade names ($21 million) comprising most] of [removed: $46 million.] [added: the assets acquired.] Auditing the accounting for the acquired intangible assets of [removed: Ten-X] [added: Homes.com] involved complex auditor judgment due to the estimation required in management’s determination of the fair value. The estimation was significant primarily due to the sensitivity of the fair value to the underlying assumptions, including customer attrition rates and projected [removed: revenue and expense growth rates.] [added: revenue.] Prospective financial information used in determining the fair value of customer [removed: relationship] [added: base and trade name] intangible assets could be affected by changes in economic and market conditions. | | |

We have audited CoStar Group, Inc.’s internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria).

In our opinion, CoStar Group, Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, [removed: 2020,] [added: 2021,] based on the COSO criteria.

[removed: As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Ten-X and Homesnap,] [added: ("Homes.com"),] which are included in the [removed: 2020] [added: 2021] consolidated financial statements of CoStar Group, Inc., and collectively constituted less than 1% of total assets as of December 31, [removed: 2020] [added: 2021] and less than [removed: 2%] [added: 1%] of total revenues and total operating costs for the year then ended.

Our audit of internal control over financial reporting of CoStar Group, Inc. also did not include an evaluation of the internal control over financial reporting of [removed: Ten-X] [added: BureauxLocaux] and [removed: Homesnap.][added: Homes.com.]

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of CoStar Group, Inc. as of December 31, [removed: 2020] [added: 2021] and [removed: 2019,] [added: 2020,] the related consolidated statements of operations, comprehensive income, [added: changes in] stockholders' equity and cash flows for each of the three years in the period ended December 31, [removed: 2020] [added: 2021] and the related notes and the financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the [removed: “financial] [added: “consolidated financial] statements”) of CoStar Group, Inc. and our report dated February [removed: 24, 2021] [added: 23, 2022] expressed an unqualified opinion thereon.

| | | | [removed: 2020] [added: 2021] | | | | | | [removed: 2019] [added: 2020] | | | | | | [removed: 2018] [added: 2019] | | |

| Revenues | | | $ | [removed: 1,659,019] [added: 1,944,135] | | | | | $ | [removed: 1,399,719] [added: 1,659,019] | | | | | $ | [removed: 1,191,832] [added: 1,399,719] | |

| Cost of revenues | | | [removed: 308,968] [added: 357,241] | | | | | | [removed: 289,239] [added: 308,968] | | | | | | [removed: 269,933] [added: 289,239] | | |

| Gross profit | | | [removed: 1,350,051] [added: 1,586,894] | | | | | | [removed: 1,110,480] [added: 1,350,051] | | | | | | [removed: 921,899] [added: 1,110,480] | | |

| Selling and marketing (excluding customer base amortization) | | | [removed: 535,778] [added: 622,007] | | | | | | [removed: 408,596] [added: 535,778] | | | | | | [removed: 359,858] [added: 408,596] | | |

| Software development | | | [removed: 162,916] [added: 201,022] | | | | | | [removed: 125,602] [added: 162,916] | | | | | | [removed: 100,937] [added: 125,602] | | |

| General and administrative | | | [removed: 299,698] [added: 256,711] | | | | | | [removed: 178,740] [added: 299,698] | | | | | | [removed: 156,659] [added: 178,740] | | |

| Customer base amortization | | | [removed: 62,457] [added: 74,817] | | | | | | [removed: 33,995] [added: 62,457] | | | | | | [removed: 30,881] [added: 33,995] | | |

| | | | [removed: 1,060,849] [added: 1,154,557] | | | | | | [removed: 746,933] [added: 1,060,849] | | | | | | [removed: 648,335] [added: 746,933] | | |

| Income from operations | | | [removed: 289,202] [added: 432,337] | | | | | | [removed: 363,547] [added: 289,202] | | | | | | [removed: 273,564] [added: 363,547] | | |

| Interest (expense) [removed: income] [added: income, net] | | | [removed: (17,395)] [added: (31,621)] | | | | | | [removed: 16,742] [added: (17,395)] | | | | | | [removed: 10,539] [added: 16,742] | | |

| Other [removed: (expense)] income [added: (expense), net] | | | [removed: (827)] [added: 3,252] | | | | | | [removed: 10,660] [added: (827)] | | | | | | [removed: (88)] [added: 10,660] | | |

| Income before income taxes | | | [removed: 270,980] [added: 403,968] | | | | | | [removed: 390,949] [added: 270,980] | | | | | | [removed: 284,015] [added: 390,949] | | |

February 23, 2022

As indicated in the accompanying Management’s Report on Internal Control over Financial Reporting, management’s assessment of and conclusion on the effectiveness of internal control over financial reporting did not include the internal controls of Comreal Info SAS ("BureauxLocaux") and Homes Group, LLC.

