CoStar Group (CSGP) 10-K risk factor changes: FY2023 vs FY2022

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

Our [added: subscription-based services generate the largest portion of our revenues.* Our] revenue may not grow, or could decrease, if we cannot attract new customers, continue to keep our cancellation rate low and continue to sell new services to our existing customers.

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

For example, [added: we have and will continue] to [added: invest significantly in developing our marketplaces and content and, to] generate brand awareness and site [removed: traffic for our marketplaces,] [added: traffic,] we have and will continue to invest significant resources in multi-channel marketing [removed: campaigns.][added: campaigns for select marketplaces.]

If these [added: development efforts and] marketing campaigns do not increase brand awareness, site [removed: traffic] [added: traffic, subscriptions for marketplaces services] and/or revenues, the cost of these campaigns could have an adverse effect on our financial results.

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

[added: The markets for information systems and services and for online marketplaces in general are highly competitive and rapidly changing.*] Competition in these markets may increase further if economic conditions or other circumstances cause customer bases and customer spending to decrease and service providers to compete for fewer customer resources.

Competitors may introduce different solutions that attract users away from our services or provide solutions similar to ours that [removed: have the advantage of better branding or marketing resources.]

[added: 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.

[removed: We] [added: For example, 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 year; however, sales fluctuate from year-to-year and may fluctuate more widely when there are changes in general economic conditions or the [removed: industry, such as changes resulting from] [added: industry.The timing of widely observed holidays and vacation periods, particularly slowdowns during] the [removed: COVID-19 pandemic] [added: end-of-year holiday period,] and [removed: due to other macroeconomic factors.][added: availability of real estate agents and related service providers during these periods, could significantly affect our quarterly operating results during that period.]

*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 [added: rates or a period of elevated interest] rates, labor shortages, supply chain disruptions, trade uncertainty, political unrest, geographical instability or other impacts from the macroeconomic environment.

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 continued remote work [removed: policies;] [added: policies or a period of elevated interest rates;] rising interest [removed: rates and] [added: rates, inflation,] slowing transaction volumes [removed: due to the impact of the COVID-19 pandemic or] [added: and] other macroeconomic [removed: events] [added: trends] that negatively impact investment returns; excessive speculative new construction in localized markets resulting in increased vacancy rates and diminished rent growth; unanticipated [removed: disasters;] [added: disasters or global health events;] and other adverse events such as decreased growth in the working age population resulting in reduced demand for all types of real estate.

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

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

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

*We may be unable to increase awareness of our brands, including CoStar, LoopNet, Apartments.com, [removed: BizBuySell,] [added: Homes.com] Land.com, [added: BizBuySell,] STR, Ten-X, [removed: Homes.com] and [removed: Homesnap,] [added: OnTheMarket,] 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 [removed: LoopNet,] the [added: LoopNet Network, the] Apartments.com [removed: network of rental websites,] [added: Network,] our Homes.com and [removed: Homesnap] [added: OnTheMarket] residential marketplaces, [removed: CoStar Showcase and] the Land.com [removed: Network.][added: Network and our CoStar Showcase.]

*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 affected*. Our ability to generate revenues from our marketplace business depends, in part, on our ability to [removed: attract users to our websites.]

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

For example, when a user enters in a search query for an apartment building name or address into an internet search engine, the internet search engine’s ranking of our Apartments.com [added: or Homes.com] webpages will determine how prominently such webpages are displayed on the search engine results page.

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

*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 [removed: LoopNet,] the [added: LoopNet Network, the] Apartments.com [removed: network of rental websites,] [added: Network,] our [removed: residential brands including] Homes.com and [removed: Homesnap] [added: OnTheMarket residential marketplaces, CoStar Showcase] and the Land.com Network, depend on advertising revenues generated primarily through sales to persons in the real estate industry, including [added: broker, agents,] property managers and [removed: owners] [added: owners, real estate agents,] and other advertisers.

Further, with respect to the Apartments.com [removed: network of rental websites,] [added: Network and LoopNet Networks,] our ability to attract and retain advertisers also depends on the current apartment rental market and apartment vacancy [removed: rates.][added: rates and commercial rental market and vacancy rates, respectively.]

Costs in connection with acquisitions and integrations may be higher than expected and could adversely affect our financial condition, results of [removed: operation] [added: operations] or prospects of the combined business.

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

Significant break-up fees incurred in the future may adversely affect our results of [removed: operation] [added: operations] and financial condition.

As a result of our acquisitions, we had approximately [removed: $2.6] [added: $2.7] billion of goodwill and intangibles as of December 31, [removed: 2022.][added: 2023.]

*Cyberattacks and security vulnerabilities could result in serious harm to our reputation, business and financial condition.* [removed: As stated above, our] [added: Our] business relies on IT Systems and involves the generation, collection, storage, processing and transmission of Confidential Information, including personal information and proprietary business [removed: information.][added: information, by us and by third-party providers we rely on.]

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

[removed: Despite these measures and similar measures implemented by many third-party providers, our] [added: 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.

The [added: tools and] techniques [added: (including artificial intelligence)] used to obtain unauthorized, improper or illegal access to a target’s systems, data or customers’ data, disable or degrade services, or sabotage systems are constantly evolving and have become increasingly complex and [removed: sophisticated, may be difficult to detect quickly and often are not recognized or detected until after they have been launched against a target.][added: sophisticated.]

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

Numerous and evolving cybersecurity threats, including [removed: advanced] [added: from diverse threat actors, such as state-sponsored organizations, opportunistic hackers] and [removed: persisting] [added: hacktivists, as well as through diverse attack vectors, such as advanced] cyberattacks, [removed: phishing and] [added: phishing,] social engineering schemes, [added: malware (including ransomware), malfeasance by insiders, human or technological error, and as a result of bugs, misconfigurations or exploited vulnerabilities in software or hardware,] could compromise the confidentiality, availability and integrity of [removed: the data such as] Confidential Information and our IT systems.

[removed: 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.

[added: In the past three years, we have not experienced a material cybersecurity incident, but any actual or perceived cybersecurity incidents or] breaches of our security could result in any or all of the following, among other things, any of which could adversely affect our business and results of operations:

- Result in significant regulatory [removed: scrutiny] [added: scrutiny, enforcement actions, legal proceedings] and [added: claims (including class action lawsuits) and other] legal and financial exposure;

- Cause us to incur significant [removed: remediation] [added: remediation, system restoration, incident response] and compliance costs;

In addition, any cyberattacks or data security breaches affecting companies that we acquire [removed: or] our customers or vendors (including data center and cloud computing providers) could have similar negative effects on our business.

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

While [removed: this vulnerability] [added: these vulnerabilities] did not have a material adverse effect on our operations, [removed: it] [added: they] and similar incidents require us to devote time and resources to [added: monitoring and] remediation on a regular basis.

*Our revenues and financial position will be adversely affected if we are not able to attract and retain clients.

have the advantage of better branding or marketing resources.

our information, analytics and online marketplaces.

If Mr. Florance were to become unavailable for any reason, there could be a material adverse impact on our operations.

The loss of other key personnel, including members of management as well as key technology, product development, and marketing personnel, could also disrupt our operations and have an adverse effect on our business.

*Introducing new products may be difficult and expensive.

If we are unable to do so successfully, our brands may be adversely affected, and we may not be able to maintain or grow our current revenue and profit levels.* In February 2024 we launched our Homes.com monetization strategy.

We have incurred, and expect to continue to incur, significant costs to develop and market Homes.com.

If we are unable to attract and retain agent subscribers and consumers, we may not be able to execute our growth plans or recognize a return on the investments we have made into Homes.com.

Failure to gain market acceptance for Homes.com could impede our ability to maintain or grow current revenue levels or reduce profits for our other brands, adversely affect the image of our brands, erode our competitive position, and result in long-term harm to our business and financial results.

Extrapolations annualizing initial sales results may differ materially from actual results realized in future periods and may not take into account other future market conditions that may negatively affect those results.

attract users to our websites.

Additionally, the methods, including Google Analytics, that we use to measure unique visitors to our portals may misstate the actual number of unique persons who visit our network of mobile applications and websites for a given month or may differ from the methods used by competitors, which may impact the comparability of unique visitors between companies.

Additionally, the methods, including Google Analytics, that we use to measure unique visitors to our portals may misstate the actual number of unique persons who visit our network of mobile applications and websites for a given month or may differ from the methods used by competitors, which may impact the comparability of unique visitors between companies.

It may be difficult to detect, investigate or remediate such cyber attacks quickly and such attacks often are not recognized or detected until after they have been launched against a target.

Our efforts to prevent, detect and respond to data

There can be no assurance that our cybersecurity risk management program and processes, including our policies, controls, or procedures, will be fully implemented, complied with or effective in protecting our IT Systems and Confidential Information.

In the past, one of our vendors providing IT infrastructure management software was compromised by cyberattacks.

demand for our information, analytics and online marketplace services, any of which could harm our business, results of operations and financial condition.

Amazon Web Services ("AWS") and Akamai Connected Cloud ("ACC") are distributed computing infrastructure platforms for business operations, commonly referred to as “cloud” computing services.

We currently run a majority of our computing on AWS and ACC and have built our software and computer systems to use computing, storage capabilities, bandwidth, and other services provided by AWS and ACC.

Given this, any significant disruption of or interference with AWS or ACC, whether temporary, regular, or prolonged, would negatively impact our operations and our business.

To date, we have financed construction with cash on hand and plan to finance the remainder of construction in the same way.

disrupt our operations, as well as the operations of our suppliers and customers.

*We may not be able to successfully halt the operation of websites that aggregate our data, as well as data from other companies, or "copycat" websites that may misappropriate our data.* We have expended significant resources to develop proprietary content and any misappropriation of our data could reduce that value of that content or our return on investment related to that content, which could harm our competitive position and results of operations.

Artificial intelligence is becoming increasingly powerful and sophisticated, and third parties may utilize artificial intelligence to misappropriate our data more quickly and at a larger scale than in the past.

*We may not be able to maintain or establish relationships with third-party listing providers, which could limit the information we have to power our products and services and impair our ability to attract or retain customers.* Our ability to attract agents and consumers to our Homes.com Network, its websites and mobile applications and other residential real estate tools depends, to some degree, on us providing timely access to comprehensive and accurate real estate listings and information.

We get listings data primarily from MLSs in the markets we serve.

We also source listings data from public records, other third-party listing providers, and other sources.

Many of our agreements with real estate listing providers may be terminated with limited notice or cause.

Many of our competitors and other real estate websites have similar access to MLSs and listing data and may be able to source certain real estate information faster or more efficiently than we can.

Because MLS participation is voluntary, brokers and homeowners may decline to post their listings data to their local MLS or may seek to change or limit the way that data is distributed.

Another industry participant or group could create a new listings data service, which could impact the relative quality or quantity of information of our listing providers.

