CoStar Group (CSGP) 10-K risk factor changes: FY2022 vs FY2021

*Our revenues and financial position will be adversely affected if we are not able to attract and retain [removed: clients*.][added: clients*. Our success and revenues depend on attracting and retaining subscribers to our information, analytics and online marketplace services.]

We may not be able to continue to grow our customer base, keep the cancellation rate low or sell new services to existing customers as a result of several factors, including, [removed: without limitation:] [added: continuing global] economic [removed: pressures;] [added: and geopolitical volatility, economic pressures and] the [added: impact of inflation on our costs and on customer spending; the] business failure of current clients; customer decisions that they do not need our services or to use alternative services; customers’ and potential customers’ budgetary constraints; consolidation in the real estate and/or financial services industries; data quality; technical problems; competitive pressures; or devaluation of the local currencies of international customers relative to the U.S. dollar which impairs the purchasing power of such customers.

*We may not be able to successfully develop and introduce new or upgraded information, analytics and online marketplace services that are attractive to our users and advertisers or successfully combine or shift focus from current services with less demand, which could decrease our revenues and our [removed: profitability*.][added: profitability.* Our future business and financial success will depend on our ability to continue to anticipate the needs of customers and potential customers and to successfully introduce new and upgraded services, including services that make our marketplaces useful for users and attractive to advertisers.]

To be successful, we must be able to quickly adapt to changes in the industry, as well as rapid technological [removed: changes] [added: changes,] by continually enhancing our information, analytics and online marketplace services.

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

If we eliminate or phase out a service and are not able to offer and successfully market and sell an alternative service, our [removed: revenue] [added: revenues] may decrease, which could have a material adverse effect on our results of operations.

*We may not be able to compete successfully against existing or future competitors in attracting advertisers, which could harm our business, results of operations and financial condition.* We [removed: may not be able to] compete [removed: successfully against existing or future competitors in attracting advertisers, which could harm our business, results of operations and financial condition.][added: to attract advertisers.]

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; reduced real estate demand due to [removed: increased] [added: continued] remote work policies; rising interest rates and slowing transaction volumes due to the impact of the COVID-19 pandemic or [removed: otherwise] [added: other macroeconomic events] that negatively impact investment returns; excessive speculative new construction in localized markets resulting in increased vacancy rates and diminished rent growth; [removed: and] unanticipated [removed: disasters] [added: disasters;] and other adverse events such as [removed: slowing of the] [added: decreased] 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 [added: increased interest rates or] a decline in leasing activity and absorption rates may affect our ability to generate revenues and may lead to more cancellations by our [added: current or future customers, either of which could cause our revenues or our revenue growth rate to decline and reduce our profitability.]

[removed: A depressed real estate market has a negative] impact on our core customer base, which could decrease demand for our information, analytics and online marketplaces.

If we are unable to successfully execute our investment strategy, we may experience decreases in our revenues [added: or revenue growth rate] and operating margins.

*We may be unable to increase awareness of our brands, including CoStar, LoopNet, Apartments.com, BizBuySell, [removed: LandsofAmerica,] [added: Land.com,] STR, 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, our Homes.com and Homesnap residential marketplaces, CoStar Showcase and the Land.com [removed: network of rural lands for-sale.][added: Network.]

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

*If internet search engines do not prominently feature our websites on the search engine results page, traffic to our websites would decrease and, if we are unable to maintain or increase traffic to our marketplaces, our business and operating results could be adversely [removed: affected.*] [added: affected*.] Our ability to generate revenues from our marketplace business depends, in part, on our ability to attract users to our websites.

Google, Bing, DuckDuckGo and other 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, our Homes.com and Homesnap residential marketplaces, the BizBuySell.com network of business for-sale websites and the Land.com [removed: network of land for-sale websites.][added: Network.]

Our competitors’ [removed: Search Engine Optimization (SEO)] [added: SEO] and [removed: Search Engine Marketing (SEM)] [added: SEM] efforts may result in webpages from their websites receiving higher rankings than the webpages from our websites.

Internet search engine providers could form partnerships or enter into other business relationships with our competitors resulting in competitors’ sites [removed: receiving higher search result rankings.]

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

[added: *Competition could render our services uncompetitive and reduce our profitability.*] The markets for information systems and services and for online marketplaces in general are highly competitive and rapidly changing.

Our existing or future [removed: competitors,] [added: competitors] may have greater name recognition, larger customer bases, better technology or data, lower prices, easier access to data, greater user traffic or greater financial, technical or marketing resources than we have to provide services that users might view as superior to our offerings.

[removed: Our competitors may be able to undertake more effective] marketing campaigns, obtain more data, adopt more aggressive pricing policies, make more attractive offers to potential employees, subscribers, advertisers, distribution partners and content providers or may be able to respond more quickly to new or emerging technologies or changes in user requirements.

*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, our residential brands including Homes.com and Homesnap and the Land.com [removed: network of rural lands for-sale,] [added: Network,] depend on advertising revenues generated primarily through sales to persons in the real estate industry, including property managers and owners and other advertisers.

*If we are not able to successfully identify, finance, integrate and/or manage costs related to acquisitions, our business operations and financial position could be adversely [removed: affected*.][added: affected.* We have expanded our markets and services in part through acquisitions of complementary businesses, services, databases and technologies, and expect to continue to do so in the future.]

For example, we may be unable to fully integrate Homesnap, [removed: Homes.com and] [added: Homes.com,] BureauxLocaux [added: and Business Immo] with CoStar [added: Group] when and as expected.

[removed: Compliance with this] [added: This consent] order [added: expired in August 2022, but if we become subject to similar orders in the future, compliance with such orders] could prevent us from closing certain acquisitions or add significant time and cost to such acquisitions, ultimately making an acquisition prohibitive or preventing us from realizing its anticipated benefits.

Further, certain acquisitions may be subject to regulatory approval, which can be [removed: time consuming] [added: time-consuming] and costly to obtain or may be denied, as in the case of RentPath.

As a result of our acquisitions, we had approximately [removed: $2.8] [added: $2.6] billion of goodwill and intangibles as of December 31, [removed: 2021.][added: 2022.]

*Our actual or perceived failure to comply with privacy laws and standards could adversely affect our business, financial condition and results of [removed: operations*.][added: operations.* We depend on IT Systems.]

As a result, we are subject to a variety of state, national and international laws and regulations that apply to the collection, use, retention, protection, disclosure, transfer and other processing of personal [removed: data, including the Fair Credit Reporting Act,] [added: information, including, but not limited to,] the [removed: General Data Protection Regulation ("GDPR")] [added: GDPR] and [removed: California Consumer Privacy Act ("CCPA").][added: CCPA.]

[removed: Other] [added: Many] states have adopted, or are considering enacting, similar laws.

Any failure or alleged failure to comply with [removed: privacy or] [added: privacy,] data protection [added: or consumer protection] laws could lead to government enforcement actions and [added: litigation and] significant penalties against us, and [added: 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, business and financial condition.* As stated above, our business [added: relies on IT Systems and] involves the [added: generation,] collection, storage, processing and transmission of [removed: customers’] [added: Confidential Information, including] personal [removed: data.][added: information and proprietary business information.]

An increasing number of organizations, including large merchants, businesses, technology companies and financial institutions, as well as government institutions, have disclosed [added: security incidents, disruptions to, and] breaches of their [removed: information security systems,] [added: or third-party providers’ IT Systems,] some of which have involved sophisticated and highly targeted attacks, including on [removed: their] websites, mobile applications and infrastructure.

We expect that unauthorized parties will continue to attempt to gain access to or disrupt our [added: IT] systems or facilities through various means, including hacking into [removed: our systems] [added: IT 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 [removed: our systems] [added: IT Systems] into disclosing user names, passwords, or other sensitive information, which may in turn be used to access our [removed: information technology systems.][added: IT Systems.]

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

Further, the security measures and procedures our customers, vendors and other users of our systems have in place to protect [removed: sensitive consumer data] [added: IT Systems] and [removed: other information] [added: Confidential Information] may not be successful or sufficient to counter all data breaches, cyberattacks or system failures.

Our [removed: information technology and infrastructure] [added: IT Systems] may be vulnerable to cyberattacks or security breaches, and third parties may be able to access [added: our,] our customers’ or [added: our] employees’ [added: Confidential Information, including] personal or proprietary [removed: information] [added: information,] that is stored on or accessible through those systems.

We have experienced [removed: from time to time,] and [removed: may] [added: expect to continue to] experience in the future, [added: cyberattacks as well as] breaches of our security measures due to human error, malfeasance, system errors or vulnerabilities or other irregularities.

[removed: Actual or perceived] breaches of our security could result in any [added: or all] of the following, among other things, any of which could adversely affect our business and results of operations:

Our competitors may be able to undertake more effective

*Global economic uncertainties and downturns or a downturn or consolidation in the real estate industry may decrease customer demand for our services and adversely affect our business and results of operations.* Global economic uncertainties or downturns could adversely affect our business and results of operations, including financial and credit market fluctuations, changes in economic policy, increased inflation and responsive actions, rising interest rates, labor shortages, supply chain disruptions, trade uncertainty, political unrest, geographical instability or other impacts from the macroeconomic environment.

These macroeconomic conditions could cause a decrease in customer spending and negatively affect the rate of growth of our business.

In response to concerns over inflation, the U.S. Federal Reserve raised interest rates in each quarter of 2022 and the first quarter of 2023, and has signaled that it expects additional interest rate increases, which could negatively impact the real estate market.

A depressed real estate market has a negative

receiving higher search result rankings.

We were previously subject to a consent order agreed to among the FTC staff, CoStar Group and LoopNet on April 17, 2012 in connection with the LoopNet merger.

We own and manage IT Systems but also rely on third-party managed IT Systems and a broad array of third-party products and services to support our business operations.

We have expended resources to implement and maintain security measures designed to protect IT Systems and Confidential Information, including engaging a third-party vendor to conduct an annual audit of our information security systems in accordance with NIST CSF benchmarks.

Despite these measures and similar measures implemented by many third-party providers, our IT Systems, or those of third parties on which we rely, may be disrupted or damaged and our Confidential Information may be compromised, corrupted, lost or stolen.

Our efforts to prevent, detect and respond to data security incidents, may not be effective due to attackers increasingly using tools and techniques that are designed to circumvent controls, to avoid detection, and to remove or obfuscate forensic evidence.

In addition, the COVID-19 pandemic has increased cybersecurity risk as a result of global remote working dynamics that may continue into the future and present additional opportunities for threat actors to engage in social engineering (for example, phishing) and to exploit vulnerabilities in non-corporate networks.

In the past three years, we have not experienced a materially disruptive information security breach, but any actual or perceived

Further, we may not be able to recover any or all damages suffered as a result of such security breach or other security incident from such third-party providers.

results of operations.