February 23, 2022

| Weighted-average outstanding shares — basic(1) | | | 392,210 | | | | | | 380,726 | | | | | | 363,096 | | |

| Weighted-average outstanding shares — diluted(1) | | | 394,160 | | | | | | 383,266 | | | | | | 366,301 | | |

(1)Prior period amounts have been retroactively adjusted to reflect the ten-for-one stock split effected in the form of a stock dividend in June 2021.

| Additional paid-in capital | | | 4,253,318 | | | | | | 4,204,703 | | |

(1)Prior period amounts have been retroactively adjusted to reflect the ten-for-one stock split effected in the form of a stock dividend in June 2021.

| Restricted stock issued | | | 1,680 | | | | | | 17 | | | | | | (17) | | | | | | — | | | | | | — | | | | | | — | | |

| Restricted stock issued | | | 1,012 | | | | | | 10 | | | | | | (10) | | | | | | — | | | | | | — | | | | | | — | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 292,564 | | | | | | 292,564 | | |

| Exercise of stock options | | | 206 | | | | | | 2 | | | | | | 6,339 | | | | | | — | | | | | | — | | | | | | 6,341 | | |

| Restricted stock issued | | | 862 | | | | | | 8 | | | | | | (7) | | | | | | — | | | | | | — | | | | | | 1 | | |

| Balance at December 31, 2021 | | | 394,936 | | | | | | $ | 3,946 | | | | | $ | 4,253,318 | | | | | $ | (5,758) | | | | | $ | 1,460,166 | | | | | $ | 5,711,672 | |

(1)Prior period amounts have been retroactively adjusted to reflect the ten-for-one stock split effected in the form of a stock dividend in June 2021.

| Proceeds from sale of property and equipment and other assets | | | 612 | | | | | | — | | | | | | — | | | | | |

| Purchase of Richmond assets and other intangibles | | | (123,764) | | | | | | — | | | | | | — | | | | | |

| Accrued capital expenditures and non-cash landlord incentives | | | $ | 2,117 | | | | | $ | 2,364 | | | | | $ | 2,160 | | | | |

December 31, 2021

On May 24, 2021, the Company acquired Homes Group, LLC ("Homes.com"), a residential real estate advertising and marketing services company primarily operating through its property listing and marketing portal, Homes.com.

On October 1, 2021, the Company acquired Comreal Info, a French *société par actions simplifiée* ("BureauxLocaux"), the owner and operator of BureauxLocaux, a leading commercial real estate digital marketplace in France.

Other subscription based-services include (i) real estate and lease management solutions to commercial customers, real estate investors and lenders, (ii) access to applications to manage workflow and advertising and marketing services for residential real estate agents through our acquisitions of Homes.com, which was acquired in May 2021, and Homesnap, which was acquired in December 2020, (iii) benchmarking and analytics for the hospitality industry and (iv) market research, portfolio and debt analysis, management and reporting capabilities.

The Company also derives revenues from transaction-based services including: (i) an online auction platform for commercial real estate through Ten-X, which was acquired in June 2020, (ii) providing online tenant applications, including background and credit checks, and rental payment processing and (iii) complementary services on an ad hoc basis for our (a) real estate and lease management solutions to commercial customers, real estate investors and lenders, (b) benchmarking and analytics for the hospitality industry and (c) other service offerings.

Revenues from transaction-based services are recognized when the promised product or services are delivered, which, in the case of Ten-X auctions, is at the time of a successful closing for the sale of the property.

| | | | 2021 | | | | | | 2020 | | |

| | | | 2021 | | | | | | 2020 | | |

- *LoopNet Portfolio Segment* - The LoopNet portfolio segment consists of one class of trade receivables.

The majority of Residential revenue is e-commerce based and does not result in accounts receivable.

Residential accounts receivable and the related allowance for credit losses are not material.

In the fourth quarter of 2021, the Company began removing fully depreciated property and equipment from the cost and accumulated depreciation amounts disclosed.

In the fourth quarter of 2021, the Company began removing fully amortized intangible assets from the cost and accumulated amortization amounts disclosed.

See Notes 5, 9 and 10 for further discussion of acquisitions, goodwill and intangible assets, respectively.

asset or a liability for such pre-acquisition contingency if: (i) it is probable that an asset existed or a liability had been assumed at the acquisition date and (ii) the amount of the asset or liability can be reasonably estimated.

In the fourth quarter of 2021, the Company adopted ASU 2021-08, *Business Combinations (Topic 805), Accounting for Contract Assets and Contract Liabilities from Contracts with Customers*.