The loss of existing relationships with MLSs and other listing providers, whether due to termination of agreements, loss of MLS memberships, or otherwise, changes to our rights to use or timely access listing data or an inability to continue to add new listing providers or changes to the way real estate information is shared, may negatively impact our listing data quality.

This could markedly decrease the quantity and quality of the sale and rental data we provide, reduce customer confidence in our products and services and cause customers to go elsewhere for real estate listings and information, which could severely harm our business, results of operations and financial condition.

*If we fail to comply with the rules and compliance requirements of MLSs, our access to and use of listings data may be restricted or terminated*.

Our products and services access and use listings data through MLS memberships and must comply with each MLS’s rules and compliance requirements to maintain their access to listings data and remain a member in good standing.

Each MLS has adopted its own rules, policies, and agreement terms governing, among other things, how MLS data

may be used and how listings data must be displayed on our websites and mobile applications.

MLS members are also subject to compliance operations requirements and, as a result, must respond to complaints lodged by the MLS or other MLS participants on required timelines.

Our subscription-based services generate the largest portion of our revenues.

Our competitors may be able to undertake more effective

In addition, we generally incur greater marketing expenses during the second quarter, which coincides with the peak season for apartment rentals.

The timing of widely observed holidays and vacation periods, particularly slowdowns during the end-of-year holiday period, and availability of real estate agents and related service providers during these periods, could significantly affect our quarterly operating results during that period.

A depressed real estate market has a negative

receiving higher search result rankings.

Our marketing expenses may increase in connection with our efforts to maintain or increase traffic to our websites.

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.

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

For example, in December 2020, we became aware that one of our vendors providing IT infrastructure management software, SolarWinds Corporation, had been compromised by cyberattacks.

As of December 22, 2020, we had implemented the fully patched versions of the SolarWinds software and we took additional measures to block internet connectivity to and from all SolarWinds’ Orion servers.

Although we have not identified any compromise of our IT Systems due to the use of SolarWinds software to date, we continue to monitor our network for any potential impact related to the SolarWinds cyberattack.

We currently plan to finance construction with cash on hand.

As a result of COVID-19 and its impact on global economic conditions, including the real estate industry, towards the end of the first quarter and in the first two months of the second quarter of 2020, we saw an increase in customer requests for cancellations or suspensions, a reduction in new customer sales, failures to pay and delays in payments of amounts owed to us.

We may see additional requests as ongoing economic uncertainty causes customers to reduce expenses and prolong the decision-making time before purchasing third-party services, which may lead to fewer of our services being purchased or service cancellations.

COVID-19, and the disruption in global economic conditions stemming from the pandemic, could also precipitate or aggravate the other risk factors discussed herein, which could materially adversely affect our business, financial condition and

results of operations.

Further, the COVID-19 pandemic may also affect our operating and financial results in a manner that is not presently known to us or that we currently do not consider to present significant risks.

We depend on processing vendors to complete credit and debit card transactions.

In addition, if the systems to authorize and process credit card transactions fail to work properly and, as a result, we do not charge our customers’ credit cards on a timely basis or at all, our business, revenue, results of operations and financial condition could be harmed.

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

Longer-term physical impacts may also result

decrease the value of our foreign assets, as well as decrease our revenues and earnings from our foreign subsidiaries, which would reduce our profitability and adversely affect our financial position.

*The economic effects of Brexit may affect relationships with existing and future customers and could have an adverse impact on our business and operating results.* On June 23, 2016, the U.K. held a referendum in which British citizens approved an exit from the E.U., commonly referred to as “Brexit.” On January 31, 2020, the U.K. officially withdrew from the E.U., and later ratified a trade and cooperation agreement governing its future relationship with the E.U. The agreement, which became effective May 1, 2021, addresses trade, economic arrangements, law enforcement, judicial cooperation and a governance framework, including procedures for dispute resolution, among other things.

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.

Brexit may also lead to divergent national laws and regulations as the U.K. continues to consider which E.U. laws to replace or replicate, and compliance with those laws and regulations may be cumbersome, difficult or costly.

We cannot yet predict the full implications of Brexit, including whether it will further increase our cost of doing business or otherwise adversely affect our financial condition or results of operations.

The ongoing impact to us from Brexit may affect not only our U.K. operations but also our E.U. operations.

Our borrowings under the 2020 Credit Agreement will carry a variable interest rate based on the EURIBOR or the LIBOR as a benchmark for establishing the rate of interest.

LIBOR is the subject of recent national, international and other regulatory guidance and proposals for reform.

The U.K. authority that regulates LIBOR announced that it will not compel banks to submit rates for the calculation of LIBOR after June 2023.

The full impact of any transition away from LIBOR remains unclear.

The 2020 Credit Agreement allows us and the administrative agent under the 2020 Credit Agreement to amend the 2020 Credit Agreement to replace LIBOR with one or more SOFR-based rates or another alternative benchmark rate.

We may not be able to

agree with the administrative agent on a replacement reference rate that is as favorable as LIBOR, which may increase the cost of our borrowings under the 2020 Credit Agreement.

The CCPA expands the rights of California residents to access and require deletion of their personal information, opt out of certain personal information sharing and receive detailed information about how their personal information is used.

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

For example, the CPRA went into effect in January 2023 (with a lookback period until January 2022).

CoStar's [removed: year-over-year] revenue growth rate for [removed: 2022 accelerated] [added: the year ended December 31, 2023 slowed] compared to [removed: 2021.][added: the year ended December 31, 2022.]

[removed: We expect] Information [removed: Services'] [added: Services] revenue growth rate for [added: the year ended December 31,] 2023 [removed: to slow] [added: slowed] compared to the [removed: revenue growth rate for 2022 as a result of lower price adjustments.][added: year ended December 31, 2022.]

[removed: The acquisitions of] [added: Our] Homes.com [added: Network] and [removed: Homesnap] [added: the acquisition of OnTheMarket have] enabled us to expand our offerings to the residential for sale market.

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

[removed: We expect residential revenue] [added: Residential's revenues] for [added: the year ended December 31,] 2023 [removed: to decrease when] [added: decreased] compared to [removed: 2022] [added: the year ended December 31, 2022,] due to the discontinuation of certain non-strategic products and services.

Our other marketplaces include Ten-X, an online auction platform for commercial real estate [removed: that was acquired on June 24, 2020.][added: and our BizBuySell and Land.com networks.]

The BizBuySell network provides online marketplaces for businesses and franchises for [removed: sale] [added: sale,] and [removed: our] [added: THE] Land.com [removed: Network] [added: network] provides online marketplaces for rural [removed: lands] [added: land] for sale.

[removed: *Subscription-based Services*][added: Subscription-based Services]

For the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] our annualized net new bookings of subscription-based services on all contracts were approximately [removed: $305] [added: $286] million, [removed: $217] [added: $305] million and [removed: $184] [added: $217] million, [removed: 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.][added: respectively.]

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

Revenue from our subscription-based contracts [removed: was] [added: were] approximately [removed: 93%,] [added: 95%,] 93% and [removed: 95%] [added: 93%] of total revenue for the years ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] respectively.

The [removed: declines] [added: decrease] in the percentage of our revenue from subscription-based contracts [added: with a term of at least one year] from [removed: 2020] [added: 2023] to [removed: 2021] [added: 2022] was primarily due to the acquisitions of companies that contained a higher percentage of transaction-based revenue than our legacy [removed: businesses.][added: businesses, as well as increases in sales of shorter term advertising products.]

For the trailing 12 months ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] our contract renewal rates for [removed: existing CoStar Group company-wide] subscription-based services for contracts with a term of at least one year were approximately 90%, [removed: 92%] [added: 90%] and [removed: 89%,] [added: 92%,] respectively; and, therefore, our cancellation rates for those services for the same periods were approximately 10%, [removed: 8%] [added: 10%] and [removed: 11%,] [added: 8%,] respectively.

Revenue from our subscription-based contracts with a term of at least one year [removed: was] [added: were] approximately [removed: 80%, 77% and] [added: 82%,] 80% [added: and 77%] of total revenue for the trailing 12 months ended December 31, [removed: 2022, 2021] [added: 2023, 2022] and [removed: 2020,] [added: 2021,] respectively.

The increase in the percentage of our revenue from subscription-based contracts for contracts with a term of at least one year from [removed: 2021 to] 2022 [added: to 2023] was due to increases in sales of longer term advertising products.

[removed: Impacts] [added: Impacts] of Current Economic [removed: Conditions][added: Conditions]

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

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

[removed: These activities may result in reduced demand for office space and rising] [added: Rising] interest rates [added: or a period of elevated interest rates] may reduce demand for all types of real estate.

Our key priorities for [removed: 2023] [added: the year ending December 31, 2024] currently include:

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

We plan to increase our residential marketing [removed: investment over] [added: investment, including] the [removed: course] [added: launch] of [removed: the year to build traffic on the website.][added: a brand campaign.]

The non-GAAP financial measures that we may disclose include EBITDA, adjusted EBITDA, adjusted EBITDA margin, [removed: non-GAAP net income and non-GAAP net income per diluted share.]

EBITDA is our net income before interest [removed: (expense) income,] [added: income or expense, net,] other [removed: (expense) income,] [added: income or expense, net,] loss on debt extinguishment, income taxes, depreciation and amortization.

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

We also believe the non-GAAP measures we disclose are measures of our ongoing operating performance because the isolation of non-cash charges, such as amortization and depreciation, and other items, such as interest [removed: (expense) income,] [added: income or expense, net,] other [removed: (expense) income,] income [added: or expense, net, income] taxes, stock-based compensation expenses, acquisition- and integration-related costs, restructuring costs, loss on debt extinguishment and settlement and impairment costs incurred outside our ordinary course of business, provides additional information about our cost structure, and, over time, helps track our operating progress.

[removed: In addition, investors, securities analysts and others have regularly relied on] EBITDA [removed: and may rely on adjusted EBITDA, adjusted EBITDA] margin, non-GAAP net income or non-GAAP net income per diluted share to provide a financial measure by which to compare our operating performance against that of other companies in our industry.

- The amount of interest [removed: (expense)] income [added: or expense, net] and other [removed: (expense)] income [added: or expense, net] we generate and incur may be useful for investors to consider and may result in current cash inflows and outflows.

However, we do not consider the amount of interest [removed: (expense)] income [added: or expense, net] and other [removed: (expense)] income [added: or expense, net] to be a representative component of the day-to-day operating performance of our business.

- 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 matters, charges [added: related to terminations of contracts or impairments of acquired intangible assets or other long lived assets.]

[removed: We] [added: Because we] do not [added: carry out restructuring activities on a predictable cycle, we do not] consider the amount of restructuring related costs to be a representative component of the day-to-day operating performance of our business.