*Climate change and other events beyond our control could harm our business.* Natural disasters, disease outbreaks and pandemics, power shortages, terrorism, political unrest, telecommunications failure, vandalism, geopolitical instability, war, climate change, and other events beyond our control could negatively impact our operations or otherwise harm our business.

Such events may result in damage or loss of service to our data centers or other infrastructure that our operations rely on, potentially reduce the attractiveness of real estate in areas we provide services, cause delays in product development or availability, or result in losses of critical data, any of which may adversely impact our operations.

In addition, the impacts of climate change on the global economy and our industry are rapidly evolving.

Physical impacts of climate change (including, but not limited to, floods, droughts, more frequent and/or intense storms, and wildfires) may disrupt our operations, as well as the operations of our suppliers and customers.

Longer-term physical impacts may also result

in changing consumer preferences, which may adversely impact demand for certain of our products.

Transition impacts of climate change may subject us to increased regulations, reporting requirements (such as the SEC’s proposed climate change disclosure rule), standards, or expectations regarding the environmental impacts of our business.

Failure to disclose accurate information in a timely manner may also adversely affect our reputation, business, or financial performance.

*Increased attention to ESG matters may require us to incur additional costs or otherwise adversely impact our business.* Increased attention to climate change; diversity, equity, and inclusion; and other ESG issues, as well as societal expectations regarding voluntary ESG initiatives and disclosures, may result in increased costs (including, but not limited to, increased costs related to compliance, stakeholder engagement, and contracting), impact our reputation, or otherwise affect our business performance.

In addition, organizations that provide information to investors on corporate governance and related matters have developed ratings processes for evaluating companies on ESG matters.

Such ratings are used by some investors to inform their investment or voting decisions.

Unfavorable ESG ratings could lead to negative investor sentiment toward us and/or our industry, which could have a negative impact on our access to and costs of capital.

To the extent ESG matters negatively impact our reputation, we may also not be able to compete as effectively to recruit or retain employees.

We may take certain actions, including the establishment of ESG-related goals or targets, to improve the ESG profile of our Company and/or offerings and/or to respond to stakeholder demand; however, such actions may be costly or be subject to numerous conditions that are outside our control, and we cannot guarantee that such actions will have the desired effect.

Moreover, while we may create and publish voluntary disclosures regarding ESG matters from time to time, many of the statements in those voluntary disclosures are based on hypothetical expectations and assumptions that may or may not be representative of current or actual risks or events or forecasts of expected risks or events, including the costs associated therewith.

Such expectations and assumptions are necessarily uncertain and may be prone to error or subject to misinterpretation given the long timelines involved and the lack of an established single approach to identifying, measuring and reporting on many ESG matters.

Such disclosures may also be at least partially reliant on third-party information that we have not independently verified or cannot be independently verified.

In addition, we expect there will likely be increasing levels of regulation, disclosure-related and otherwise, with respect to ESG matters, and increased regulation will likely lead to increased compliance costs as well as scrutiny that could heighten all of the risks identified in this risk factor.

Such ESG matters may also impact our suppliers or customers, which may adversely impact our business, financial condition, or results of operations.

These risks may be exacerbated from impacts, or perceived impacts, of emerging technologies (including, but not limited to, machine learning) on human rights, privacy, or other social considerations, which may result in reputational harm, compliance costs for any new rules or interpretations, or other adverse impacts on our operations and financial performance.

Further, significant foreign exchange rate fluctuations resulting in a decline in the respective local currency may

Because the agreement merely sets forth a framework in many respects and will require complex additional bilateral negotiations between the U.K. and the E.U. as both parties continue to work on the rules for implementation, significant political and economic uncertainty remains about how the precise terms of the relationship between the parties will differ from the terms before withdrawal.

Such uncertainty could have an adverse effect on our business and results of operations.

Risks related to regulatory compliance and legal matters

We own and manage some IT Systems but also rely on third-party service providers and vendors for a range of products and services, including cloud products/services, that are critical to internal and/or external customer-facing operations.

Our success and revenues depend on attracting and retaining subscribers to our information, analytics and online marketplace services.

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

We compete to attract advertisers.

*A downturn or consolidation in the real estate industry may decrease customer demand for our services*.

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

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

*Competition could render our services uncompetitive and reduce our profitability*.

We have expanded our markets and services in part through acquisitions of complementary businesses, services, databases and technologies, and expect to continue to do so in the future.

We are subject to an FTC consent order, which is publicly available on the FTC's website at http://www.ftc.gov/, that, among other things, requires us to give the FTC advance notice of certain acquisitions.

We depend on information technology networks and systems to process, transmit and store electronic information and to communicate among our locations around the world and with our clients and vendors.

We collect, use and disclose personally identifiable information, such as names, addresses, phone numbers and email addresses.

We collect, store and use biometric data and sensitive or confidential transaction and account information.

We also collect personal information from tenants and landlords, including social security numbers, birthdates and financial information to facilitate the apartment rental application and payment process between a renter and property manager.

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

We also collect, store and process employee personal data.

Our efforts to prevent, detect and respond to data security incidents, may not be effective.

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

Our business, brands and reputation depend upon the satisfactory performance, reliability and availability of our websites, the internet and our service providers.

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

Expanding into new markets and increasing the depth of our coverage in existing markets imposes additional burdens on our research, systems development, sales, marketing and general managerial resources.

*Our business depends on retaining and attracting highly capable management and operating personnel*.

To retain and attract key personnel, we use various measures, including employment agreements, awards under a stock incentive plan and incentive bonuses for key employees.

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.

The extent to which COVID-19 will further impact our business, operations and financial results, including the duration and magnitude of such impact, is uncertain and will depend on numerous rapidly evolving factors that we cannot accurately predict including, among others:

- The length and severity of the pandemic, including new variants;

- The negative impact on global and regional economies, credit markets and economic activity;

- Governmental, business and individual actions taken in response to the pandemic and the impact of those actions on global economic activity;

- The impact of business disruptions and reductions in employment levels and the level of consumer confidence in the economy on our clients and the resulting impact on their demand for our services and solutions;

- Business consolidations or failures among businesses that we serve;

- Our clients’ ability to pay for our services and solutions and our ability to collect payment for services provided; and

- The pace and extent of economic recovery following the COVID-19 pandemic, including recovery in the real estate industry in particular.

For additional discussion of the impacts of the COVID-19 pandemic, which could be materially adverse to our operations and financial results, please see "Management’s Discussion and Analysis of Financial Condition and Results of Operations - Impact of the COVID-19 Pandemic" in Item 7 of Part II of this Annual Report on Form 10-K.

and processing credit card payments, it could cause one or more of the major credit card companies to disallow our continued use of their payment products.

Our success depends on our clients’ confidence in the comprehensiveness, accuracy and reliability of the data and analysis we provide.

The success of our business depends in large part on our intellectual property, including intellectual property involved in our methodologies, databases, services and software.

*We may be subject to legal liability for collecting, displaying or distributing information*.

*International operations expose us to additional business risks, which may reduce our profitability*.

On December 24, 2020, the E.U. and the U.K. announced they had entered into a post-Brexit deal on certain aspects of trade and other strategic and political issues.

The impact of Brexit, the December 2020 post-Brexit agreement and the future relationship between the E.U. and the U.K., including terms not addressed in the December 2020 agreement, remain uncertain.

under the heading “Risk Factors,” as well as those described from time to time in our filings with the [removed: Securities and Exchange Commission.][added: SEC.]

The following discussion should be read in conjunction with our Quarterly Reports on Form 10-Q, Current Reports on Form 8-K and other filings with the [removed: Securities and Exchange Commission] [added: SEC] and the consolidated financial statements and related notes included in this [removed: Annual Report on Form 10-K.][added: Report.]

[removed: CoStar®] [added: CoStar] is our subscription-based integrated platform for commercial real estate intelligence, which includes information about office, industrial, retail, [removed: multifamily] [added: 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 [added: status] and [added: provides] lease [removed: analytical] [added: analytical, risk management, and hospitality benchmarking] capabilities.

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

We also provide [removed: analytics and] benchmarking [removed: reports] [added: and analytics] for the hospitality [removed: industry.][added: industry both on a subscription basis and an ad hoc basis.]

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

[removed: Our] [added: Apartments.com is the flagship brand of our apartment marketing] network of subscription-based advertising services [added: and] provides property management companies and landlords with a comprehensive advertising destination for their available rental units and offers renters a platform for searching for available rentals.

[removed: Apartments.com] [added: This network] also earns transaction-based revenue primarily from providing online tenant applications, including background and credit checks, and rental payment processing.

[removed: We have implemented] [added: Quarterly sales of multifamily products increased over 2022 due to new properties being added to the network and the impact of] a [removed: revised] [added: new] pricing strategy [added: implemented] to align prices at each product level with the value of the leads delivered.

LoopNet's revenue growth rates [removed: decreased] [added: slowed] in [removed: 2021] [added: 2022] when compared to [removed: 2020] [added: 2021] as growth in the average price per listing declined in [removed: 2021] [added: 2022] when compared to [removed: 2020.][added: 2021.]

[removed: On December 22, 2020, we acquired Homesnap®,] [added: Homesnap is] an online and mobile software platform that provides [removed: subscription-based] [added: residential real estate professionals] access to applications that manage residential real estate agent workflow and marketing campaigns delivered on third-party platforms.

We expect residential revenue for [removed: 2022] [added: 2023] to [removed: decline] [added: decrease] when compared to [removed: 2021] [added: 2022] due to the discontinuation of certain [removed: Homes.com products and services, which is expected to be partially offset by expected increases in sales of Homesnap] [added: non-strategic] products and services.

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

Also included is our BizBuySell network, which includes BizQuest® and FindaFranchise and our Land.com [removed: network] [added: Network] of [removed: sites, which includes LandsofAmerica, LandAndFarm and LandWatch®.][added: sites.]

The BizBuySell network provides online marketplaces for businesses [removed: for-sale] and [added: franchises for sale and] our Land.com [removed: network of sites provide] [added: Network provides] online marketplaces for rural lands [removed: for-sale.][added: for sale.]

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

For the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] our annualized net new bookings of subscription-based services on all contracts were approximately [removed: $217] [added: $305] million, [removed: $184] [added: $217] million and [removed: $210] [added: $184] million, respectively, calculated based on the annualized amount of change in our sales resulting from all new subscription-based contracts or upgrades on all existing subscription-based contracts, less write-downs and cancellations, for the period reported.

Revenue from our subscription-based contracts was approximately 93%, [removed: 95%] [added: 93%] and [removed: 96%] [added: 95%] of total revenue for the years ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] respectively.

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

For the trailing [removed: twelve] [added: 12] months ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] our contract renewal rates for existing CoStar Group company-wide subscription-based services for contracts with a term of at least one year were approximately [removed: 92%, 89% and] 90%, [removed: respectively, and;] [added: 92% and 89%, respectively; and,] therefore, our cancellation rates for those services for the same periods were approximately [removed: 8%, 11% and] 10%, [added: 8% and 11%,] respectively.