This guidance requires contract assets and liabilities acquired or assumed in an acquisition be measured in accordance with the accounting framework for revenue from contracts with customers as if the Company had originated the acquired contract.

This is an exception to the general requirement to measure assets acquired and liabilities assumed at their fair value on the acquisition date.

The Company applied this revised guidance to all acquisitions in the year ended December 31, 2021.

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| LoopNet(1) | | | 204,816 | | | | | | 2,695 | | | | | | 207,511 | | | | | | 179,371 | | | | | | 434 | | | | | | 179,805 | | | | | | 149,400 | | | | | | 580 | | | | | | 149,980 | | |

COSTAR GROUP, INC.

Adoption of ASU No. 2016-02

As discussed in Note 2 to the consolidated financial statements, the Company changed its method for accounting for leases in 2019 due to the adoption of Accounting Standards Update (ASU) No. 2016-02, *Leases* (Topic 842), and the related amendments.

February 24, 2021

February 24, 2021

| Weighted-average outstanding shares — basic | | | 38,073 | | | | | | 36,310 | | | | | | 36,058 | | |

| Weighted-average outstanding shares — diluted | | | 38,326 | | | | | | 36,630 | | | | | | 36,448 | | |

*See accompanying notes.*

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| | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Long-term investments | | | — | | | | | | 10,070 | | |

| Additional paid-in capital | | | 4,208,252 | | | | | | 2,473,338 | | |

| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |

| Balance at December 31, 2017 | | | 36,107 | | | | | | $ | 361 | | | | | $ | 2,339,253 | | | | | $ | (9,020) | | | | | $ | 320,656 | | | | | $ | 2,651,250 | |

| Cumulative effect of adoption of new accounting standard, net of tax | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 54,464 | | | | | | 54,464 | | |

| Balance at January 1, 2018 | | | 36,107 | | | | | | 361 | | | | | | 2,339,253 | | | | | | (9,020) | | | | | | 375,120 | | | | | | 2,705,714 | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 238,334 | | | | | | 238,334 | | |

| Exercise of stock options | | | 177 | | | | | | 2 | | | | | | 21,991 | | | | | | — | | | | | | — | | | | | | 21,993 | | |

| Restricted stock grants | | | 160 | | | | | | 1 | | | | | | (1) | | | | | | — | | | | | | — | | | | | | — | | |

| Stock issued for acquisitions | | | 103 | | | | | | 1 | | | | | | 36,365 | | | | | | — | | | | | | — | | | | | | 36,366 | | |

| Restricted stock grants | | | 168 | | | | | | 2 | | | | | | (2) | | | | | | — | | | | | | — | | | | | | — | | |

| Restricted stock grants | | | 100 | | | | | | 1 | | | | | | (1) | | | | | | — | | | | | | — | | | | | | — | | |

| Stock issued in connection with acquisition - ForRent | | | $ | — | | | | | $ | — | | | | | $ | 36,366 | | | | |

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

On October 22, 2019, the Company acquired STR, Inc. and STR Global, Ltd. (together with STR, Inc., referred to as "STR").

STR provides benchmarking and analytics for the hospitality industry.

The Company's subscription-based services consist primarily of information, analytics and online marketplace services offered over the Internet to the commercial real estate industry and related professionals.

The Company also provides (i) market research, portfolio and debt analysis, management and reporting capabilities, (ii) real estate and lease management solutions, including lease administration and abstraction services, to commercial customers,

real estate investors, and lenders, (iii) benchmarking and analytics for the hospitality industry through STR, (iv) an online auction platform for commercial real estate through Ten-X and its subsidiaries, which were acquired in June 2020, and (v) an online and mobile software platform that provides applications to optimize residential real estate agent workflow through Homesnap, which was acquired in December 2020.

| Net unrealized loss on investments, net of tax | | | — | | | | | | (730) | | |

The Company’s potentially dilutive securities include outstanding stock options and unvested stock-based awards.

Investments

The Company determines the appropriate classification of debt and equity investments at the time of purchase and re-evaluates such designation as of each balance sheet date.

As of December 31, 2019, the Company's investments consisted of long-term variable rate debt instruments with an auction reset feature, referred to as auction rate securities.

The Company's auction rate security investments were classified as available-for-sale and carried at fair value, with any changes in unrealized holding gains and losses, net of the related tax effect excluded from earnings and reported as a separate component of accumulated other comprehensive loss in stockholders’ equity until realized.

A decline in market value of any investment below cost that is deemed to be other-than-temporary results in a reduction in carrying amount to fair value.

The impairment is charged to earnings and a new cost basis for the security is established.