The financial items that have been excluded from our net income to calculate non-GAAP net income and non-GAAP net income per diluted share are amortization of acquired intangible assets and other related costs, stock-based compensation, acquisition- and integration-related costs, restructuring and related costs and settlement and impairment costs incurred outside [removed: our ordinary course of business.]

In [removed: 2022] [added: both 2023] and [removed: 2021,] [added: 2022,] we assumed a 26% [removed: and 25%] tax rate, [removed: respectively,] which approximated our historical long-term statutory corporate tax rate, excluding the impact of discrete items.

| | | | Year Ended December 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | [added: | | | | | |]

| | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] | | | | | | [removed: 2020] [added: 2022] | | | | | | | | | | | | [added: 2021] | | | [added: | | | | | |]

[removed: | Interest (income) expense, net | | | (32,125) | | | | | | 31,621 | | | | | | 17,395 | | | | | | | | | | | | | | |][added: *Interest Income, Net*.]

[removed: | Other (income) expense, net | | | (3,383) | | | | | | (3,252) | | | | | | 827 | | | | | | | | | | | | | | |][added: *Other Income, Net*.]

The following table provides our selected consolidated results of operations for the indicated periods (in [removed: thousands] [added: millions] and as a percentage of total revenue):

[removed: | | | | Year] [added: Comparison of Year] Ended December [removed: 31, | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |][added: 31, 2023 and Year Ended December 31, 2022]

| | | | [removed: 2022] [added: 2023] | | | | | | | | | | | | [removed: 2021] [added: 2022] | | | | | | | | | | | | [removed: 2020] [added: 2021] | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

We expect CoStar's revenue growth rate for the year ending December 31, 2024 to be consistent with the revenue growth rate for the year ended December 31, 2023 primarily due to converting legacy STR customers to our new CoStar based benchmarking product offsetting lower inflation-based price adjustments.

We expect Information Services' revenue growth rate for the year ending December 31, 2024 to slow compared to the revenue growth rate for the year ended December 31, 2023 as a result of transitioning legacy STR customers to our new CoStar based benchmarking product.

Multifamily's revenue growth rate for the year ended December 31, 2023 accelerated compared to the year ended December 31, 2022 as a result of higher sales volumes driven by increases in pricing on renewals and an increase in the number of properties listed on our network.

We expect Multifamily's revenue growth rate for the year ending December 31, 2024 to moderate compared to the revenue growth rate for the year ended December 31, 2023 due to lower inflation-based price adjustments.

LoopNet's revenue growth rate for the year ended December 31, 2023 accelerated compared to the year ended December 31, 2022, due to an increase in the average price per listing.

We expect LoopNet's revenue growth rate for the year ending December 31, 2024 to

slow compared to the revenue growth rate for the year ended December 31, 2023 as a result of disruptions related to transitioning sales and service activities to a dedicated LoopNet field sales team.

Homes.com is a homes for sale listings site that combines our proprietary research with listing information to allow homebuyers an informative and collaborative experience finding homes for sale or lease.

In February 2024, we began selling subscription memberships to promote the home listing as well as the agent in the sort order.

OnTheMarket is a property portal in the U.K., which primarily offers subscriptions-based advertising services to agents.

We expect Residential's revenues for the year ending December 31, 2024 to increase compared to the year ended December 31, 2023 due to the OnTheMarket Acquisition and the launch of our new Homes.com product.

Other marketplaces' revenues for the year ended December 31, 2023 decreased compared to the year ended December 31, 2022, due to lower Ten-X transaction revenue, partially offset by growth in other products.

We expect other marketplaces' revenues for the year ending December 31, 2024 to be consistent with the revenues for the year ended December 31, 2023.

Net new bookings is calculated based on the annualized amount of change in the Company's sales bookings resulting from new subscription-based contracts, changes to existing subscription-based contracts and cancellations of subscription-based contracts for the period reported.

Net new bookings is calculated on all subscription-based contracts without regard to contract term.

The increase in the percentage of our revenue from subscription-based contracts from 2022 to 2023 was primarily due to the growth in our subscription-based services.

For Homes.com we are creating additional content for neighborhoods, parks, schools and condos.

In February 2024, we launched our new Homes.com subscription memberships to promote the home listing as well as the agent in the sort order on the website.

We intend to create an expanded dedicated sales force, to supplement the efforts of our sales team already in place.

For OnTheMarket, we plan to integrate OnTheMarket into the Company’s operations including additional investment in marketing, content creation and enhancing OnTheMarket’s website to improve performance and facilitate better search engine optimization.

- Continuing to enhance our facilities.

We are expanding our research and technology center in Richmond, Virginia.

The expansion includes construction of two new buildings spanning 750,000 square feet and will bring our campus footprint to over 1 million square feet when completed.

We plan to increase our research, technology, operations, software development, marketing and sales teams in this location.

In February 2024, we closed on the purchase of a building in Arlington, Virginia and we plan to build out a space for our employees.

The lease on our current Washington, DC headquarters ends in 2025.

We expect our investment in these priorities will increase our research, selling and marketing and facilities expenses, including potential impairments of assets associated with the acquired building.

Each of these will reduce our net income and may reduce our cash on hand for the year ending December 31, 2024 compared to the year ended December 31, 2023.

non-GAAP net income and non-GAAP net income per diluted share.

In addition, investors, securities analysts and others have regularly relied on EBITDA and may rely on adjusted EBITDA, adjusted

our ordinary course of business.

See Note 14 of the Notes to Consolidated Financial Statements included in Part IV of this Report for the reconciliation of our net income to our EBITDA.

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

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

| Revenues | | | $ | 2,455.0 | | | | | 100 | | % | | | | $ | 2,182.4 | | | | | 100 | | % | | | | $ | 1,944.1 | | | | | 100 | | % |

| Cost of revenues | | | 491.5 | | | | | | 20 | | | | | | 414.0 | | | | | | 19 | | | | | | 357.2 | | | | | | 18 | | |

| Software development | | | 267.6 | | | | | | 11 | | | | | | 220.9 | | | | | | 10 | | | | | | 201.0 | | | | | | 10 | | |

| General and administrative | | | 381.5 | | | | | | 16 | | | | | | 338.7 | | | | | | 16 | | | | | | 256.8 | | | | | | 13 | | |

| Customer base amortization | | | 42.2 | | | | | | 2 | | | | | | 73.6 | | | | | | 3 | | | | | | 74.8 | | | | | | 4 | | |

| Total operating expenses(1) | | | 1,681.2 | | | | | | 68 | | | | | | 1,317.4 | | | | | | 60 | | | | | | 1,154.6 | | | | | | 59 | | |

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.

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.

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.

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

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.

LoopNet's revenue growth rates slowed in 2022 when compared to 2021 as growth in the average price per listing declined in 2022 when compared to 2021.

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.

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.

Also included is our BizBuySell network, which includes BizQuest® and FindaFranchise and our Land.com Network of sites.

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

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

While the impacts of the COVID-19 pandemic and current economic conditions continue to evolve, they have not materially affected our consolidated financial statements during 2022, 2021 and 2020.

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.

◦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.

◦Continuing to invest in CoStar, including:

▪Enhancing benchmarking capabilities.

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.

evaluate and compare our performance from quarter-to-quarter and from year-to-year without the impact of these items.

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

The following table shows our net income reconciled to our EBITDA and our net cash flows from operating, investing and financing activities for the indicated periods (in thousands):

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

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

| Net income | | | $ | 369,453 | | | | | $ | 292,564 | | | | | $ | 227,128 | | | | | | | | | | | | | |

| Amortization of acquired intangible assets in cost of revenues | | | 29,019 | | | | | | 28,809 | | | | | | 25,675 | | | | | | | | | | | | | | |

| Amortization of acquired intangible assets in operating expenses | | | 73,560 | | | | | | 74,817 | | | | | | 62,457 | | | | | | | | | | | | | | |

| Depreciation and other amortization | | | 29,127 | | | | | | 29,018 | | | | | | 28,812 | | | | | | | | | | | | | | |

| Income tax expense | | | 117,004 | | | | | | 111,404 | | | | | | 43,852 | | | | | | | | | | | | | | |

| EBITDA | | | $ | 582,655 | | | | | $ | 564,981 | | | | | $ | 406,146 | | | | | | | | | | | | | |

| Net cash provided by (used in) | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |

| Operating activities | | | $ | 478,620 | | | | | $ | 469,731 | | | | | $ | 486,106 | | | | | | | | | | | | | |

We provide information, analytics and online marketplace services to commercial real estate and related business communities within the regions where we operate which primarily include, North America, Europe, Asia-Pacific and Latin [removed: America.]

For [added: both] the years ended December 31, [removed: 2022] [added: 2023] and December 31, [removed: 2021,] [added: 2022,] revenues denominated in foreign currencies were approximately [removed: 4% and] 4%, [removed: respectively,] of total revenue.

For the years ended December 31, [removed: 2022] [added: 2023] and December 31, [removed: 2021,] [added: 2022,] our revenues would have decreased by approximately [removed: $8] [added: $10] million and [removed: $7] [added: $8] million, respectively, if the U.S. dollar exchange rate used strengthened by 10%.

For the years ended December 31, [removed: 2022] [added: 2023] and December 31, [removed: 2021,] [added: 2022,] our revenues would have increased by approximately [removed: $8 million] [added: 4%] and [removed: $7] [added: $8] million, respectively, if the U.S. dollar exchange rate used weakened by 10%.

As of December 31, [removed: 2022,] [added: 2023,] accumulated other comprehensive loss included a loss from foreign currency translation adjustments of approximately [removed: $29.1] [added: $17.6] 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: 2022.][added: 2023.]

As of December 31, [removed: 2022,] [added: 2023,] we had [removed: $5.0 billion] of cash and cash equivalents.

We currently diversify our cash and cash equivalents holdings amongst multiple financial [removed: institutions.][added: institutions and AAA-rated Government and Treasury Money Market Funds.]

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: 2022.][added: 2023.]

We had approximately [removed: $2.6] [added: $2.7] billion of goodwill and intangible assets as of December 31, [removed: 2022.][added: 2023.]

As of December 31, [removed: 2022,] [added: 2023,] 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.

America.

Our service offerings span all commercial property types, including office, retail, industrial, multifamily, [removed: commercial] land, mixed-use and hospitality.

[removed: With] [added: Through] our [removed: acquisitions of Homesnap] [added: Homes.com Network] and [removed: Homes.com,] [added: our acquisition of OnTheMarket,] we also offer online platforms that manage workflow and marketing for residential real estate agents and brokers and provide [removed: a portal] [added: portals] for homebuyers to view residential property listings.

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

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 [added: Part IV of] this Report.

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 [removed: Statements.][added: Statements, included in Part IV of this Report.]

[removed: 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 [removed: 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 drone operators in the U.K. and Canada are certified and trained to Civil Aviation Authority and Transport [removed: Canada,] [added: Canada standards, respectively,] with a permission for commercial operations [removed: pending, respectively.][added: pending.]