Our trailing [removed: twelve-month] [added: 12-month] contract renewal rate may decline as a result of negative economic conditions, consolidations among our clients, reductions in customer spending or decreases in our customer base.

Revenue from our subscription-based contracts with a term of at least one year was approximately [removed: 77%, 80%] [added: 80%, 77%] and [removed: 82%] [added: 80%] of total revenue for the trailing [removed: twelve] [added: 12] months ended December 31, [removed: 2021, 2020] [added: 2022, 2021] and [removed: 2019,] [added: 2020,] respectively.

The [removed: decline] [added: decrease] in the percentage of our revenue from subscription-based contracts [removed: from 2019 to 2020 and] [added: with a term of at least one year] from 2020 to 2021 was primarily due to the acquisitions of companies [removed: which] [added: that] contained a higher percentage of transaction-based revenue than our legacy businesses, as well [removed: as,] [added: as] increases in [removed: our] sales of shorter term advertising products.

While the [removed: impact] [added: impacts] of the COVID-19 pandemic [removed: continues] [added: and current economic conditions continue] to evolve, [removed: it did] [added: they have] not materially [removed: affect] [added: affected] our consolidated financial statements during [removed: 2020 or 2021.][added: 2022, 2021 and 2020.]

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 [removed: home.][added: home, or by the current economic conditions.]

If the demand for office space [added: or other real estate] decreases significantly, there could be a downturn in the commercial real estate market [removed: which] [added: that] may materially adversely affect many of our clients.

We plan to continue to invest in our business and our services, evaluate strategic growth [removed: opportunities,] [added: opportunities] and pursue our key priorities as described [removed: below, while we closely monitor the economic developments from the COVID-19 pandemic and manage our response to such developments.][added: below.]

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

Our key priorities for [removed: 2022] [added: 2023] currently include:

[removed: - Continuing] [added: ◦Continuing] to develop and invest in [added: the Homes.com] residential [removed: marketplaces.][added: marketplace.]

[removed: - Continuing] [added: ◦Continuing] to invest in CoStar, including:

[removed: ◦Enhancing] [added: ▪Enhancing] benchmarking capabilities.

We prepare and publicly release quarterly unaudited financial statements prepared in accordance with [removed: generally accepted accounting principles (“GAAP”).][added: GAAP.]

We also disclose and discuss certain non-GAAP financial measures in our public releases, investor conference calls and filings with the [removed: Securities and Exchange Commission.][added: SEC.]

The non-GAAP financial measures that we may disclose include [removed: net income before interest (expense) income, other (expense) income, loss on debt extinguishment, income taxes, depreciation and amortization (“EBITDA”),] [added: EBITDA,] adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share.

We typically disclose EBITDA on a consolidated and an operating segment basis in our earnings releases, investor conference calls and filings with the [removed: Securities and Exchange Commission.][added: SEC.]

We may disclose adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share on a consolidated basis in our earnings releases, investor conference calls and filings with the [removed: Securities and Exchange Commission.][added: SEC.]

In addition, we urge investors and potential investors in our securities to carefully review the GAAP financial information included as part of our Annual Reports on Form 10-K and Quarterly Reports on Form 10-Q that are filed with the [removed: Securities and Exchange Commission,] [added: SEC,] as well as our quarterly earnings releases, and compare the GAAP financial information with our EBITDA, adjusted EBITDA, adjusted EBITDA margin, non-GAAP net income and non-GAAP net income per diluted share.

[removed: We believe the disclosure of non-GAAP measures can help investors meaningfully] evaluate and compare our performance from [removed: quarter to quarter] [added: quarter-to-quarter] and from [removed: year to year] [added: year-to-year] without the impact of these items.

- The amount of settlement and impairment costs incurred outside of our ordinary course of business may be useful for investors to consider because they generally represent gains or losses from the settlement of litigation [removed: matters or impairments on acquired intangible assets.][added: matters, charges]

CoStar's year-over-year revenue growth rate for 2022 accelerated compared to 2021.

The number of subscribers has increased year-over-year and we have also realized the impact of price increases and existing customers upgrading to our global service offering.

We expect CoStar's revenue growth rate for 2023 to slow compared to the revenue growth rate for 2022 as a result of less benefit from customer upgrades as the global product upgrade campaign is substantially complete and lower inflation-based price adjustments.

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

Information Services' year-over-year revenue growth rate for 2022 accelerated compared to 2021 as a result of increased revenue from CoStar Real Estate Manager services and the results of the Business Immo acquisition.

We expect Information Services' revenue growth rate for 2023 to slow compared to the revenue growth rate for 2022 as a result of lower price adjustments.

Multifamily's year-over-year revenue growth rate for 2022 slowed compared to 2021 due to customers selecting lower-priced ad packages in the second half of 2021 while rental vacancy rates declined relative to historical averages reducing demand for top-level packages.

We expect Multifamily's year-over-year revenue growth rate for 2023 to accelerate compared to the revenue growth rate for 2022 due to expected increases in sales levels from bringing additional properties on the network.

We expect LoopNet's year-over-year revenue growth rate for 2023 to accelerate compared to the revenue growth rate for 2022 due to expected increases in sales levels from increasing the number of listings in the network.

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.

Residential revenue was consistent between 2022 and 2021.

Overall, other marketplaces' revenue growth rate slowed in 2022 compared to 2021 primarily due to the impact of the Ten-X acquisition closing in June 2020.We expect other marketplaces revenue growth rate for 2023 to slow compared to the growth rate for 2022 due to lower Ten-X transaction revenue.

The increase in the percentage of our revenue from subscription-based contracts for contracts with a term of at least one year from 2021 to 2022 was due to increases in sales of longer term advertising products.

Impacts of Current Economic Conditions

In response to the concerns over inflation risk, the U.S. Federal Reserve has raised interest rates in the first, second, third and fourth quarters of 2022 and the first quarter of 2023 and signaled it expects additional rate increases.

Further, the COVID-19 pandemic has created significant economic volatility, uncertainty and disruption around the world.

These activities may result in reduced demand for office space and rising interest rates may reduce demand for all types of real estate.

Our residential strategy involves creating new and improved tools for residential agents and brokers and to help homebuyers find a new home and connect with the agents of their choosing.

We plan to increase our residential marketing investment over the course of the year to build traffic on the website.

◦Continuing to invest in our LoopNet marketplace and international business.

We plan to invest in additional sales capabilities and increase marketing investment to accelerate revenue growth in LoopNet.

This includes expansion of our LoopNet brand in the U.K., France and Spain.

We continue to integrate the STR products into our core platform.

We plan to apply STR's benchmarking expertise within CoStar by making STAR reports available in the CoStar environment and provide users with tools to perform ad hoc analysis.

▪Enhancing analytics capabilities.

We are adding information on commercial property investment funds and linking property data to allow fund investors to perform detailed analysis on their property portfolios directly in the CoStar platform.

We expect our investment in these priorities, and the full-year impact realized in 2023 from an increase in our sales force which occurred primarily in the second half of 2022, will increase our selling and marketing expense and reduce our income from operations for the year ended December 31, 2023 compared to the year ended December 31, 2022.

Business" in this Report.

We believe the disclosure of non-GAAP measures can help investors meaningfully

related to terminations of contracts or impairments of acquired intangible assets or other long lived assets.

Business" in this Report.

| CoStar | | | $ | 836,980 | | | | | $ | 722,821 | | | | | $ | 114,159 | | | | | 16% | | |

| Multifamily | | | 745,388 | | | | | | 678,680 | | | | | | 66,708 | | | | | | 10 | | |

| LoopNet | | | 230,941 | | | | | | 207,511 | | | | | | 23,430 | | | | | | 11 | | |

| Total revenues | | | 2,182,399 | | | | | | 1,944,135 | | | | | | 238,264 | | | | | | 12 | | |

| Gross profit | | | 1,768,391 | | | | | | 1,586,894 | | | | | | 181,497 | | | | | | 11 | | |

| Net income | | | $ | 369,453 | | | | | $ | 292,564 | | | | | $ | 76,889 | | | | | 26% | | |

Multifamily revenues increased $67 million, or 10%, primarily due to increases in pricing on renewals and, to a lesser extent, an increase in properties listed.

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.

Information services' revenue growth rates decreased in 2021 compared to 2020 primarily due to the STR acquisition in 2019 which resulted in a full year of results in 2020.

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

Apartments.comTM is part of our network of apartment marketing sites, which primarily includes ApartmentFinder®, ForRent.com®, ApartmentHomeLiving.comTM, Apartamentos.comTM and Westside Rentals®.

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

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

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

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

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 .

Impact of the COVID-19 Pandemic

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

We 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.

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.

Overall, the increased direct spend related to the COVID-19 pandemic, including office 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 results.

During 2021, excluding our multifamily service offering, which is discussed under Service Offerings above, our company-wide net new bookings and renewal rates for subscription-based services have returned to pre-pandemic levels.

In addition, we saw improvements in collection trends along with improvements in the economy which led us to reduce our allowance for credit losses previously taken.

Due to the uncertainty associated with the COVID-19 pandemic and any resulting economic impacts, we will continue to monitor these trends and the effect on our results of operations.

Any anticipated changes in financial performance discussed in this report are based on our current observations and experience and involve estimates and assumptions.

As the future extent and duration of the effects of the COVID-19 pandemic remain unclear, our estimates and assumptions may evolve as conditions change and actual results may vary.

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.

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

Our residential team is creating new and improved tools to help consumers have a highly contextual experience when searching for homes supported by high quality media and in-depth attributes of homes and details of the surrounding neighborhoods, parks and schools and to help consumers collaborate with their agent and other consumers.

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.

In October 2021, we 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.

In accordance with that agreement, we are developing a

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

To support the expanded product offering, we expect to increase our investment in residential products in 2022 by approximately $200 million.

For the years ended December 31, [removed: 2021] [added: 2022] and December 31, [removed: 2020,] [added: 2021,] revenues denominated in foreign currencies were approximately 4% and [removed: 5%,] [added: 4%,] respectively, of total revenue.

For the years ended December 31, [removed: 2021] [added: 2022] and December 31, [removed: 2020,] [added: 2021,] our revenues would have decreased by approximately [removed: $7] [added: $8] million and [removed: $8] [added: $7] million, respectively, if the U.S. dollar exchange rate used strengthened by 10%.

For the years ended December 31, [removed: 2021] [added: 2022] and December 31, [removed: 2020,] [added: 2021,] our revenues would have increased by approximately [removed: $7] [added: $8] million and [removed: $8] [added: $7] million, respectively, if the U.S. dollar exchange rate used weakened by 10%.

As of December 31, [removed: 2021,] [added: 2022,] accumulated other comprehensive loss included a loss from foreign currency translation adjustments of approximately [removed: $5.8] [added: $29.1] 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: 2021.][added: 2022.]

We are subject to interest rate market risk in connection with our [removed: new] revolving credit facility.

On July 1, 2020, we issued $1.0 billion aggregate principal amount of [removed: 2.800%] Senior [removed: Notes due July 15, 2030.][added: Notes.]

Changes in interest rates would not have a material impact to our current interest and debt financing expense, as all of our borrowings except for our credit facility are fixed rate, and no amounts were outstanding under our credit facility as of December 31, [removed: 2021.][added: 2022.]

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

We had approximately [removed: $2.8] [added: $2.6] billion of goodwill and intangible assets as of December 31, [removed: 2021.][added: 2022.]

As of December 31, [removed: 2021,] [added: 2022,] 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.

As of December 31, 2022, we had $5.0 billion of cash and cash equivalents.

As of December 31, 2021, we had $3.8 billion of cash, cash equivalents and restricted cash.

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

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

We manage [added: and report] our business geographically in two operating segments, with our primary areas of measurement and decision-making being North America, which includes the U.S. and Canada, and International, which primarily includes Europe, Asia-Pacific and Latin America.

See Notes 5 and 9 [removed: to] [added: of] the [removed: accompanying] Notes to the Consolidated Financial Statements [removed: included in Part IV of this Annual Report on Form 10-K] for further discussion of 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 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; [added: risk management tools;] and a large, diverse base of clients.

Our database has been developed and enhanced for more than [removed: 30] [added: 35] years by a research department that makes daily database updates.

We deliver our comprehensive commercial real estate information content to our [removed: North American and European] customers primarily via an integrated solution of online service offerings that includes information about space available for-lease, [added: comparable sales information, information about properties for-sale, tenant information, internet marketing services, risk management tools, analytical capabilities, information for clients’ websites, information about industry professionals and their business relationships, data integration and industry news.]

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 the Consolidated Financial Statements included in this [removed: Annual Report on Form 10-K.][added: Report.]

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

Quantitative and Qualitative Disclosures about Market Risk” in this [removed: Annual Report on Form 10-K.][added: Report.]

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

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, [removed: tenants, space available for lease, industry professionals and their business relationships, industry news and market and lease analytical capabilities.]

CoStar is our largest service offering in our North America and International operating [removed: segments.][added: segments and contains the following tools and features.]

[removed: 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 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 advertising services provides property owners, professional property management companies and landlords with a comprehensive advertising destination for their available rental units and offers renters a platform for searching for available rentals.

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

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

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

Homesnap [removed: will provide] [added: also provides] a custom version of its platform, branded as Citysnap™, specifically for the five boroughs of New York [removed: City.][added: City in conjunction with the Real Estate Board of New York's Residential Listing Service.]

[removed: Ten-X] [added: *Ten-X*] operates an online auction platform for commercial real estate.

We generally see higher sales of Apartments.com listing services during the peak summer rental season and higher CoStar sales towards the end of the [removed: year, however] [added: 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 reevaluate our priorities on a regular basis and may reevaluate our priorities as [removed: the COVID-19 pandemic continues] [added: economic conditions continue] to evolve.

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

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: offering] [added: offering,] and plan to continue to invest in, evaluate and strategically position our sales force as we continue to develop and grow.

The market for real estate information and analysis is [removed: vast] [added: vast,] based on the variety, volume and value of transactions related to real estate.

Each transaction has multiple participants and multiple information [removed: requirements] [added: requirements,] and in order to facilitate transactions, industry participants must have extensive, accurate and current information and analysis.

Members of the real estate and related business community require daily access to current data such as space availability, properties for-sale, rental units available, rental rates, vacancy rates, tenant movements, [removed: sales comparables,] [added: comparable sales,] supply, new construction, absorption rates and other important market developments to carry out their businesses effectively.

The creation and maintenance of a standardized information platform for commercial real estate requires infrastructure including a standardized database, accurate and comprehensive research capabilities, experienced analysts, [removed: easy to use] [added: easy-to-use] technology and intensive participant interaction.

Property managers have several options at their disposal, including their own websites, drive-by and outdoor advertising, traditional classified ads, free online listing services, search engine marketing and [removed: internet listings services (“ILS”),] [added: ILS,] like Apartments.com and the network of apartment listing websites we own and operate.

We believe that consumers expect accurate, actionable and comprehensive homes for sale information [removed: in] [added: on] a platform that allows collaboration between homebuyers and agents.

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

We have spent more than [removed: 30] [added: 35] years building and acquiring databases of commercial real estate information, which includes information on [added: properties,] leasing, sales, comparable sales, tenants and demand statistics, as well as digital [removed: images.][added: images, drone videos and 3-D tours.]

This highly complex database is comprised of hundreds of data fields, tracking such categories as location, site and zoning information, building characteristics, space and unit [added: characteristics and] availability, tax assessments, [added: true] ownership, sales and lease comparables, [added: multi-family rents, vacancies and concessions,] space requirements, [removed: number of] retail [removed: stores, number of listings,] [added: locations,] mortgage and deed information, for-sale and for-lease listings, [added: fund data,] income and expense histories, tenant names, [added: tenant credit scores, view of company locations,] lease expirations, contact information, historical trends, [removed: demographic information] [added: forecasts] and [removed: retail sales per square foot.][added: demographic information.]

The database also includes building photographs, aerial [removed: photographs,] [added: photographs and videos,] 3-D virtual tours, plat maps and floor plans.

Our researchers collect and analyze commercial real estate information through phone calls, e-mails and additional research methods including field inspections, public records review, news [removed: monitoring and] [added: monitoring,] third-party data [removed: feeds.][added: feeds and user entered content.]

We have also set up direct feeds from larger apartment [removed: sites] [added: sites, owners] and [added: brokers, and] have put in place an automated system that compiles information sourced from the internet in order to provide the most up-to-date [removed: information on rental availabilities.][added: information.]

Because of the importance commercial real estate professionals place on our data and our prominent position in the industry, many of these professionals routinely take the initiative and [added: to] proactively report available space and transactions through our online tool, which we refer to as our Marketing Center, or directly to our researchers.

Our field research [removed: effort includes] [added: efforts include] physical [removed: inspection] [added: inspections] of properties in order to research new availabilities, find additional property inventory, [added: identify] new construction, collect tenant information, verify existing information, photograph properties and create high quality videos of interior spaces (including walk-through videos and 3-D virtual tours), amenities and exterior features of properties.

[removed: A significant majority of these vehicles are customized, energy efficient hybrid cars that] [added: Our field researchers] are equipped with [removed: computers, Global Positioning System tracking software,] high resolution digital cameras and handheld laser instruments to precisely measure buildings and geo-code [added: and position them on digital maps.]

A typical site inspection of a commercial property consists of photographing the building, [added: capturing interior images, videos and 3-D tours,] measuring the building, geo-coding the building, capturing “for-sale” or “for-lease” sign information, counting parking spaces, assessing property condition and construction and gathering tenant information.

We place researchers on the low-flying aircraft to scout [removed: additional] [added: new] commercial developments and take aerial photographs and videos.

- Reviewing recorded or live listen phone calls (in states where applicable) to ensure information was properly sourced and correctly captured;

tenants, space available for lease, industry professionals and their business relationships, industry news and market status and provides lease analysis, risk management, and hospitality benchmarking capabilities.

- *Lender* provides lenders the tools to manage their loan portfolio and risk.

These tools automatically connect the user's portfolio to CoStar's research, market analytics and proprietary COMPASS credit default model, as well as their own data sets, to enable portfolio surveillance, concentration risk monitoring, stress testing and expected credit loss modeling and to support loan originations and underwriting.

STAR Reports are only available to industry participants who provide us with data.

*Land.com* is the flagship brand in our network of marketplaces for rural lands for-sale sites, which also includes *LandsofAmerica*TM, *LandAndFarm*TM and *LandWatch®*.

*BizBuySell* is the flagship brand in our network of marketplaces for operating businesses and franchises for-sale, which also includes *BizQuest* and *FindaFranchise*.

We acquired Homes.com, BureauxLocaux and Business Immo in May 2021, October 2021 and April 2022, respectively.

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Employees have multiple choices for health plans, access to vision and

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).

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, data integration and industry news.

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.

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.

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

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

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.

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 these acquisitions.

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.

result in increased revenues and earnings from sales of other services we offer in lieu of the eliminated or phased out services.

We utilize high-tech, field research vehicles primarily within North America and Europe.

and position them on digital maps.

Each vehicle uses wireless technology to track and transmit field data.

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.

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.

CoStar is delivered through desktop, mobile and other internet-connected devices to our subscribers primarily in our North American and European markets and contains the following tools and features.

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

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.

*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.

Ten-X operates an online auction platform for commercial real estate.

*LandsofAmerica*TM, *LandAndFarm*TM *and LandWatch®* LandsofAmerica.com, LandAndFarm.com and LandWatch.com are leading online marketplaces for rural land for-sale.

The LandsofAmerica.com, LandAndFarm.com and LandWatch.com websites are also accessible via our Land.com domain.

*BizBuySell, BizQuest* *and FindaFranchise* BizBuySell.com, BizQuest.com and FindaFranchise.com are leading online marketplaces for operating businesses and franchises for-sale.

Our CoStar U.K. sales force continues to grow our existing client base and train users on the product enhancements we release.

In Canada, our sales representatives focus on targeting brokers, owners and lender prospects for subscribing to our suite of products.

quality and valuable to employees and their families.

We consider the health and wellbeing of our employees, clients and communities to be our top priority during the COVID-19 pandemic.

We adopted new policies and procedures to ensure safety, which currently include requirements for mask wearing in the office and when coming into contact with the community.

We provide personal protective equipment for all employees, including face coverings, hand sanitizer, antibacterial surface sanitizer and other protective equipment as needed.

In addition, our office space workstations have been redesigned and upgraded to allow for six feet of social distancing between them and include physical barrier shielding.

HVAC systems in our offices have been upgraded with enhanced filtration, increased fresh air intake and ultraviolet lighting disinfection.

We have also made a significant investment in commercial grade air filtration equipment and monitor air quality in majority of our office locations.

Finally, all high contact surfaces in our offices are cleaned multiple times during the day and deep cleaned each night.

We hosted four on-site COVID-19 vaccination clinics for our employees and their family members during 2021, and we established an HR Concierge service to coordinate COVID-19 vaccinations for employees outside of our major office locations.

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” [added: of the Notes] to our Consolidated Financial [removed: Statements and related Notes.][added: Statements.]

While our management presently believes that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our business, financial position, future results of operations or liquidity, legal proceedings are inherently uncertain, and unfavorable rulings could, individually or in [added: the] aggregate, have a material adverse effect on our business, financial position, future results of operations or liquidity.

Washington, [removed: DC] [added: D.C.] 20549

For the fiscal year ended December 31, [removed: 2021][added: 2022]

[removed: ][added: ]

As of June 30, [removed: 2021,] [added: 2022,] 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: $28.7] [added: $23.7] billion.