We are leveraging our capabilities developed from our extensive commercial real estate research efforts to produce original, media rich content of neighborhoods, schools, parks and condominium buildings' amenities and common areas for our residential products using professional photographers and [removed: fleets] [added: a fleet] of drones to conduct aerial research of residential real estate.

Our portfolio of information, analytics and online marketplaces is branded and marketed to our customers and marketplace end users under the primary brands of [removed: CoStar*®*, STR*®*, Apartments.comTM, LoopNet*®*, Homes.com*®*, Homesnap*®*, Ten-X*®*, BizBuySell*®* and Land.comTM.][added: CoStar, LoopNet, Apartments.com, Homes.com, OnTheMarket,Ten-X, STR.]

We have developed and we expect to continue to develop additional services leveraging our database to meet the needs of our existing customers as well as [removed: potential] [added: potentially] new categories of customers.

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, [added: 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.]

[removed: *•Properties*] [added: - *Properties*] provides a comprehensive inventory of office, industrial, retail, multifamily, hospitality and student housing properties and land.

[removed: *•Tenants* is a detailed online business-to-business prospecting and analytics tool] providing commercial real estate professionals with the most comprehensive commercial real estate-related tenant information available in our North American markets.

- *Public Record* provides access to a searchable database of commercially-zoned parcels in the U.S. Users can search for property attributes and [removed: sale] [added: sales] transaction, loan, lien and tax assessment information.

[removed: - *Lender*] [added: *•Lender*] provides lenders the tools to manage their loan portfolio and risk.

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 Risk [removed: Analytics®] [added: Analytics] service offerings.

[removed: *•STARTM* Reports provide] [added: *•Benchmarking* provides] hospitality benchmarking, measuring a hotel’s performance against a self-selected aggregated competitive set.

[removed: STAR Reports] [added: Benchmarking results] are only available to industry participants who provide us with data.

[removed: Apartments.com™,] [added: Apartments.com,] the flagship brand of our network of apartment marketing sites, provides a variety of ad packages and enhancements that allow property managers and owners to fully showcase their apartment community through increased exposure and interactions that allow renters to view, engage and connect with the community.

[removed: *•ApartmentFinder*TM] [added: *•ApartmentFinder*] provides lead generation, advertising and internet marketing solutions to property managers and owners through its main site, ApartmentFinder.com.

[removed: *•ForRent.com*®] [added: *•ForRent.com*] provides digital advertising through a network of four multifamily websites, which includes ForRent.com, [removed: AFTER55.com®, CorporateHousing.comTM] [added: AFTER55.com, CorporateHousing.com] and [removed: ForRentUniversity.com®.][added: ForRentUniversity.com.]

[removed: *•ApartmentHomeLiving.com*TM] [added: *•ApartmentHomeLiving.com*] provides renters with another national online apartment rental resource that showcases apartments for rent with official prices, pictures, floor plans and detailed information on each apartment.

[removed: *•WestsideRentals.com®*] [added: *•WestsideRentals.com*] specializes in Southern California real estate rentals.

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

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

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

The LoopNet network leverages 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: healthcare,] hospitality, sports and entertainment, land and residential.

[removed: *LoopNet] [added: LoopNet] Premium [removed: Lister®*] [added: Lister] is designed for commercial real estate professionals and other customers who seek the broadest possible exposure for their listings, access to leads lists and advanced marketing and searching tools.

[removed: *LoopNet] [added: LoopNet] Diamond, Platinum and Gold [removed: Ads*] [added: Ads] are designed for commercial real estate professionals and other customers who seek the broadest possible exposure for their listings, access to leads lists and advanced marketing and searching tools.

[removed: The acquisitions of] [added: Our] Homes.com [added: Network] and [removed: Homesnap] [added: the acquisition of OnTheMarket have] enabled us to expand our offerings to the residential for sale market.

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

For [added: both] the years ended December 31, [removed: 2022, 2021] [added: 2023] and [removed: 2020,] [added: 2022,] no single client accounted for more than 5% of our revenues.

In [removed: 2022,] [added: 2023,] we successfully implemented a number of important sales initiatives focused on selling our products to brokers, property owners and lenders in the U.S. This focus will continue in [removed: 2023.][added: 2024.]

[removed: Acquisitions][added: Acquisitions]

We acquired Homes.com, [removed: BureauxLocaux and] [added: BureauxLocaux,] Business Immo [added: and OnTheMarket] in May 2021, October [removed: 2021 and] [added: 2021,] April [removed: 2022,] [added: 2022 and December 2023,] respectively.

See Notes 5 and 9 of the Notes to the Consolidated Financial [removed: Statements] [added: Statements, included in Part IV of this Report,] for further discussion of these acquisitions.

[removed: Development,] [added: Development,] Investments and [removed: Expansion][added: Expansion]

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

Further, in some cases, when integrating and coordinating our services and assessing industry and client needs, we may decide to combine, shift focus from, de-emphasize, phase [removed: out,] [added: out] or eliminate a service that, among other things, overlaps or is redundant with other services we offer.

- Search engines, internet listing services and mobile software applications featuring homes for sale, such as Google, Bing, Facebook Marketplace, Zillow, Trulia, Redfin, Realtor.com, Move.com, Craigslist, RealtyTrac, MLS.com, Home Finder, For Sale by [removed: Owner and] [added: Owner,] Auction.com, [added: Rightmove and Zoopla,] as well as agent marketing platforms and workflow providers;

Because of the importance commercial real estate professionals place on our data and our prominent position in the industry,

Land.com and BizBuySell.

*•Tenants* is a detailed online business-to-business prospecting and analytics tool.

facts important to renters.

Homes.com is a homes for sale listings site that combines our proprietary research with listing information to allow homebuyers an informative and collaborative experience finding homes for sale or lease.

In February 2024, we began selling memberships that allow agents to connect with prospective homebuyers sourced from the agent's own listings.

OnTheMarket is a property portal in the U.K. which primarily offers subscriptions-based advertising services to agents.

our research, sales and marketing organizations.

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.

We offer ad hoc reports with a customizable data set providing aggregated hotel performance data for a bespoke set of hotels or standardized industry segments (e.g. market or submarket).

Homes.com is a homes for sale listings site.

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

Our residential team is creating new and improved tools to help agents promote their residential listings, connect with buyers and sellers and streamline their daily workflow.

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

dental benefits and may participate in our employee wellness program as well as our employee assistance program.

For the fiscal year ended December 31, [removed: 2022][added: 2023]

[removed: ][added: ]

As of June 30, [removed: 2022,] [added: 2023,] 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: $23.7] [added: $36.0] billion.

As of February [removed: 17, 2023, 406,772,431] [added: 16, 2024, 408,409,321] 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: 2022] [added: 2023] are incorporated by reference into Part III of this Report.

| | | | [Glossary of [removed: Terms](#i450746f8b5af40fcb91ebfd3557dc847_1883)] [added: Terms](#i3d5fa50fac5a487ea89498a470016300_13)] | | | [removed: [4](#i450746f8b5af40fcb91ebfd3557dc847_1883)] [added: [4](#i3d5fa50fac5a487ea89498a470016300_13)] | | |

| Item 1. | | | [removed: [Business](#i450746f8b5af40fcb91ebfd3557dc847_16)] [added: [Business](#i3d5fa50fac5a487ea89498a470016300_19)] | | | [removed: [7](#i450746f8b5af40fcb91ebfd3557dc847_16)] [added: [7](#i3d5fa50fac5a487ea89498a470016300_19)] | | |

| Item 1A. | | | [Risk [removed: Factors](#i450746f8b5af40fcb91ebfd3557dc847_19)] [added: Factors](#i3d5fa50fac5a487ea89498a470016300_22)] | | | [removed: [21](#i450746f8b5af40fcb91ebfd3557dc847_19)] [added: [20](#i3d5fa50fac5a487ea89498a470016300_22)] | | |

| Item 1B. | | | [Unresolved Staff [removed: Comments](#i450746f8b5af40fcb91ebfd3557dc847_22)] [added: Comments](#i3d5fa50fac5a487ea89498a470016300_25)] | | | [removed: [33](#i450746f8b5af40fcb91ebfd3557dc847_22)] [added: [32](#i3d5fa50fac5a487ea89498a470016300_25)] | | |

| Item 2. | | | [removed: [Properties](#i450746f8b5af40fcb91ebfd3557dc847_25)] [added: [Properties](#i3d5fa50fac5a487ea89498a470016300_28)] | | | [removed: [33](#i450746f8b5af40fcb91ebfd3557dc847_25)] [added: [34](#i3d5fa50fac5a487ea89498a470016300_28)] | | |

| Item 3. | | | [Legal [removed: Proceedings](#i450746f8b5af40fcb91ebfd3557dc847_28)] [added: Proceedings](#i3d5fa50fac5a487ea89498a470016300_31)] | | | [removed: [34](#i450746f8b5af40fcb91ebfd3557dc847_28)] [added: [34](#i3d5fa50fac5a487ea89498a470016300_31)] | | |

| Item 4. | | | [Mine Safety [removed: Disclosures](#i450746f8b5af40fcb91ebfd3557dc847_31)] [added: Disclosures](#i3d5fa50fac5a487ea89498a470016300_34)] | | | [removed: [34](#i450746f8b5af40fcb91ebfd3557dc847_31)] [added: [34](#i3d5fa50fac5a487ea89498a470016300_34)] | | |

| Item 5. | | | [Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity [removed: Securities](#i450746f8b5af40fcb91ebfd3557dc847_37)] [added: Securities](#i3d5fa50fac5a487ea89498a470016300_40)] | | | [removed: [35](#i450746f8b5af40fcb91ebfd3557dc847_37)] [added: [35](#i3d5fa50fac5a487ea89498a470016300_40)] | | |

| Item 6. | | | [removed: [Reserved](#i450746f8b5af40fcb91ebfd3557dc847_40)] [added: [Reserved](#i3d5fa50fac5a487ea89498a470016300_43)] | | | [removed: [37](#i450746f8b5af40fcb91ebfd3557dc847_40)] [added: [37](#i3d5fa50fac5a487ea89498a470016300_43)] | | |

| Item 7. | | | [Management’s Discussion and Analysis of Financial Condition and Results of [removed: Operations](#i450746f8b5af40fcb91ebfd3557dc847_43)] [added: Operations](#i3d5fa50fac5a487ea89498a470016300_46)] | | | [removed: [38](#i450746f8b5af40fcb91ebfd3557dc847_43)] [added: [38](#i3d5fa50fac5a487ea89498a470016300_46)] | | |

| Item 7A. | | | [Quantitative and Qualitative Disclosures about Market [removed: Risk](#i450746f8b5af40fcb91ebfd3557dc847_70)] [added: Risk](#i3d5fa50fac5a487ea89498a470016300_73)] | | | [removed: [50](#i450746f8b5af40fcb91ebfd3557dc847_70)] [added: [49](#i3d5fa50fac5a487ea89498a470016300_73)] | | |