As of February [removed: 18, 2022, 394,987,704] [added: 17, 2023, 406,772,431] 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: 2021] [added: 2022] are incorporated by reference into Part III of this Report.

| Item 1. | | | [removed: [Business](#i674069b223524e4c81840572761696f1_16)] [added: [Business](#i450746f8b5af40fcb91ebfd3557dc847_16)] | | | [removed: [4](#i674069b223524e4c81840572761696f1_16)] [added: [7](#i450746f8b5af40fcb91ebfd3557dc847_16)] | | |

| Item 1A. | | | [Risk [removed: Factors](#i674069b223524e4c81840572761696f1_19)] [added: Factors](#i450746f8b5af40fcb91ebfd3557dc847_19)] | | | [removed: [18](#i674069b223524e4c81840572761696f1_19)] [added: [21](#i450746f8b5af40fcb91ebfd3557dc847_19)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#i674069b223524e4c81840572761696f1_22)] [added: Comments](#i450746f8b5af40fcb91ebfd3557dc847_22)] | | | [removed: [29](#i674069b223524e4c81840572761696f1_22)] [added: [33](#i450746f8b5af40fcb91ebfd3557dc847_22)] | | |

| Item 2. | | | [removed: [Properties](#i674069b223524e4c81840572761696f1_25)] [added: [Properties](#i450746f8b5af40fcb91ebfd3557dc847_25)] | | | [removed: [29](#i674069b223524e4c81840572761696f1_25)] [added: [33](#i450746f8b5af40fcb91ebfd3557dc847_25)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#i674069b223524e4c81840572761696f1_28)] [added: Proceedings](#i450746f8b5af40fcb91ebfd3557dc847_28)] | | | [removed: [29](#i674069b223524e4c81840572761696f1_28)] [added: [34](#i450746f8b5af40fcb91ebfd3557dc847_28)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#i674069b223524e4c81840572761696f1_31)] [added: Disclosures](#i450746f8b5af40fcb91ebfd3557dc847_31)] | | | [removed: [29](#i674069b223524e4c81840572761696f1_31)] [added: [34](#i450746f8b5af40fcb91ebfd3557dc847_31)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i674069b223524e4c81840572761696f1_37)] [added: Securities](#i450746f8b5af40fcb91ebfd3557dc847_37)] | | | [removed: [30](#i674069b223524e4c81840572761696f1_37)] [added: [35](#i450746f8b5af40fcb91ebfd3557dc847_37)] | | |

| Item 6. | | | [removed: [Reserved](#i674069b223524e4c81840572761696f1_18141941860449)] [added: [Reserved](#i450746f8b5af40fcb91ebfd3557dc847_40)] | | | [removed: [32](#i674069b223524e4c81840572761696f1_18141941860449)] [added: [37](#i450746f8b5af40fcb91ebfd3557dc847_40)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i674069b223524e4c81840572761696f1_43)] [added: Operations](#i450746f8b5af40fcb91ebfd3557dc847_43)] | | | [removed: [33](#i674069b223524e4c81840572761696f1_43)] [added: [38](#i450746f8b5af40fcb91ebfd3557dc847_43)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#i674069b223524e4c81840572761696f1_73)] [added: Risk](#i450746f8b5af40fcb91ebfd3557dc847_70)] | | | [removed: [46](#i674069b223524e4c81840572761696f1_73)] [added: [50](#i450746f8b5af40fcb91ebfd3557dc847_70)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#i674069b223524e4c81840572761696f1_76)] [added: Data](#i450746f8b5af40fcb91ebfd3557dc847_73)] | | | [removed: [47](#i674069b223524e4c81840572761696f1_76)] [added: [51](#i450746f8b5af40fcb91ebfd3557dc847_73)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i674069b223524e4c81840572761696f1_79)] [added: Disclosure](#i450746f8b5af40fcb91ebfd3557dc847_76)] | | | [removed: [47](#i674069b223524e4c81840572761696f1_79)] [added: [51](#i450746f8b5af40fcb91ebfd3557dc847_76)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#i674069b223524e4c81840572761696f1_82)] [added: Procedures](#i450746f8b5af40fcb91ebfd3557dc847_79)] | | | [removed: [47](#i674069b223524e4c81840572761696f1_82)] [added: [51](#i450746f8b5af40fcb91ebfd3557dc847_79)] | | |

| Item 9B. | | | [Other [removed: Information](#i674069b223524e4c81840572761696f1_85)] [added: Information](#i450746f8b5af40fcb91ebfd3557dc847_82)] | | | [removed: [48](#i674069b223524e4c81840572761696f1_85)] [added: [52](#i450746f8b5af40fcb91ebfd3557dc847_82)] | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i674069b223524e4c81840572761696f1_17592186046633)] [added: Inspections](#i450746f8b5af40fcb91ebfd3557dc847_85)] | | | [removed: [48](#i674069b223524e4c81840572761696f1_85)] [added: [52](#i450746f8b5af40fcb91ebfd3557dc847_82)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#i674069b223524e4c81840572761696f1_91)] [added: Governance](#i450746f8b5af40fcb91ebfd3557dc847_91)] | | | [removed: [48](#i674069b223524e4c81840572761696f1_91)] [added: [52](#i450746f8b5af40fcb91ebfd3557dc847_91)] | | |

| Item 11. | | | [Executive [removed: Compensation](#i674069b223524e4c81840572761696f1_94)] [added: Compensation](#i450746f8b5af40fcb91ebfd3557dc847_94)] | | | [removed: [48](#i674069b223524e4c81840572761696f1_94)] [added: [52](#i450746f8b5af40fcb91ebfd3557dc847_94)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i674069b223524e4c81840572761696f1_97)] [added: Matters](#i450746f8b5af40fcb91ebfd3557dc847_97)] | | | [removed: [48](#i674069b223524e4c81840572761696f1_97)] [added: [52](#i450746f8b5af40fcb91ebfd3557dc847_97)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#i674069b223524e4c81840572761696f1_100)] [added: Independence](#i450746f8b5af40fcb91ebfd3557dc847_100)] | | | [removed: [49](#i674069b223524e4c81840572761696f1_100)] [added: [52](#i450746f8b5af40fcb91ebfd3557dc847_100)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#i674069b223524e4c81840572761696f1_103)] [added: Services](#i450746f8b5af40fcb91ebfd3557dc847_103)] | | | [removed: [49](#i674069b223524e4c81840572761696f1_103)] [added: [52](#i450746f8b5af40fcb91ebfd3557dc847_103)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#i674069b223524e4c81840572761696f1_109)] [added: Schedules](#i450746f8b5af40fcb91ebfd3557dc847_109)] | | | [removed: [50](#i674069b223524e4c81840572761696f1_109)] [added: [53](#i450746f8b5af40fcb91ebfd3557dc847_109)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#i674069b223524e4c81840572761696f1_112)] [added: Summary](#i450746f8b5af40fcb91ebfd3557dc847_112)] | | | [removed: [53](#i674069b223524e4c81840572761696f1_112)] [added: [56](#i450746f8b5af40fcb91ebfd3557dc847_112)] | | |

| | | | [removed: [Signatures](#i674069b223524e4c81840572761696f1_115)] [added: [Signatures](#i450746f8b5af40fcb91ebfd3557dc847_115)] | | | [removed: [54](#i674069b223524e4c81840572761696f1_115)] [added: [57](#i450746f8b5af40fcb91ebfd3557dc847_115)] | | |

| | | | [Index to Consolidated Financial [removed: Statements](#i674069b223524e4c81840572761696f1_118)] [added: Statements](#i450746f8b5af40fcb91ebfd3557dc847_118)] | | | [removed: [F-](#i674069b223524e4c81840572761696f1_118)[1](#i674069b223524e4c81840572761696f1_118)] [added: [F-](#i450746f8b5af40fcb91ebfd3557dc847_118)[1](#i450746f8b5af40fcb91ebfd3557dc847_118)] | | |

[removed: Forward-looking statements include] information that is not purely historic fact and include, without limitation, statements concerning our financial outlook for [removed: 2022] [added: 2023] and beyond, our possible or assumed future results of operations 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, [removed: non-generally accepted accounting principles (“GAAP”)] [added: non-GAAP] net income, non-GAAP net income per [added: diluted] share, weighted-average outstanding shares, cash flow from operating activities, operating costs, capital and other expenditures, [added: key priorities for 2023, trends in customer behavior,] the current and future impacts of COVID-19 on [removed: our operations, our actions in response to] [added: global economic conditions,] the [removed: COVID-19 pandemic, key priorities for 2022, trends in customer behavior,] [added: real estate industry, or our customers,] legal proceedings and claims, legal costs, effective tax rate, 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, geographic and product expansion, planned service enhancements, expansion and development of our sales forces, planned sales and marketing activities and investments, 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 [removed: (the “2020] [added: provided in the 2020] Credit [removed: Agreement”),] [added: 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, sources and adequacy of liquidity and growth and markets for our stock.

Sections of this Report [removed: which] [added: that] 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 Consolidated Financial Statements and related Notes.

| | | | [Glossary of Terms](#i450746f8b5af40fcb91ebfd3557dc847_1883) | | | [4](#i450746f8b5af40fcb91ebfd3557dc847_1883) | | |

Glossary of Terms

The following abbreviations or acronyms used in this Annual Report on Form 10-K (this "Report") are defined below:

| | | | | | |

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

| Abbreviation or Acronym | | | Definition | | |

| 2020 Credit Agreement | | | The second amended and restated credit agreement, which amended and restated in its entirety the then-existing credit agreement originally entered into on April 1, 2014 and amended and restated on July 1, 2020 | | |

| ACH | | | Automated Clearing House | | |

| ADR | | | Average daily rate | | |

| ARS | | | Auction rate securities | | |

| ASC | | | Accounting Standards Codification | | |

| ASU | | | Accounting Standards Update | | |

| Brexit | | | The June 23, 2016 U.K. referendum in which British citizens approved an exit from the E.U. | | |

| BureauxLocaux | | | The legal entity, Comreal Info, a French *société par actions simplifiée*, the owner and operator of BureauxLocaux, a commercial real estate digital marketplace, in France | | |

| BureauxLocaux Acquisition | | | CoStar UK's acquisition of BureauxLocaux completed on October 1, 2021 pursuant to a Share Sale and Purchase Agreement dated October 1, 2021 between CoStar UK, M.A.J.E. Marketing & Strategie and an individual | | |

| Business Immo | | | The legal entity BIH, a French *société par actions simplifiée*, the owner and operator of Business Immo, a leading commercial real estate news service provider in France | | |

| Business Immo Acquisition | | | CoStar UK's acquisition of the issued share capital of Business Immo on April 5, 2022 | | |

| CAN-SPAM Act | | | Controlling the Assault of Non-Solicited Pornography and Marketing Act | | |

| CCPA | | | California Consumer Privacy Act | | |

| CECL | | | Current expected credit losses | | |

| CMBS | | | Commercial mortgage-based securities | | |

| Confidential Information | | | Information about customers, employees, contractors, suppliers, vendors, and others such as landlords and tenants, including personal information such as names, addresses, phone numbers, email addresses, credit card information, biometric data, sensitive or confidential transaction and account information, social security numbers, birthdates and financial information (for example, to facilitate the apartment rental application and payment process between a renter and property manager), as well as a broad range of proprietary and confidential business information, collectively | | |

| CoStar Group | | | The legal entity, CoStar Group, Inc., a Delaware corporation, one or more if its consolidated subsidiaries or operating segments, or the entirety of CoStar Group, Inc. and its consolidated subsidiaries | | |

| CoStar UK | | | The legal entity, CoStar UK Limited, a wholly owned subsidiary CoStar Group | | |

| Covenant Suspension Period | | | A period of time defined in the 2020 Credit Agreement in which we maintain a corporate investment grade rating from any two of Standard & Poor’s Rating Services, Fitch Ratings, Inc. or Moody’s Investors Services, Inc. and no event of default is continuing | | |

| CPA | | | Colorado Privacy Act | | |

| CPRA | | | The California Privacy Rights Act | | |

| CRI | | | CoStar Realty Information, Inc., a Delaware corporation and wholly owned subsidiary of CoStar Group, Inc. | | |

| DSUs | | | Deferred Stock Units | | |

| E.U. | | | European Union | | |

| EBITDA | | | Net income before interest and other income (expense), income taxes, depreciation and amortization | | |

| ESG | | | Environmental, Social and Governance | | |

| | | | | | |

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

| Abbreviation or Acronym | | | Definition | | |

| ESPP | | | Employee Stock Purchase Plan | | |

| EURIBOR | | | Euro Interbank Offered Rate | | |

| FASB | | | Financial Accounting Standards Board | | |

| FCRA | | | Fair Credit Reporting Act | | |

| FTC | | | Federal Trade Commission | | |

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 duration and magnitude of the COVID-19 pandemic, including 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 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 Homesnap and 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 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;

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 U.S. 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 on May 31, 2025 (with two [removed: 5-year] [added: five-year] renewal options).

[removed: We own a building] [added: Our staff] in Richmond, [removed: Virginia,] [added: Virginia occupy an owned building] located at 501 S 5th Street, where we occupy 276,695 square feet and lease out 33,912 square feet to another [removed: tenant.][added: tenant through March of 2023; an owned building located at 901 Semmes Avenue, where we own and occupy 117,448 square feet; and leased space at 951 E Byrd St where we occupy 97,171 square feet.]

[removed: This location houses] [added: These locations house] research, [added: product] development and sales functions.

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

These locations include, among others, the following: Hendersonville, Tennessee; [removed: Irvine, California;] [added: Norfolk, Virginia;] Boston, Massachusetts; [added: New York, New York;] San Francisco, California; [removed: Ontario, California;] and Los Angeles, California.

All of our owned properties are held under fee simple ownership and are not materially encumbered.

Our common stock is traded on the Nasdaq Global Select Market under the symbol “CSGP.” As of January 31, [removed: 2022,] [added: 2023,] there were [removed: 1,819] [added: 1,731] 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: 2021.][added: 2022.]

*Issuer Purchases of Equity Securities.* The following table is a summary of our repurchases of common stock [removed: during each of the three months in] [added: for] the quarter ended December 31, [removed: 2021:][added: 2022:]

| Month, [removed: 2021] [added: 2022] | | | | | | Total Number of Shares Purchased (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 | | |

- An equal investment in the [removed: Standards & Poor's Stock] [added: S&P] 500 [removed: (“S&P 500”)] Index; and

The comparison covers the period beginning December 31, [removed: 2016] [added: 2017] and ending on December 31, [removed: 2021,] [added: 2022,] and assumes the reinvestment of any dividends.

[removed: ][added: ]

| Company / Index | | | | | | [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] | | | | | | [removed: 12/31/21] [added: 12/31/22] | | |

| October 1 through 31 | | | | | | 13,854 | | | | | | | | | $ | 70.67 | | | | | — | | | | | | — | | |

| November 1 through 30 | | | | | | 17,151 | | | | | | | | | 82.68 | | | | | | — | | | | | | — | | |

| December 1 through 31 | | | | | | 4,026 | | | | | | | | | 81.26 | | | | | | — | | | | | | — | | |

| Total | | | | | | 35,031 | | | | | | | | | $ | 77.77 | | | | | — | | | | | | — | | |

| CoStar Group, Inc. | | | | | | $ | 100.00 | | | | | $ | 113.60 | | | | | $ | 201.48 | | | | | $ | 311.26 | | | | | $ | 266.14 | | | | | $ | 260.25 | |

| S&P 500 Index | | | | | | 100.00 | | | | | | 95.62 | | | | | | 125.72 | | | | | | 148.85 | | | | | | 191.58 | | | | | | 156.88 | | |

| S&P 500 Internet Services & Infrastructure Index | | | | | | 100.00 | | | | | | 91.54 | | | | | | 123.09 | | | | | | 142.89 | | | | | | 163.81 | | | | | | 126.13 | | |

| 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 | | |

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 Securities Exchange Act of 1934 is recorded, processed, summarized and reported, within the time periods specified in the [removed: Securities and Exchange Commission’s] [added: SEC’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.

As of December 31, [removed: 2021,] [added: 2022,] 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 as of December 31, [removed: 2021] [added: 2022] and were operating at a reasonable assurance level.

We expect that the implementation of this system will improve our internal [removed: controls] [added: control] over financial reporting.

Other than the implementation of a new financial system noted above, there have been no changes in our internal control over financial reporting during the quarter ended December 31, [removed: 2021] [added: 2022] that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

As defined by the [removed: Securities and Exchange Commission,] [added: SEC,] internal control over financial reporting is a process designed by, or supervised by, the Company’s principal executive and principal financial officers, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance with GAAP.

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, [removed: 2021] [added: 2022] based on criteria established in Internal Control – Integrated Framework (2013 framework) issued by the Committee of Sponsoring Organizations of the Treadway [removed: Commission (“the COSO Framework”).][added: Commission.]

Based on this assessment, management has concluded that the Company's internal control over financial reporting was effective as of December 31, [removed: 2021.][added: 2022.]

Ernst & Young LLP, the independent registered public accounting firm that audited the Company's financial statements included in this report, has issued an attestation report on the effectiveness of internal control over financial reporting, a copy of which is included in this [removed: Annual Report on Form 10-K.][added: Report.]

This implementation is expected to be a multi-year project.

This implementation is expected to continue beyond 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.

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, 2021.

The excluded aggregate financial position of Homes.com and BureauxLocaux collectively represented less than 1% of our total assets as of December 31, 2021, and less than 1% of our revenues and total operating costs for the year then ended.

We will include the internal controls of Homes.com and BureauxLocaux in our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2022.

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

Copies of each of these codes may be found in the “Investors” section of the Company’s website at [removed: www.investors.costargroup.com/leadership.][added: https://investors.costargroup.com/leadership.]

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 [removed: Security of Exchange ("SEC")] [added: SEC] rules on the 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: 2022] [added: 2023] annual meeting of stockholders under the captions “Nominees for the Board of Directors,” “Nominees’ Business Experience, Qualifications and Directorships,” “Executive [removed: Officers and Key Employees,”] [added: Officers,”] “Board Meetings and Committees,” [removed: and "Delinquent] [added: and, if applicable, “Delinquent] Section 16(a) [removed: Reports."][added: Reports.”]

The information required by this Item is incorporated by reference to our Proxy Statement for our [removed: 2022] [added: 2023] 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: 2022] [added: 2023] 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: 2022] [added: 2023] 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: 2022] [added: 2023] annual meeting of stockholders under the caption “Ratification of the Appointment of Independent Registered Public Accounting Firm.”

[added: (a)(2) Financial statement schedules:] Additional financial statement schedules are omitted because they are not applicable or not required or because the required information is incorporated herein by reference or included in the financial statements or related notes included elsewhere in this report.

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

| [removed: [3.2](http://www.sec.gov/Archives/edgar/data/1057352/000105735213000070/bylawsmajorityvotingamendm.htm)] [added: [3.2](https://www.sec.gov/Archives/edgar/data/1057352/000105735222000069/fourthamendedandrestatedby.htm)] | | | | | | [removed: Third] [added: Fourth] Amended and Restated By-Laws [added: of CoStar Group, Inc.] (Incorporated by reference to Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed with the [removed: Commission] [added: SEC] on [removed: September 24, 2013).] [added: May 9, 2022).] | | |

| [4.1](http://www.sec.gov/Archives/edgar/data/1057352/000095012311056513/w82657a1exv4w1.htm) | | | | | | Specimen Common Stock Certificate (Incorporated by reference to Exhibit 4.1 to the Registration Statement on Form S-4 of the Registrant (Reg. No. 333-174214) filed with the [removed: Commission] [added: SEC] on June 3, 2011). | | |

| [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: (filed herewith).] [added: (Incorporated by reference to Exhibit 4.2 to the Registrant's Annual Report on Form 10-K filed with the SEC on February 23, 2022).] | | |

| [4.3](http://www.sec.gov/Archives/edgar/data/1057352/000114036120015295/ex4_1.htm) | | | | | | Indenture, dated as of July 1, 2020, by and among CoStar Group, Inc., as issuer, the guarantors named therein and Wilmington Trust, National Association, as trustee, relating to the 2.800% Senior Notes due 2030, including the form of 2.800% Senior Notes due 2030 (Incorporated by reference to Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed with the [removed: Commission] [added: SEC] on July 1, 2020). | | |

| *[10.1](http://www.sec.gov/Archives/edgar/data/1057352/000105735216000138/ex44-2016stockincentivepla.htm) | | | | | | CoStar Group, Inc. 2016 Stock Incentive Plan (Incorporated by reference to Exhibit 4.4 to the Registration Statement on Form S-8 of the Registrant (Reg. No. 333-212278) filed with the [removed: Commission] [added: SEC] on June 28, 2016). | | |

| *[10.21](https://www.sec.gov/Archives/edgar/data/1057352/000105735221000080/secondaresppplanasapproved.htm) | | | | | | 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 [removed: Commission] [added: SEC] on July 28, 2021). | | |

| *[10.24](http://www.sec.gov/Archives/edgar/data/1057352/0001005150-98-000402.txt) | | | | | | Employment Agreement for Andrew C. Florance (Incorporated by reference to Exhibit 10.2 to Amendment No. 1 to the Registration Statement on Form S-1 of the Registrant (Reg. No. 333-47953) filed with the [removed: Commission] [added: SEC] on April 27, 1998). | | |

| [10.28](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 [removed: Commission] [added: SEC] on July 1, 2020) | | |

| [removed: [21.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735222000027/csgp-ex21120211231.htm)] [added: [21.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735223000030/csgp-ex21120221231.htm)] | | | | | | Subsidiaries of the Registrant (filed herewith). | | |

| [removed: [23.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735222000027/csgp-ex23120211231.htm)] [added: [23.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735223000030/csgp-ex23120221231.htm)] | | | | | | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith). | | |

| [removed: [31.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735222000027/csgp-ex31120211231.htm)] [added: [31.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735223000030/csgp-ex31120221231.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/1057352/000105735222000027/csgp-ex31220211231.htm)] [added: [31.2](https://www.sec.gov/Archives/edgar/data/1057352/000105735223000030/csgp-ex31220221231.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/1057352/000105735222000027/csgp-ex32120211231.htm)] [added: [32.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735223000030/csgp-ex32120221231.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/1057352/000105735222000027/csgp-ex32220211231.htm)] [added: [32.2](https://www.sec.gov/Archives/edgar/data/1057352/000105735223000030/csgp-ex32220221231.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: 2021,] [added: 2022,] 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. | | |

| 104 | | | | | | The cover page from the Registrant's Annual Report on Form 10-K for the year ended December 31, [removed: 2021,] [added: 2022,] formatted in Inline XBRL (included as Exhibit 101). | | |