| Item 8. | | | [Financial Statements and Supplementary [removed: Data](#i450746f8b5af40fcb91ebfd3557dc847_73)] [added: Data](#i3d5fa50fac5a487ea89498a470016300_76)] | | | [removed: [51](#i450746f8b5af40fcb91ebfd3557dc847_73)] [added: [51](#i3d5fa50fac5a487ea89498a470016300_76)] | | |

| Item 9. | | | [Changes in and Disagreements with Accountants on Accounting and Financial [removed: Disclosure](#i450746f8b5af40fcb91ebfd3557dc847_76)] [added: Disclosure](#i3d5fa50fac5a487ea89498a470016300_79)] | | | [removed: [51](#i450746f8b5af40fcb91ebfd3557dc847_76)] [added: [51](#i3d5fa50fac5a487ea89498a470016300_79)] | | |

| Item 9A. | | | [Controls and [removed: Procedures](#i450746f8b5af40fcb91ebfd3557dc847_79)] [added: Procedures](#i3d5fa50fac5a487ea89498a470016300_82)] | | | [removed: [51](#i450746f8b5af40fcb91ebfd3557dc847_79)] [added: [51](#i3d5fa50fac5a487ea89498a470016300_82)] | | |

| Item 9B. | | | [Other [removed: Information](#i450746f8b5af40fcb91ebfd3557dc847_82)] [added: Information](#i3d5fa50fac5a487ea89498a470016300_85)] | | | [removed: [52](#i450746f8b5af40fcb91ebfd3557dc847_82)] [added: [52](#i3d5fa50fac5a487ea89498a470016300_85)] | | |

| Item 9C. | | | [Disclosure Regarding Foreign Jurisdictions that Prevent [removed: Inspections](#i450746f8b5af40fcb91ebfd3557dc847_85)] [added: Inspections](#i3d5fa50fac5a487ea89498a470016300_88)] | | | [removed: [52](#i450746f8b5af40fcb91ebfd3557dc847_82)] [added: [52](#i3d5fa50fac5a487ea89498a470016300_85)] | | |

| Item 10. | | | [Directors, Executive Officers and Corporate [removed: Governance](#i450746f8b5af40fcb91ebfd3557dc847_91)] [added: Governance](#i3d5fa50fac5a487ea89498a470016300_94)] | | | [removed: [52](#i450746f8b5af40fcb91ebfd3557dc847_91)] [added: [52](#i3d5fa50fac5a487ea89498a470016300_94)] | | |

| Item 11. | | | [Executive [removed: Compensation](#i450746f8b5af40fcb91ebfd3557dc847_94)] [added: Compensation](#i3d5fa50fac5a487ea89498a470016300_97)] | | | [removed: [52](#i450746f8b5af40fcb91ebfd3557dc847_94)] [added: [52](#i3d5fa50fac5a487ea89498a470016300_97)] | | |

| Item 12. | | | [Security Ownership of Certain Beneficial Owners and Management and Related Stockholder [removed: Matters](#i450746f8b5af40fcb91ebfd3557dc847_97)] [added: Matters](#i3d5fa50fac5a487ea89498a470016300_100)] | | | [removed: [52](#i450746f8b5af40fcb91ebfd3557dc847_97)] [added: [52](#i3d5fa50fac5a487ea89498a470016300_100)] | | |

| Item 13. | | | [Certain Relationships and Related Transactions, and Director [removed: Independence](#i450746f8b5af40fcb91ebfd3557dc847_100)] [added: Independence](#i3d5fa50fac5a487ea89498a470016300_103)] | | | [removed: [52](#i450746f8b5af40fcb91ebfd3557dc847_100)] [added: [52](#i3d5fa50fac5a487ea89498a470016300_103)] | | |

| Item 14. | | | [Principal Accountant Fees and [removed: Services](#i450746f8b5af40fcb91ebfd3557dc847_103)] [added: Services](#i3d5fa50fac5a487ea89498a470016300_106)] | | | [removed: [52](#i450746f8b5af40fcb91ebfd3557dc847_103)] [added: [52](#i3d5fa50fac5a487ea89498a470016300_106)] | | |

| Item 15. | | | [Exhibits and Financial Statement [removed: Schedules](#i450746f8b5af40fcb91ebfd3557dc847_109)] [added: Schedules](#i3d5fa50fac5a487ea89498a470016300_112)] | | | [removed: [53](#i450746f8b5af40fcb91ebfd3557dc847_109)] [added: [53](#i3d5fa50fac5a487ea89498a470016300_112)] | | |

| Item 16. | | | [Form 10-K [removed: Summary](#i450746f8b5af40fcb91ebfd3557dc847_112)] [added: Summary](#i3d5fa50fac5a487ea89498a470016300_115)] | | | [removed: [56](#i450746f8b5af40fcb91ebfd3557dc847_112)] [added: [56](#i3d5fa50fac5a487ea89498a470016300_115)] | | |

| | | | [Index to Consolidated Financial [removed: Statements](#i450746f8b5af40fcb91ebfd3557dc847_118)] [added: Statements](#i3d5fa50fac5a487ea89498a470016300_121)] | | | [removed: [F-](#i450746f8b5af40fcb91ebfd3557dc847_118)[1](#i450746f8b5af40fcb91ebfd3557dc847_118)] [added: [F-](#i3d5fa50fac5a487ea89498a470016300_121)[1](#i3d5fa50fac5a487ea89498a470016300_121)] | | |

| 2020 Credit Agreement | | | The second amended and restated credit agreement, [added: dated July 1, 2020,] which amended and restated in its entirety the then-existing credit agreement originally entered into on April 1, [removed: 2014 and] [added: 2014, as] amended [added: by the first amendment to the second amended] and restated [removed: on July 1, 2020] [added: credit agreement, dated May 8, 2023.] | | |

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

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

| CCPA | | | California Consumer Privacy [added: Act, as amended by the California Privacy Rights] Act | | |

| CoStar Group | | | The legal entity, CoStar Group, Inc., a Delaware corporation, one or more [removed: if] [added: of] 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 [added: of] CoStar Group | | |

| EBITDA | | | Net income before interest [removed: and] [added: income or expense, net;] other income [removed: (expense),] [added: or expense, net; loss on debt extinguishment;] income [removed: taxes,] [added: taxes;] depreciation and amortization | | |

| Homes.com | | | A [removed: homes for sale] [added: homes-for-sale] listings site | | |

| Homesnap Acquisition | | | CRI's acquisition of Homesnap completed on December 22, 2020, pursuant to an Agreement and Plan of Merger dated November 20, 2020 between CRI, [removed: Snapped] Halo Merger Sub [removed: Corp., a Delaware corporation and wholly-owned subsidiary of CRI,] [added: Corp] and Homesnap, [removed: Inc., a Delaware corporation. Snapped] [added: Inc.] Halo Merger Sub Corp. was merged with and into Homesnap, Inc., with Homesnap, Inc. surviving the merger as a wholly-owned subsidiary of CRI | | |

[added: Forward-looking statements include] information that is not purely historic fact and include, without limitation, statements concerning our financial outlook for [removed: 2023] [added: the year ending December 31, 2024] 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, non-GAAP net income, non-GAAP net income per diluted share, weighted-average outstanding shares, cash flow from operating activities, operating costs, capital and other expenditures, [added: the impact of current economic conditions on our revenues, revenue growth rates and profitability,] key priorities for [removed: 2023,] [added: the year ending December 31, 2024,] trends in customer behavior, [removed: the current and future impacts of COVID-19 on global economic conditions, the 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 [removed: sales,] [added: bookings,] contract renewal rates, use of proceeds from equity and debt offerings, the use of proceeds [removed: of] [added: from] any draws under our $750 million credit facility provided [removed: in] [added: by] the 2020 Credit Agreement, expectations regarding our compliance with financial and restrictive covenants in the 2020 Credit Agreement, employee relations, management’s plans, goals and objectives for future operations, sources and adequacy of liquidity and growth and markets for our stock.

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements.

Indicate by checkmark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

| Item 1C | | | [C](#i3d5fa50fac5a487ea89498a470016300_2202)[ybersecurity](#i3d5fa50fac5a487ea89498a470016300_2202) | | | [33](#i3d5fa50fac5a487ea89498a470016300_2202) | | |

| | | | [Signatures](#i3d5fa50fac5a487ea89498a470016300_118) | | | [57](#i3d5fa50fac5a487ea89498a470016300_118) | | |

| Apartments.com Network | | | Apartments.com, the flagship brand of our network of apartment marketing sites, and its network of rental websites | | |

| Audit Committee | | | The Audit Committee of the Board | | |

| BizBuySell | | | BizBuySell.com and its network of business for-sale websites | | |

| Board | | | The CoStar Group Board of Directors | | |

| CODM | | | Chief Operating Decision Maker | | |

| Halo Merger Sub | | | Snapped Halo Merger Sub Corp., a Delaware corporation and wholly owned subsidiary of CoStar Realty Information, Inc. | | |

| Homes.com Network | | | Homes.com, the flagship brand of our North American network of online platforms that manage workflow and marketing for residential real estate agents and brokers and provide portals for homebuyers to view residential property listings | | |

| LoopNet Network | | | Our network of online marketplaces, including LoopNet.co.uk, CityFeet.com and Showcase.com, enabling 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 | | |

| MLS | | | Multiple listing services | | |

| OnTheMarket | | | The legal entity OnTheMarket Plc, the operator of onthemarket.com, a leading U.K. residential property portal. | | |

| OnTheMarket Acquisition | | | CoStar UK's acquisition of OnTheMarket completed in December 2023, pursuant to Rule 2.7 of the United Kingdom City Code on Takeovers and Mergers. The acquisition has been implemented by means of a court-sanctioned scheme of arrangement under the U.K. Companies Act 2006 | | |

| SONIA | | | Sterling Overnight Index Average | | |

| STAR Report | | | A benchmarking tool used by the hospitality industry to compare a hotel's performance against a set of similar hotels in the same geographical area | | |

| STR | | | STR, LLC together with STR Global Ltd is a global data and analytics company that specializes in benchmarking hotel performance and providing market insights to the industry | | |

| Term SOFR | | | The forward-looking SOFR term rates administered by CME Group Benchmark Administration Limited | | |

- our inability to maintain or increase internet traffic to our marketplaces, and the risk that the methods, including Google Analytics, that we use to measure unique visitors to our portals may misstate the actual number of unique persons who visit our network of mobile applications and websites for a given month or may differ from the methods used by competitors;

- our ability to maintain or establish relationships with third-party listing providers;

- our ability to comply with the rules and compliance requirements of MLSs;

| | | | | | |

| | | | [Signatures](#i450746f8b5af40fcb91ebfd3557dc847_115) | | | [57](#i450746f8b5af40fcb91ebfd3557dc847_115) | | |

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

| IRA | | | The Inflation Reduction Act of 2022 | | |

Forward-looking statements include

- our inability to maintain or increase internet traffic to our marketplaces;

- the effects of and uncertainty surrounding the COVID-19 pandemic and its effect on the global economy and the real estate industry;

*Cybersecurity Risk Management and Strategy*

We have developed and implemented a cybersecurity risk management program intended to protect the confidentiality, integrity, and availability of our critical systems and information.