(a)(2) Financial statement schedules:

Schedule II – Valuation and Qualifying Accounts

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

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

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

| | | | | | | Balance at Beginning of Year | | | | | | Charged to Expense | | | | | | | | | | | | Reductions | | | | | | Balance at End of Year | | |

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

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

| Year ended December 31, 2019(2) | | | | | | $ | 5,709 | | | | | $ | 10,978 | | | | | | | | | | | $ | 11,590 | | | | | $ | 5,097 | |

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

(1)Additions to the allowance for doubtful accounts are charged to bad debt expense.

Additions to the allowance for sales credits are charged against revenues.

(2)On January 1, 2020, the Company adopted ASU 2016-13, Financial Instruments-Credit Losses (Topic 326): Measurement of Credit Losses on Financial Instruments, using the modified retrospective method.

The adoption resulted in a $0.5 million reduction to the December 31, 2019 allowance for credit losses.

See Note 4 for a description of changes in the allowance for credit losses for the years ended December 31, 2021 and 2020.

| February [removed: 23, 2022] [added: 22, 2023] | | | | | | Andrew C. Florance | | |

| /s/ Michael R. Klein | | | | | | Chairman of the Board | | | | | | February [removed: 23, 2022] [added: 22, 2023] | | |

| /s/ Andrew C. Florance | | | | | | Chief Executive Officer and | | | | | | February [removed: 23, 2022] [added: 22, 2023] | | |

| /s/ Scott T. Wheeler | | | | | | Chief Financial Officer | | | | | | February [removed: 23, 2022] [added: 22, 2023] | | |

| /s/ Michael J. Glosserman | | | | | | Director | | | | | | February [removed: 23, 2022] [added: 22, 2023] | | |

| /s/ John W. Hill | | | | | | Director | | | | | | February [removed: 23, 2022] [added: 22, 2023] | | |

| /s/ Laura Cox Kaplan | | | | | | Director | | | | | | February [removed: 23, 2022] [added: 22, 2023] | | |

| /s/ Christopher J. Nassetta | | | | | | Director | | | | | | February [removed: 23, 2022] [added: 22, 2023] | | |

| /s/ Louise S. Sams | | | | | | Director | | | | | | February [removed: 23, 2022] [added: 22, 2023] | | |

| /s/ Robert W. Musslewhite | | | | | | Director | | | | | | February [removed: 23, 2022] [added: 22, 2023] | | |

| Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 42) | | | [removed: [F-](#i674069b223524e4c81840572761696f1_121)[2](#i674069b223524e4c81840572761696f1_121)] [added: [F-](#i450746f8b5af40fcb91ebfd3557dc847_121)[2](#i450746f8b5af40fcb91ebfd3557dc847_121)] | | |

| Consolidated Statements of Operations | | | [removed: [F-](#i674069b223524e4c81840572761696f1_124)[6](#i674069b223524e4c81840572761696f1_124)] [added: [F-](#i450746f8b5af40fcb91ebfd3557dc847_124)[5](#i450746f8b5af40fcb91ebfd3557dc847_124)] | | |

| Consolidated Statements of Comprehensive Income | | | [removed: [F-](#i674069b223524e4c81840572761696f1_127)[7](#i674069b223524e4c81840572761696f1_127)] [added: [F-](#i450746f8b5af40fcb91ebfd3557dc847_127)[6](#i450746f8b5af40fcb91ebfd3557dc847_127)] | | |

| Consolidated Balance Sheets | | | [removed: [F-](#i674069b223524e4c81840572761696f1_130)[8](#i674069b223524e4c81840572761696f1_130)] [added: [F-](#i450746f8b5af40fcb91ebfd3557dc847_130)[7](#i450746f8b5af40fcb91ebfd3557dc847_130)] | | |

| Consolidated Statements of Changes in Stockholders’ Equity | | | [removed: [F-](#i674069b223524e4c81840572761696f1_136)[9](#i674069b223524e4c81840572761696f1_136)] [added: [F-](#i450746f8b5af40fcb91ebfd3557dc847_133)[8](#i450746f8b5af40fcb91ebfd3557dc847_133)] | | |

| Consolidated Statements of Cash Flows | | | [removed: [F-](#i674069b223524e4c81840572761696f1_139)[10](#i674069b223524e4c81840572761696f1_139)] [added: [F-](#i450746f8b5af40fcb91ebfd3557dc847_136)[9](#i450746f8b5af40fcb91ebfd3557dc847_136)] | | |

[removed: | Notes to Consolidated Financial Statements | | | [F-](#i674069b223524e4c81840572761696f1_142)[11](#i674069b223524e4c81840572761696f1_142) | | |][added: NOTES TO CONSOLIDATED FINANCIAL STATEMENTS]

We have audited the accompanying consolidated balance sheets of CoStar Group, Inc. (the Company) as of December 31, [removed: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the related consolidated statements of operations, comprehensive income, changes in stockholders’ equity, and cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022] and the related notes [removed: 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: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] 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: 23, 2022] [added: 22, 2023] expressed an unqualified opinion thereon.

We have audited CoStar Group, Inc.’s internal control over financial reporting as of December 31, [removed: 2021,] [added: 2022,] 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: 2021,] [added: 2022,] based on the COSO criteria.

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: 2021] [added: 2022] and [removed: 2020,] [added: 2021,] the related consolidated statements of operations, comprehensive income, changes in stockholders' equity and cash flows for each of the three years in the period ended December 31, [removed: 2021] [added: 2022] and the related notes [removed: and the financial statement schedule listed in the Index at Item 15(a)(2) (collectively referred to as the “consolidated financial statements”)] of CoStar Group, Inc. and our report dated February [removed: 23, 2022] [added: 22, 2023] expressed an unqualified opinion thereon.

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

| Revenues | | | $ | [removed: 1,944,135] [added: 2,182,399] | | | | | $ | [removed: 1,659,019] [added: 1,944,135] | | | | | $ | [removed: 1,399,719] [added: 1,659,019] | |

| Cost of revenues | | | [removed: 357,241] [added: 414,008] | | | | | | [removed: 308,968] [added: 357,241] | | | | | | [removed: 289,239] [added: 308,968] | | |

| Gross profit | | | [removed: 1,586,894] [added: 1,768,391] | | | | | | [removed: 1,350,051] [added: 1,586,894] | | | | | | [removed: 1,110,480] [added: 1,350,051] | | |

| Selling and marketing (excluding customer base amortization) | | | [removed: 622,007] [added: 684,222] | | | | | | [removed: 535,778] [added: 622,007] | | | | | | [removed: 408,596] [added: 535,778] | | |

| Software development | | | [removed: 201,022] [added: 220,923] | | | | | | [removed: 162,916] [added: 201,022] | | | | | | [removed: 125,602] [added: 162,916] | | |

| General and administrative | | | [removed: 256,711] [added: 338,737] | | | | | | [removed: 299,698] [added: 256,711] | | | | | | [removed: 178,740] [added: 299,698] | | |

| Customer base amortization | | | [removed: 74,817] [added: 73,560] | | | | | | [removed: 62,457] [added: 74,817] | | | | | | [removed: 33,995] [added: 62,457] | | |

| | | | [removed: 1,154,557] [added: 1,317,442] | | | | | | [removed: 1,060,849] [added: 1,154,557] | | | | | | [removed: 746,933] [added: 1,060,849] | | |

| Income from operations | | | [removed: 432,337] [added: 450,949] | | | | | | [removed: 289,202] [added: 432,337] | | | | | | [removed: 363,547] [added: 289,202] | | |

| Interest [removed: (expense) income,] [added: income (expense),] net | | | [removed: (31,621)] [added: 32,125] | | | | | | [removed: (17,395)] [added: (31,621)] | | | | | | [removed: 16,742] [added: (17,395)] | | |

| Other income (expense), net | | | [removed: 3,252] [added: 3,383] | | | | | | [removed: (827)] [added: 3,252] | | | | | | [removed: 10,660] [added: (827)] | | |

| Income before income taxes | | | [removed: 403,968] [added: 486,457] | | | | | | [removed: 270,980] [added: 403,968] | | | | | | [removed: 390,949] [added: 270,980] | | |

| Income tax expense | | | [removed: 111,404] [added: 117,004] | | | | | | [removed: 43,852] [added: 111,404] | | | | | | [removed: 75,986] [added: 43,852] | | |

| Net income | | | $ | [removed: 292,564] [added: 369,453] | | | | | $ | [removed: 227,128] [added: 292,564] | | | | | $ | [removed: 314,963] [added: 227,128] | |

| Net income per share — basic(1) | | | $ | [removed: 0.75] [added: 0.93] | | | | | $ | [removed: 0.60] [added: 0.75] | | | | | $ | [removed: 0.87] [added: 0.60] | |

| Net income per share — diluted(1) | | | $ | [removed: 0.74] [added: 0.93] | | | | | $ | [removed: 0.59] [added: 0.74] | | | | | $ | [removed: 0.86] [added: 0.59] | |

| Notes to Consolidated Financial Statements | | | [F-](#i450746f8b5af40fcb91ebfd3557dc847_139)[10](#i450746f8b5af40fcb91ebfd3557dc847_139) | | |

| | | | | | | Highly Automated Revenue Systems related to Subscription Revenue | | |

| *Description of the Matter* | | | | | | As described in Note 2 to the consolidated financial statements, the Company derives revenues primarily by (i) providing access to its proprietary database of commercial real estate information and (ii) providing online marketplaces for professional property management companies, property owners, real estate agents and brokers and landlords, in each case, typically through a fixed fee for its subscription-based services. Revenues from subscription-based contracts are approximately 93% of total revenues for the current year and are recognized on a straight-line basis over the term of the agreement. The Company’s revenue recognition process involves several applications responsible for the initiation, processing, and recording of transactions. These applications interface with the Company’s enterprise resource planning system through automated and manual journal entries to accurately reflect revenue. | | |

| | | | | | | The process to calculate, aggregate, and record revenue relies on multiple internally developed and external tools and systems and involves interfacing significant volumes of data across the systems. Auditing the Company's accounting for revenue from subscription-based contracts was challenging and complex due to the high volume of individually-low-monetary-value transactions, dependency on the effective design and operation of multiple applications, some of which are specifically designed for the Company's business, and the use of multiple data sources in the revenue recognition process. Given the complexity of the information technology (IT) environment, the required involvement of professionals with expertise in IT to identify, test, and evaluate the revenue data flows, systems, and automated controls, we considered the audit of the Company’s subscription revenue-generating transactions to be a critical audit matter. | | |

| *How We Addressed the Matter in Our Audit* | | | | | | We performed procedures related to the Company’s internal controls that included, among others, obtaining an understanding, evaluating the design, and testing the operating effectiveness of internal controls over the Company’s accounting for subscription revenue. We tested the controls over the initiation and billing of new and recurring subscriptions, the provisioning of customers, and the Company’s cash to billings reconciliation process. We tested the controls related to the key application interfaces between the provisioning, billing, and accounting systems and tested IT general controls related to access to the relevant applications and data, and changes made to the relevant systems, configurations and interfaces. | | |

| | | | | | | We performed substantive audit procedures that included, among others, testing the Company’s accounting for revenue from contracts with customers, by testing, on a sample basis, the completeness and accuracy of the underlying data within the Company’s billing system. We performed data analytics by extracting data from the general ledger to evaluate the completeness and accuracy of recorded revenue and deferred revenue amounts, tracing a sample of sales transactions to source data, and testing a sample of cash to billings reconciliations. | | |

February 22, 2023

February 22, 2023

| | | | 2022 | | | | | | 2021 | | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 369,453 | | | | | | 369,453 | | |

| Other comprehensive loss | | | — | | | | | | — | | | | | | — | | | | | | (23,317) | | | | | | — | | | | | | (23,317) | | |

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

| Stock issued for equity offerings, net of transaction costs | | | 10,656 | | | | | | 107 | | | | | | 745,593 | | | | | | — | | | | | | — | | | | | | 745,700 | | |

| Balance at December 31, 2022 | | | 406,671 | | | | | | $ | 4,066 | | | | | $ | 5,065,511 | | | | | $ | (29,075) | | | | | $ | 1,829,619 | | | | | $ | 6,870,121 | |

The Company acquired Homes.com, BureauxLocaux and Business Immo in May 2021, October 2021 and April 2022, respectively.

Revenue from our subscription-based contracts was approximately 93%, 93% and 95% of total revenue for the years ended December 31, 2022, 2021 and 2020, respectively.

| | | | 2022 | | | | | | 2021 | | |

For equity instruments that vest based on achievement of both a performance and market condition,

When determining the grant date fair value of all stock-based awards, the Company considers whether it is in possession of any material, non-public information that upon its release would have a material affect on its share price, and if so, whether the observable share price or expected volatility assumptions used in determining the fair value of the awards should be adjusted.

Cash and cash equivalents were $5.0 billion and $3.8 billion as of December 31, 2022 and 2021, respectively.

The Company had no restricted cash as of December 31, 2022 and 2021.

In January 2021, the Company purchased an office building located in Richmond, Virginia, together with the land and assumed an existing lease for a purchase price of $131 million, inclusive of property taxes, title insurance and other transaction costs.

The purchase of the Richmond building was accounted for as an asset acquisition, including an intangible asset for the assumed lease.

The net impact from the lease arrangement is recorded in other income (expense), net on the consolidated statements of operations and was not material.

The Company has broken ground on an expansion of its campus in Richmond, Virginia and acquired a small office building near the campus to facilitate employee staging while the expansion is being constructed.

The capitalized spending associated with these efforts is recorded in the purchase of Richmond assets line of the consolidated statements of cash flows.

During 2022, the Company ceased using leased properties in California and Maryland as part of efforts to centralize our workforce which resulted in an impairment charge of $9 million for lease ROU assets and property and equipment related to abandoned leases.

The leases related to the North America segment.

We may first assess qualitative factors to evaluate whether it is more likely than not that the fair value of a reporting unit is less than its carrying amount, or elect to bypass the qualitative assessment.

See Note 11 for further discussion of the Company's accounting for its outstanding debt, revolving credit facility and related issuance costs.

However, in response to the deferral of the cessation date for certain overnight LIBOR measures, the FASB issued ASU 2022-06 on December 21, 2022, which extends the sunset date of Topic 848 to December 31, 2024.

In March 2022, the FASB issued ASU 2022-02, *Financial Instruments-Credit Losses (Topic 326): Troubled Debt Restructurings and Vintage Disclosures.* This ASU eliminates prior guidance on troubled debt restructurings for creditors that have adopted ASU 2016-13, *Measurement of Credit Losses in Financial Statements,* and adds enhanced disclosures for creditors with respect to loan refinancings and restructurings for borrowers experiencing financial difficulty.

In addition, the ASU amends guidance on "vintage disclosures" to require the disclosure of current period gross write offs by year of origination.

This guidance is effective for fiscal years beginning after December 15, 2022.

The Company expects there to be no material impact on its consolidated financial statements and related disclosures from the adoption of this ASU.

| Balance at December 31, 2022(2) | | | $ | 103,782 | |

| | | | Year Ended December 31, 2022 | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Beginning balance at December 31, 2021 | | | $ | 5,380 | | | | | $ | 1,820 | | | | | $ | 3,393 | | | | | $ | 1,968 | | | | | $ | 813 | | | | | | | | | | | $ | 13,374 | |

| Current-period provision (release) for expected credit losses | | | 9,168 | | | | | | (557) | | | | | | 5,813 | | | | | | 3,807 | | | | | | 78 | | | | | | | | | | | | 18,309 | | |

| Write-offs charged against the allowance, net of recoveries and other | | | (10,038) | | | | | | (212) | | | | | | (4,859) | | | | | | (4,379) | | | | | | — | | | | | | | | | | | | (19,488) | | |

| | | | | | | Valuation of Acquired Intangible Assets of Homes.com | | |

| *Description of the Matter* | | | | | | As described in Note 5 to the consolidated financial statements, during the year ended December 31, 2021, the Company completed the acquisition of Homes Group, LLC. (“Homes.com”) for $152 million in cash. The Company’s accounting for the acquisition included determining the fair value of the acquired intangible assets, with customer base ($32 million) and trade names ($21 million) comprising most of the assets acquired. Auditing the accounting for the acquired intangible assets of 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 revenue. Prospective financial information used in determining the fair value of customer base and trade name intangible assets could be affected by changes in economic and market conditions. | | |

| *How We Addressed the Matter in Our Audit* | | | | | | We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s process for accounting for acquired intangible assets. For example, we tested controls over management’s review of the valuation model and significant assumptions used in the valuation as well as controls over the completeness and accuracy of the data used in the model and assumptions. To test the fair value of these acquired intangible assets, our audit procedures included, among others, evaluating the Company's use of valuation methodologies, evaluating the significant assumptions, evaluating the prospective financial information and testing the completeness and accuracy of underlying data. We involved our valuation specialists to assist in testing certain significant assumptions used to value the acquired intangible assets. For example, we compared the significant assumptions to current industry and market trends, historical results of the acquired business and to other relevant factors. We also performed sensitivity analyses of the significant assumptions to evaluate the change in the fair value resulting from changes in the assumptions. | | |

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.

("Homes.com"), which are included in the 2021 consolidated financial statements of CoStar Group, Inc., and collectively constituted less than 1% of total assets as of December 31, 2021 and less than 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 BureauxLocaux and Homes.com.

February 23, 2022

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| Balance at December 31, 2018 | | | 364,588 | | | | | | $ | 3,646 | | | | | $ | 2,416,530 | | | | | $ | (11,688) | | | | | $ | 613,454 | | | | | $ | 3,021,942 | |

| Cumulative effect of adoption of new accounting standard, net of tax | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 12,057 | | | | | | 12,057 | | |

| Balance at January 1, 2019 | | | 364,588 | | | | | | $ | 3,646 | | | | | $ | 2,416,530 | | | | | $ | (11,688) | | | | | $ | 625,511 | | | | | $ | 3,033,999 | |

| Net income | | | — | | | | | | — | | | | | | — | | | | | | — | | | | | | 314,963 | | | | | | 314,963 | | |

| Other comprehensive income | | | — | | | | | | — | | | | | | — | | | | | | 3,103 | | | | | | — | | | | | | 3,103 | | |

| Exercise of stock options | | | 1,159 | | | | | | 12 | | | | | | 18,640 | | | | | | — | | | | | | — | | | | | | 18,652 | | |

| Management stock purchase plan | | | — | | | | | | — | | | | | | 3,491 | | | | | | — | | | | | | — | | | | | | 3,491 | | |

| Cash, cash equivalents and restricted cash at beginning of year | | | 3,755,912 | | | | | | 1,070,731 | | | | | | 1,100,416 | | | | | |

On June 24, 2020, the Company acquired Ten-X Holding Company, Inc. and its subsidiaries ("Ten-X"), which operate an online auction platform for commercial real estate.

On October 26, 2020, the Company acquired Emporis GmbH, a Germany-based provider of international commercial real estate data and images.

On December 22, 2020, the Company acquired Homesnap, Inc. (“Homesnap”), which operates an online mobile software platform for residential real estate agents and brokers.

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.

See Note 5 for further discussion of acquisitions.

See Note 5 for further discussion.

Cash, cash equivalents, and restricted cash consisted of the following as of December 31, 2021 and 2020 (in thousands):

| Restricted cash: | | | | | | | | | | | |

| RentPath break fee held in escrow under the terms of the Asset Purchase Agreement | | | — | | | | | | 58,750 | | |

| Other restricted cash related to acquisitions | | | — | | | | | | 3,349 | | |

| Total restricted cash | | | — | | | | | | 62,099 | | |

| Cash, cash equivalents and restricted cash | | | $ | 3,827,126 | | | | | $ | 3,755,912 | |

The incremental borrowing rate is subsequently reassessed upon a modification to the lease arrangement.

See Note 11 for further discussion of the Company's 2020 Credit Agreement and Senior Notes issuance.

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.

| Balance at December 31, 2020(1) | | | $ | 77,363 | |

| ________________________ | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

(3) Amounts previously disclosed in the Commercial Property and Land portfolio segment have been further disaggregated into the LoopNet, Residential and Other Marketplaces portfolio segments.

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