Our cybersecurity risk management program is guided by the National Institute of Standards and Technology Cybersecurity Framework (NIST CSF).

This does not imply that we meet any particular technical standards, specifications, or requirements at all times, only that we use the NIST CSF as a guide to help us identify, assess, and manage cybersecurity risks relevant to our business.

Additionally, we engage a third-party vendor regularly to benchmark our information security program’s maturity against the NIST CSF.

Our cybersecurity risk management program is integrated into our overall enterprise risk management program, and shares common methodologies, reporting channels and governance processes that apply across the enterprise risk management program to other legal, compliance, strategic, operational, and financial risk areas.

Key elements of our cybersecurity risk management program include, but are not limited to the following:

a.Internal and external asset identification, assessment, monitoring and classification procedures to evaluate cybersecurity risks and inform mitigation efforts.

b.A security team principally responsible for managing (1) our cybersecurity risk assessment processes, (2) our cyber processes, and (3) our cyber threat and incident response;

c.The use of external service providers, where appropriate, to assess defenses, analyze threat intelligence, or otherwise assist with aspects of our security controls;

d.Cybersecurity awareness training of our employees, software development teams, incident response personnel, and senior management;

e.A cybersecurity incident response plan that includes procedures for responding to cybersecurity incidents; and regular tabletop exercises to assess our response readiness; and

f.A third-party risk management process for key service providers, suppliers, and vendors who access critical systems and data based on risk profile.

We have not identified material risks from known cybersecurity threats, including as a result of any prior cybersecurity incidents, that have materially affected us, including our operations, business strategy, results of operations, or financial condition.

We face certain ongoing risks from cybersecurity threats that, if realized, are reasonably likely to materially affect us, including our operations, business strategy, results of operations, or financial condition.

See *Risk Factors – “Cyberattacks and security vulnerabilities could result in serious harm to our reputation, business and financial condition.”* and *“Technical problems or disruptions that affect either our customers’ ability to access our services, or the software, internal applications, database and network systems underlying our services, could damage our reputation and lead to reduced demand for our information, analytics and online marketplace services, lower revenues and increased costs.”*

*Cybersecurity Governance*

Our Board considers cybersecurity risk as part of its risk oversight function and has delegated to the Audit Committee oversight of cybersecurity and other information technology risks.

The Audit Committee oversees management’s implementation of our cybersecurity risk management program.

Our Audit Committee receives reports from management on our cybersecurity risks.

In addition, management updates the Audit Committee, as necessary, regarding any significant cybersecurity incidents.

The Audit Committee reports to the full Board regarding its activities, including those related to cybersecurity.

Our management team is informed and monitors the prevention, detection, mitigation and remediation of cybersecurity threats.

The team has primary responsibility for our overall cybersecurity risk management program and supervises both our internal cybersecurity personnel and our retained external cybersecurity consultants.

Our management team’s experience includes industry-recognized certifications, such as CISSP, CISM, and CISA, decades of experience as part of our IT team, and previous cybersecurity leadership positions at various Fortune 500 companies and U.S. Defense contractors.

Our management team is informed about and monitors the prevention, detection, mitigation, and remediation of cybersecurity risks and incidents through various means, which may include briefings from internal security personnel; threat intelligence and other information obtained from governmental, public or private sources, including external consultants engaged by us; and alerts and reports produced by security tools deployed in the IT environment.

Our headquarters is located at 1331 L Street, NW, in downtown Washington, DC, where we occupy approximately [removed: 169,093] [added: 169,000] square feet of office space, with a lease that expires on May 31, 2025 (with two five-year renewal options).

Our principal facility in the U.K. is located in London, where we occupy [removed: 23,064] [added: 42,000] square feet of office space.

This facility is used by our International operating [removed: segment.][added: segment, including our recent acquisition, OnTheMarket.]

Our staff in Richmond, Virginia occupy an owned building located at 501 S 5th Street, where we occupy [removed: 276,695 square feet and lease out 33,912] [added: approximately 310,000] square [removed: feet to another tenant through March of 2023;] [added: feet,] an owned building located at 901 Semmes Avenue, where we own and occupy [removed: 117,448] [added: approximately 117,000] square feet; and leased space at 951 E Byrd [removed: St] [added: St.,] where we occupy [removed: 97,171] [added: approximately 97,000] square feet.

Our common stock is traded on the Nasdaq Global Select Market under the symbol “CSGP.” As of January 31, [removed: 2023,] [added: 2024,] there were [removed: 1,731] [added: 1,654] holders of record of our common stock.

[removed: *Dividend Policy.*] We have never declared or paid any dividends on our common stock.

[removed: *Recent Issues of Unregistered Securities.*] We did not issue any unregistered securities during the year ended December 31, [removed: 2022.][added: 2023.]

[removed: *Issuer Purchases of Equity Securities.*] The following table is a summary of our repurchases of common stock for the quarter ended December 31, [removed: 2022:][added: 2023:]

[removed: ISSUER] [added: ISSUER] PURCHASES OF EQUITY [removed: SECURITIES][added: SECURITIES]

| [removed: Month, 2022] [added: 2023] | | | | | | [removed: Total] [added: Total] Number [removed: of Shares Purchased (1) | | |] [added: of Shares Purchased(1)] | | | | | | [removed: Average] [added: Average] Price Paid per [removed: Share] [added: Share] | | | | | | [removed: Total] [added: Total] Number of Shares Purchased as Part of Publicly Announced Plans or [removed: Programs] [added: Programs] | | | | | | [removed: Maximum] [added: Maximum] Number of Shares that May Yet Be Purchased Under the Plans or [removed: Programs] [added: Programs] | | |

The comparison covers the period beginning December 31, [removed: 2017] [added: 2018] and ending on December 31, [removed: 2022,] [added: 2023,] and assumes the reinvestment of any dividends.

[removed: ][added: ]

| Company / Index | | | | | | [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] | | | | | | [removed: 12/31/22] [added: 12/31/23] | | |

Dividend Policy.

Recent Issues of Unregistered Securities.

Issuer Purchases of Equity Securities.

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

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

| October 1 through 31 | | | | | | 12,677 | | | | | | $ | 76.89 | | | | | — | | | | | | — | | |

| November 1 through 30 | | | | | | 14,445 | | | | | | 73.48 | | | | | | — | | | | | | — | | |

| December 1 through 31 | | | | | | 8,252 | | | | | | 88.25 | | | | | | — | | | | | | — | | |

| Total | | | | | | 35,374 | | | | | | $ | 78.15 | | | | | — | | | | | | — | | |

| ___________________ | | | | | | | | | | | | | | | | | | | | | | | | | | |

| CoStar Group, Inc. | | | | | | $ | 100.00 | | | | | $ | 177.36 | | | | | $ | 273.99 | | | | | $ | 234.27 | | | | | $ | 229.09 | | | | | $ | 259.06 | |

| S&P 500 Index | | | | | | 100.00 | | | | | | 131.49 | | | | | | 155.68 | | | | | | 200.37 | | | | | | 164.08 | | | | | | 207.21 | | |

| S&P 500 Internet Services & Infrastructure Index | | | | | | 100.00 | | | | | | 134.46 | | | | | | 156.09 | | | | | | 178.95 | | | | | | 137.79 | | | | | | 160.76 | | |

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

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

| 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 | | |

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 [removed: 1934] [added: 1934, as amended,] is recorded, processed, summarized and reported, within the time periods specified in the 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: 2022,] [added: 2023,] 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: 2022] [added: 2023] and were operating at a reasonable assurance level.

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

The Company’s internal control over financial reporting is supported by written policies and procedures, [removed: that] [added: which] (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the Company’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with GAAP, and that receipts and expenditures of the Company are being made only in accordance with authorizations of the Company’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company’s assets that could have a material effect on the financial statements.

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: 2022] [added: 2023] based on criteria established in Internal Control – Integrated Framework (2013 framework) issued by the Committee of [removed: Sponsoring Organizations of the Treadway Commission.]

Based on this assessment, management has concluded that the Company's internal control over financial reporting was effective as of December 31, [removed: 2022.][added: 2023.]

Sponsoring Organizations of the Treadway Commission.

In December 2023, we completed the OnTheMarket Acquisition.

As permitted by the SEC, we have elected to exclude the internal controls of this acquisition, which has 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, 2023.

The excluded financial position of OnTheMarket represented less than 1% of our total assets as of December 31, 2023, and less than 1% of our revenues and total operating costs for the year then ended.

We will include the internal controls of OnTheMarket in our assessment of the effectiveness of our internal control over financial reporting as of December 31, 2024.

The remaining information required by this Item is incorporated by reference to our Proxy Statement for our [removed: 2023] [added: 2024] annual meeting of stockholders under the captions [removed: “Nominees for the Board of Directors,” “Nominees’ Business Experience, Qualifications and Directorships,”] [added: “Director Nominees,”] “Executive Officers,” [added: Corporate Governance Highlights,”] “Board [removed: Meetings and] Committees,” [added: “Insider trading arrangements and policies,”] and, if applicable, “Delinquent Section 16(a) Reports.”

The information required by this Item is incorporated by reference to our Proxy Statement for our [removed: 2023] [added: 2024] annual meeting of stockholders under the captions “Compensation Discussion and Analysis,” [removed: “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: 2023] [added: 2024] 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: 2023] [added: 2024] 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: 2023] [added: 2024] annual meeting of stockholders under the caption “Ratification of the Appointment of Independent Registered Public Accounting Firm.”

| *[10.12](http://www.sec.gov/Archives/edgar/data/1057352/000105735207000051/ex_99-1.htm) | | | | | | Form of 2007 Plan Restricted Stock Grant Agreement between the Registrant and certain of its officers, directors and employees (Incorporated by reference to Exhibit 99.1 to the Registrant’s [added: Current] Report on Form 8-K filed June 22, 2007). | | |

| *[10.13](http://www.sec.gov/Archives/edgar/data/1057352/000105735214000006/csgp-ex108_20131231.htm) | | | | | | Form of 2007 Plan Restricted Stock Unit Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.8 to the Registrant's [added: Annual] Report on Form 10-K filed February 20, 2014). | | |

| *[10.14](http://www.sec.gov/Archives/edgar/data/1057352/000105735209000013/iso2007agrmt.htm) | | | | | | Form of 2007 Plan Incentive Stock Option Grant Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.8 to the Registrant’s [added: Annual] Report on Form 10-K filed February 24, 2009). | | |

| *[10.15](http://www.sec.gov/Archives/edgar/data/1057352/000105735209000013/iso2007agrmt_w-florance.htm) | | | | | | Form of 2007 Plan Incentive Stock Option Grant Agreement between the Registrant and Andrew C. Florance (Incorporated by reference to Exhibit 10.9 to the Registrant’s [added: Annual] Report on Form 10-K filed February 24, 2009). | | |

| *[10.16](http://www.sec.gov/Archives/edgar/data/1057352/000105735209000013/nqso2007agrmt.htm) | | | | | | Form of 2007 Plan Nonqualified Stock Option Grant Agreement between the Registrant and certain of its officers and employees (Incorporated by reference to Exhibit 10.10 to the Registrant’s [added: Annual] Report on Form 10-K filed February 24, 2009). | | |

| *[10.17](http://www.sec.gov/Archives/edgar/data/1057352/000105735209000013/nqso2007agrmt_w-dir.htm) | | | | | | Form of 2007 Plan Nonqualified Stock Option Grant Agreement between the Registrant and certain of its directors (Incorporated by reference to Exhibit 10.11 to the Registrant’s [added: Annual] Report on Form 10-K filed February 24, 2009). | | |

| *[10.18](http://www.sec.gov/Archives/edgar/data/1057352/000105735209000013/nqso2007agrmt_w-florance.htm) | | | | | | Form of 2007 Plan Nonqualified Stock Option Grant Agreement between the Registrant and Andrew C. Florance (Incorporated by reference to Exhibit 10.12 to the Registrant’s [added: Annual] Report on Form 10-K filed February 24, 2009). | | |

| *[10.19](http://www.sec.gov/Archives/edgar/data/1057352/000105735208000004/rest_stockform-frenchsubform.htm) | | | | | | Form of 2007 Plan French Sub-Plan Restricted Stock Agreement between the Registrant and certain of its employees (Incorporated by reference to Exhibit 10.10 to the Registrant’s [added: Annual] Report on Form 10-K filed February 29, 2008). | | |

| *[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 [added: (No. 333-258220)] filed with the SEC on July 28, 2021). | | |

| [removed: *[10.22](http://www.sec.gov/Archives/edgar/data/1057352/000105735218000011/csgp-ex1021_20171207.htm)] [added: *[10.23](http://www.sec.gov/Archives/edgar/data/1057352/000105735218000011/csgp-ex1021_20171207.htm)] | | | | | | CoStar Group, Inc. Management Stock Purchase Plan (Incorporated by reference to Exhibit 10.21 to the Registrant’s [added: Annual] Report on Form 10-K filed February 23, 2018). | | |

| [removed: *[10.23](http://www.sec.gov/Archives/edgar/data/1057352/000105735213000078/csgp-9302013xex101.htm)] [added: *[10.24](http://www.sec.gov/Archives/edgar/data/1057352/000105735213000078/csgp-9302013xex101.htm)] | | | | | | Summary of Non-Employee Director Compensation (Incorporated by reference to Exhibit 10.1 to the Registrant's [added: Quarterly] Report on Form 10-Q filed on October 24, 2013). | | |

| [removed: *[10.24](http://www.sec.gov/Archives/edgar/data/1057352/0001005150-98-000402.txt)] [added: *[10.25](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 [added: Registrant's] Registration Statement on Form S-1 [removed: of the Registrant] (Reg. No. 333-47953) filed with the SEC on April 27, 1998). | | |

| [removed: *[10.25](http://www.sec.gov/Archives/edgar/data/1057352/000105735209000013/firstamd-florance_empagrmt.htm)] [added: *[10.26](http://www.sec.gov/Archives/edgar/data/1057352/000105735209000013/firstamd-florance_empagrmt.htm)] | | | | | | First Amendment to Andrew C. Florance Employment Agreement, effective January 1, 2009 (Incorporated by reference to Exhibit 10.16 to the Registrant’s [added: Annual] Report on Form 10-K filed February 24, 2009). | | |

| [removed: [10.26](http://www.sec.gov/Archives/edgar/data/1057352/000095013304001856/w96989exv10w1.htm)] [added: [10.27](http://www.sec.gov/Archives/edgar/data/1057352/000095013304001856/w96989exv10w1.htm)] | | | | | | Form of Indemnification Agreement between the Registrant and each of its officers and directors (Incorporated by reference to Exhibit 10.1 to the Registrant’s [added: Quarterly] Report on Form 10-Q filed on May 7, 2004). | | |

| [removed: [10.27](http://www.sec.gov/Archives/edgar/data/1057352/000105735211000072/lease.htm)] [added: [10.28](http://www.sec.gov/Archives/edgar/data/1057352/000105735211000072/lease.htm)] | | | | | | Deed of Office Lease by and between GLL L-Street 1331, LLC and CoStar Realty Information, Inc., dated February 18, 2011, and made effective as of June 1, 2010 (Incorporated by reference to Exhibit 10.1 to the Registrant’s [added: Quarterly] Report on form 10-Q filed on April 29, 2011). | | |

| [removed: [10.28](http://www.sec.gov/Archives/edgar/data/1057352/000114036120015295/ex10_1.htm)] [added: [10.29](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 SEC on July 1, 2020) | | |

| [removed: [21.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735223000030/csgp-ex21120221231.htm)] [added: [21.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735224000013/csgpex21120231231.htm)] | | | | | | Subsidiaries of the Registrant (filed herewith). | | |

| [removed: [23.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735223000030/csgp-ex23120221231.htm)] [added: [23.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735224000013/csgp-ex23120231231.htm)] | | | | | | Consent of Ernst & Young LLP, Independent Registered Public Accounting Firm (filed herewith). | | |

| [removed: [31.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735223000030/csgp-ex31120221231.htm)] [added: [31.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735224000013/csgp-ex31120231231.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/1057352/000105735223000030/csgp-ex31220221231.htm)] [added: [31.2](https://www.sec.gov/Archives/edgar/data/1057352/000105735224000013/csgp-ex31220231231.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/1057352/000105735223000030/csgp-ex32120221231.htm)] [added: [32.1](https://www.sec.gov/Archives/edgar/data/1057352/000105735224000013/csgp-ex32120231231.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/1057352/000105735223000030/csgp-ex32220221231.htm)] [added: [32.2](https://www.sec.gov/Archives/edgar/data/1057352/000105735224000013/csgp-ex32220231231.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: 2022,] [added: 2023,] 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: 2022,] [added: 2023,] formatted in Inline XBRL (included as Exhibit 101). | | |

| *[10.22](https://www.sec.gov/Archives/edgar/data/1057352/000105735224000013/csgp-ex102220231231.htm) | | | | | | Canadian Addendum to CoStar Group ESPP (filed herewith). | | |

| [10.30](http://www.sec.gov/Archives/edgar/data/1057352/000105735223000111/csgp-063023xex101.htm) | | | | | | First Amendment to the Second Amended and Restated Credit Agreement, dated as of May 8, 2023, among CoStar Group, Inc., as borrower, CoStar Realty Information, Inc., as co-borrower, the lenders from time to time party thereto and Bank of America, N.A., as administrative agent (Incorporated by reference to Exhibit 10.1 to the Registrant’s Quarterly Report on Form 10-Q filed July 26, 2023) | | |

| [97](https://www.sec.gov/Archives/edgar/data/1057352/000105735224000013/csgp-ex9720231231.htm) | | | | | | CoStar Group, Inc. Clawback Policy, effective September 13, 2023 (filed herewith). | | |

| February [removed: 22, 2023] [added: 21, 2024] | | | | | | Andrew C. Florance | | |

| /s/ Michael R. Klein | | | | | | Chairman of the Board | | | | | | February [removed: 22, 2023] [added: 21, 2024] | | |

| /s/ Andrew C. Florance | | | | | | Chief Executive Officer and | | | | | | February [removed: 22, 2023] [added: 21, 2024] | | |

| /s/ Scott T. Wheeler | | | | | | Chief Financial Officer | | | | | | February [removed: 22, 2023] [added: 21, 2024] | | |

| /s/ Michael J. Glosserman | | | | | | Director | | | | | | February [removed: 22, 2023] [added: 21, 2024] | | |

| /s/ John W. Hill | | | | | | Director | | | | | | February [removed: 22, 2023] [added: 21, 2024] | | |

| /s/ Laura Cox Kaplan | | | | | | Director | | | | | | February [removed: 22, 2023] [added: 21, 2024] | | |

| /s/ Christopher J. Nassetta | | | | | | Director | | | | | | February [removed: 22, 2023] [added: 21, 2024] | | |

| /s/ Louise S. Sams | | | | | | Director | | | | | | February [removed: 22, 2023] [added: 21, 2024] | | |

| /s/ Robert W. Musslewhite | | | | | | Director | | | | | | February [removed: 22, 2023] [added: 21, 2024] | | |

| Reports of Independent Registered Public Accounting Firm (PCAOB ID Number 42) | | | [removed: [F-](#i450746f8b5af40fcb91ebfd3557dc847_121)[2](#i450746f8b5af40fcb91ebfd3557dc847_121)] [added: [F-](#i3d5fa50fac5a487ea89498a470016300_124)[2](#i3d5fa50fac5a487ea89498a470016300_124)] | | |

| Consolidated Statements of Operations | | | [removed: [F-](#i450746f8b5af40fcb91ebfd3557dc847_124)[5](#i450746f8b5af40fcb91ebfd3557dc847_124)] [added: [F-](#i3d5fa50fac5a487ea89498a470016300_127)[6](#i3d5fa50fac5a487ea89498a470016300_127)] | | |

| Consolidated Statements of Comprehensive Income | | | [removed: [F-](#i450746f8b5af40fcb91ebfd3557dc847_127)[6](#i450746f8b5af40fcb91ebfd3557dc847_127)] [added: [F-](#i3d5fa50fac5a487ea89498a470016300_130)[7](#i3d5fa50fac5a487ea89498a470016300_130)] | | |

| Consolidated Balance Sheets | | | [removed: [F-](#i450746f8b5af40fcb91ebfd3557dc847_130)[7](#i450746f8b5af40fcb91ebfd3557dc847_130)] [added: [F-](#i3d5fa50fac5a487ea89498a470016300_133)[8](#i3d5fa50fac5a487ea89498a470016300_133)] | | |

| Consolidated Statements of Changes in Stockholders’ Equity | | | [removed: [F-](#i450746f8b5af40fcb91ebfd3557dc847_133)[8](#i450746f8b5af40fcb91ebfd3557dc847_133)] [added: [F-](#i3d5fa50fac5a487ea89498a470016300_136)[9](#i3d5fa50fac5a487ea89498a470016300_136)] | | |

[removed: | Consolidated Statements of Cash Flows | | | [F-](#i450746f8b5af40fcb91ebfd3557dc847_136)[9](#i450746f8b5af40fcb91ebfd3557dc847_136) | | |][added: CONSOLIDATED STATEMENTS OF CASH FLOWS]

| Notes to Consolidated Financial Statements | | | [removed: [F-](#i450746f8b5af40fcb91ebfd3557dc847_139)[10](#i450746f8b5af40fcb91ebfd3557dc847_139)] [added: [F-](#i3d5fa50fac5a487ea89498a470016300_142)[12](#i3d5fa50fac5a487ea89498a470016300_142)] | | |

We have audited the accompanying consolidated balance sheets of CoStar Group, Inc. (the Company) as of December 31, [removed: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] 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: 2022] [added: 2023,] and the related notes (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: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] and the results of its operations and its cash flows for each of the three years in the period ended December 31, [removed: 2022,] [added: 2023,] 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: 2022,] [added: 2023,] 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: 22, 2023] [added: 21, 2024] expressed an unqualified opinion thereon.

| *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 [removed: 93%] [added: 95%] 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 [removed: tools] [added: software programs] 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. | | |

We have audited CoStar Group, Inc.’s internal control over financial reporting as of December 31, [removed: 2022,] [added: 2023,] 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: 2022,] [added: 2023,] 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: 2022] [added: 2023] and [removed: 2021,] [added: 2022,] 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: 2022] [added: 2023] and the related notes of CoStar Group, Inc. and our report dated February [removed: 22, 2023] [added: 21, 2024] expressed an unqualified opinion thereon.

(in [removed: thousands,] [added: millions,] except per share data)

| | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Selling and marketing (excluding customer base amortization) | | | [removed: 684,222] [added: 989.9] | | | | | | [removed: 622,007] [added: 684.2] | | | | | | [removed: 535,778] [added: 622.0] | | |

| Interest income (expense), net | | | [removed: 32,125] [added: 213.6] | | | | | | [removed: (31,621)] [added: 32.1] | | | | | | [removed: (17,395)] [added: (31.6)] | | |

| Net income per share — [removed: basic(1)] [added: basic] | | | $ | [removed: 0.93] [added: 0.92] | | | | | $ | [removed: 0.75] [added: 0.93] | | | | | $ | [removed: 0.60] [added: 0.75] | |

| Net income per share — [removed: diluted(1)] [added: diluted] | | | $ | [removed: 0.93] [added: 0.92] | | | | | $ | [removed: 0.74] [added: 0.93] | | | | | $ | [removed: 0.59] [added: 0.74] | |

| | | | | | | [removed: 2022] [added: 2023] | | | | | | [removed: 2021] [added: 2022] | | | | | | [removed: 2020] [added: 2021] | | |

| Other comprehensive [removed: (loss) income,] [added: income (loss),] net of tax | | | | | | | | | | | | | | | | | | | | |

| Foreign currency translation adjustment | | | | | | [removed: (23,317)] [added: 11.5] | | | | | | [removed: (4,869)] [added: (23.3)] | | | | | | [removed: 6,966] [added: (4.9)] | | |

| | | | [added: 2023 | | | | | |] 2022 | | | | | | 2021 | | |

| Less: Allowance for credit losses | | | [removed: (12,195)] [added: (23.2)] | | | | | | [removed: (13,374)] [added: (12.2)] | | |

| Prepaid expenses and other current assets | | | [removed: 63,952] [added: 70.2] | | | | | | [removed: 36,182] [added: 64.0] | | |

| Deferred income taxes, net | | | [removed: 9,722] | | | | | | [removed: 5,034] | | | [added: | | | (3.0) | | |]

| Lease right-of-use assets | | | [removed: 80,392] | | | | | | [removed: 100,680] | | | [added: | | | 0.4 | | |]

| Property and equipment, net | | | [removed: 321,250] [added: 472.2] | | | | | | [removed: 271,431] [added: 321.3] | | |

| /s/ Angelique G. Brunner | | | | | | Director | | | | | | February 21, 2024 | | |

| Angelique G. Brunner | | | | | | | | | | | | | | |

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

| Consolidated Statements of Cash Flows | | | [F-](#i3d5fa50fac5a487ea89498a470016300_139)[10](#i3d5fa50fac5a487ea89498a470016300_139) | | |

February 21, 2024

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 OnTheMarket Plc., which is included in the 2023 consolidated financial statements of the Company and constituted less than 1% and 1% of total and net assets, respectively, as of December 31, 2023, and less than 1% and less than 1% of revenues and net income, respectively, for the year then ended.

Our audit of internal control over financial reporting of the Company also did not include an evaluation of the internal control over financial reporting of OnTheMarket Plc.

February 21, 2024

| Revenues | | | $ | 2,455.0 | | | | | $ | 2,182.4 | | | | | $ | 1,944.1 | |

| Cost of revenues | | | 491.5 | | | | | | 414.0 | | | | | | 357.2 | | |

| Gross profit | | | 1,963.5 | | | | | | 1,768.4 | | | | | | 1,586.9 | | |

| Software development | | | 267.6 | | | | | | 220.9 | | | | | | 201.0 | | |

| General and administrative | | | 381.5 | | | | | | 338.7 | | | | | | 256.8 | | |

| Customer base amortization | | | 42.2 | | | | | | 73.6 | | | | | | 74.8 | | |

| | | | 1,681.2 | | | | | | 1,317.4 | | | | | | 1,154.6 | | |

| Income from operations | | | 282.3 | | | | | | 451.0 | | | | | | 432.3 | | |

| Other income, net | | | 5.4 | | | | | | 3.4 | | | | | | 3.3 | | |

| Income before income taxes | | | 501.3 | | | | | | 486.5 | | | | | | 404.0 | | |

| Income tax expense | | | 126.6 | | | | | | 117.0 | | | | | | 111.4 | | |

| Net income | | | $ | 374.7 | | | | | $ | 369.5 | | | | | $ | 292.6 | |

| Weighted-average outstanding shares — basic | | | 405.3 | | | | | | 396.3 | | | | | | 392.2 | | |

| Weighted-average outstanding shares — diluted | | | 406.9 | | | | | | 397.8 | | | | | | 394.2 | | |

(in millions)

| Net income | | | | | | $ | 374.7 | | | | | $ | 369.5 | | | | | $ | 292.6 | |

| Total other comprehensive income (loss) | | | | | | 11.5 | | | | | | (23.3) | | | | | | (4.9) | | |

| Total comprehensive income | | | | | | $ | 386.2 | | | | | $ | 346.2 | | | | | $ | 287.7 | |

(in millions, except per share data)

| | | | 2023 | | | | | | 2022 | | |

| Accounts receivable, net | | | 190.0 | | | | | | 153.9 | | |

| Total current assets | | | 5,476.1 | | | | | | 5,185.9 | | |

| Goodwill | | | 2,386.2 | | | | | | 2,314.8 | | |

| Intangible assets, net | | | 313.7 | | | | | | 329.3 | | |

| Total assets | | | $ | 8,919.7 | | | | | $ | 8,402.5 | |

| Accounts payable | | | $ | 23.1 | | | | | $ | 28.6 | |

| Accrued wages and commissions | | | 117.8 | | | | | | 105.0 | | |

| Accrued expenses | | | 163.0 | | | | | | 89.1 | | |

| Total current liabilities | | | 455.8 | | | | | | 372.7 | | |

| Deferred income taxes, net | | | 36.7 | | | | | | 76.2 | | |

| Total liabilities | | | 1,581.1 | | | | | | 1,532.5 | | |

| Additional paid-in capital | | | 5,147.8 | | | | | | 5,065.4 | | |

| | | | | | |

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

February 22, 2023

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

| Revenues | | | $ | 2,182,399 | | | | | $ | 1,944,135 | | | | | $ | 1,659,019 | |

| Cost of revenues | | | 414,008 | | | | | | 357,241 | | | | | | 308,968 | | |

| Gross profit | | | 1,768,391 | | | | | | 1,586,894 | | | | | | 1,350,051 | | |

| Software development | | | 220,923 | | | | | | 201,022 | | | | | | 162,916 | | |

| General and administrative | | | 338,737 | | | | | | 256,711 | | | | | | 299,698 | | |

| Customer base amortization | | | 73,560 | | | | | | 74,817 | | | | | | 62,457 | | |

| | | | 1,317,442 | | | | | | 1,154,557 | | | | | | 1,060,849 | | |

| Income from operations | | | 450,949 | | | | | | 432,337 | | | | | | 289,202 | | |

| Other income (expense), net | | | 3,383 | | | | | | 3,252 | | | | | | (827) | | |

| Income before income taxes | | | 486,457 | | | | | | 403,968 | | | | | | 270,980 | | |

| Income tax expense | | | 117,004 | | | | | | 111,404 | | | | | | 43,852 | | |

| Net income | | | $ | 369,453 | | | | | $ | 292,564 | | | | | $ | 227,128 | |

| Weighted-average outstanding shares — basic(1) | | | 396,284 | | | | | | 392,210 | | | | | | 380,726 | | |

| Weighted-average outstanding shares — diluted(1) | | | 397,752 | | | | | | 394,160 | | | | | | 383,266 | | |

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

(in thousands)

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

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

| Net income | | | | | | $ | 369,453 | | | | | $ | 292,564 | | | | | $ | 227,128 | |

| Unrealized gain on investments | | | | | | — | | | | | | — | | | | | | 189 | | |

| Reclassification adjustment for realized loss on investments included in net income | | | | | | — | | | | | | — | | | | | | 541 | | |

| Total other comprehensive (loss) income, net of tax | | | | | | (23,317) | | | | | | (4,869) | | | | | | 7,696 | | |

| Total comprehensive income | | | | | | $ | 346,136 | | | | | $ | 287,695 | | | | | $ | 234,824 | |

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

| Cash and cash equivalents | | | $ | 4,967,970 | | | | | $ | 3,827,126 | |

| Accounts receivable | | | 166,140 | | | | | | 138,191 | | |

| Accounts receivable, net | | | 153,945 | | | | | | 124,817 | | |

| Total current assets | | | 5,185,867 | | | | | | 3,988,125 | | |

| Goodwill | | | 2,314,759 | | | | | | 2,321,015 | | |

| Intangible assets, net | | | 329,306 | | | | | | 435,662 | | |

| Total assets | | | $ | 8,402,470 | | | | | $ | 7,256,871 | |

| Accounts payable | | | $ | 28,460 | | | | | $ | 22,244 | |

| Deferred revenue | | | 103,567 | | | | | | 95,471 | | |

| Total current liabilities | | | 372,615 | | | | | | 338,689 | | |

| Total liabilities | | | 1,532,349 | | | | | | 1,545,199 | | |

| Additional paid-in capital | | | 5,065,511 | | | | | | 4,253,318 | | |